Autumn Statement: Philip Hammond to invest £400m in 'full-fibre' broadband

The Treasury believes the money in the Autumn Statement will help at least two million more homes and business get full-fibre broadband

Ben Chu
Monday 21 November 2016 17:14

The Chancellor, Philip Hammond, is expected to pledge £400m of public funds to extend the UK’s “full-fibre” broadband network in the Autumn Statement on Wednesday.

This will form part a new Digital Infrastructure Fund for the telecoms industry, with the public money to be matched by private investment.

The Treasury believes the funding will help at least two million more homes and business get full-fibre broadband, regarded as the future of high speed telecoms.

Also in the Autumn Statement Mr Hammond Government is also expected to confirm £1.3bn of additional capital spending to upgrade Britain’s road network.

This will be made up of £1.1bn on local schemes and £220m on easing the pressure on “pinch points”.

There is expected to be £27m to fund an expressway between Oxford and Cambridge via Milton Keynes.

In her speech to the CBI on Tuesday Theresa May announced an extra £2bn for UK Research and Development funding by the end of the Parliament, which she said would “help put post-Brexit Britain at the cutting edge of science and tech”.

But the overall economic and fiscal backdrop to the Autumn Statement is expected to be bleak.

Analysts expect the Office for Budget Responsibility to downgrade the UK’s growth forecast for 2017 to around 1.2-1.4 per cent and to increase its borrowing forecast over the next five years by as much as £100bn relative to the March Budget due to a slowdown in the economy.

Soon after taking office Theresa May abandoned George Osborne’s pledge to run an absolute budget surplus by 2019-20.

But the Chancellor is not expected to roll back his predecessor’s £12bn squeeze on the working age benefit bill by 2020, despite Ms May’s pledge to help the “just about managing” classes, or “JAMs”.

And the expected increase in inflation over the next two years, due to the sharp depreciation of the pound since the Brexit vote, threatens to make the planned freeze on tax credits even more painful for millions of working families.

Some analysts expect inflation to hit 4 per cent next year, up from 0.9 per cent today.

Yet there are expected to be some measures from the Chancellor to help the JAMs possibly including a cancellation of a planned 2p per litre increase on fuel duty next April, more help with childcare costs, or a reduction in air passenger duty.

On broadband infrastructure, BT has been heavily criticised by rivals such as Sky and Virgin for underinvesting in the country’s fibre network in recent years.

The network is owned and maintained by BT but all private broadband providers have to use it.

Only 2 per cent of the country’s premises have full-fibre connections and critics say BT has been more interested in maximising the financial returns of its older copper network.

In July Ofcom announced it would force BT to establish its Openreach arm – which maintains the UK’s broadband infrastructure – as a legally separate company within the group in order to improve performance on broadband investment.

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