Superfast broadband scheme two years behind schedule and £207m over budget

The National Audit Office reports that projects in Merseyside, Oxfordshire, Derbyshire and elsewhere will be delayed until 2017

Fibre optic broadband is now widely available in the UK (Getty Images)

The Government’s long-trailed plan to introduce superfast broadband to much of rural Britain is running two years late and costing the taxpayer more than expected, official auditors have said.

Just nine of the 44 local projects that will roll out fast internet to 90 per cent of the population will be finished by the original target date of 2015, according to the National Audit Office. Most others will take until 2017 to be completed.

The report also stated that the scheme will cost the public an additional £207 million because the plan to introduce private investment to cover the £1.2 billion costs has failed to motivate interest. Auditors concluded that competition among suppliers had been limited, leaving BT as the only active bidder.

Amyas Morse, head of the NAO, said: "The rural broadband project is moving forward late and without the benefit of strong competition to protect public value. For this we will have to rely on the department's active use of the controls it has negotiated and strong supervision by Ofcom."

The worst affected areas include Merseyside, Oxfordshire and Derbyshire, which are among those councils holding out for a more valuable investment and are therefore yet to commit to a BT contract.

There are also concerns that as the sole bidder BT have been able to drive down the cost of their investment by refusing to reveal regional disparities in price. The auditors said in their report that the Government had "secured only limited transparency" over the costs in BT's bids.

In response, the company said they cannot share information about councils with each other to ensure they are getting a fair deal due to reasons of commercial confidentiality.

Public Accounts Committee chairwoman Margaret Hodge said: "The DCMS has not had a good enough grip on its rural broadband programme. The department wanted the private sector to foot 36 per cent of the bill for the £1.2 billion rural broadband programme, but it is now expected to contribute just 23 per cent, leaving the public sector purse to cover the rest.

She added: "Opaque data and limited benchmarks for comparison mean the department has no idea if BT is being reasonable or adding in big mark ups. Private sector organisations need to be 100 per cent transparent about their figures when spending public money. It is not acceptable to hide behind arguments about commercial sensitivity.

In response, A DCMS spokesperson conceded that effective enforcement of contracts would be needed to ensure cost effectiveness and admitted superfast broadband would not reach some target areas until 2017.

“We have noted the NAO report and welcome its confirmation that processes we have put in place to ensure value for money are strong and robust,” they said. “Around 88 per cent of the country will have access to superfast broadband by December 2015, with an estimated 90 per cent getting superfast coverage by early 2016.

"An extra £250 million of investment means we will reach 95 per cent of premises by 2017 and we are now exploring with industry how to expand coverage further, using more innovative fixed, wireless and mobile broadband solutions, to reach at least 99 per cent of premises in the UK by 2018."

A BT spokesman said: “BT has applied cost efficiencies to its Broadband Delivery UK work and so the company is delivering excellent value for money. Deploying fibre broadband is an expensive long-term business and so it was no surprise that others dropped out as the going got tough.”