National Audit Office NAO

In 2013 and 2015 we published reports on the progress of the Superfast (Rural) Broadband Programme. Since we last reported, the Superfast Programme has moved increasingly to gigabit-capable full-fibre solutions in place of copper telephone wires from premises to a local cabinet. Local bodies used contractors to deliver the programme, the largest of which was Openreach, a subsidiary of BT that runs the UK’s largest broadband network. Openreach remains the dominant provider under the Superfast Programme, responsible for 125 of the 147 contracts and for delivery to around 97% of premises overall.

Government’s programme is delayed, meaning that those without superfast broadband speeds in hard-to-reach areas will have to wait longer to benefit. More than half of the Superfast Programme’s current contracts are reporting delays due to suppliers underestimating build times, insufficient supply chain capacity and local bodies having to rescope contracts because of supplier data errors. This means that some people in harder-to-reach areas are waiting longer to get superfast speeds. The Department now expects its contracts to run until 2024, four years longer than originally planned. This is partly due to delays to existing contracts but also because the programme has been extended, with local bodies awarding new contracts to increase coverage. Ofcom estimates that nearly 1.6 million premises cannot yet access speeds of 30 Mbps and nearly 600,000 cannot access 10 Mbps.

The Superfast Programme business case identified a range of potential benefits arising from widespread superfast usage including increased productivity, improved educational attainment, public sector cost savings and a reduction in carbon emissions. These benefits are not programme-specific but come also from privately funded infrastructure and will not be formally evaluated. Moreover, they are realised only when users subscribe to superfast packages. The Department’s business case defined no programme-level benefits against which to measure progress, making it difficult to assess programme performance. In its subsequent evaluations of the Superfast Programme, the Department used established methods to estimate programme-specific impacts arising only from public investment, and not from commercial roll-out. Local bodies have reported substantial returns on their superfast investment and benefits including job creation, productivity improvements and new start-ups.

Despite the widespread availability of superfast broadband, many people have complained to their MPs about their broadband and Ofcom research shows broadband satisfaction levels of 85%, which is below other utilities. The primary reasons for consumer dissatisfaction were unreliable connectivity and slow speeds. Issues with broadband stem from premises not yet covered by superfast broadband, those that are covered but have not signed up to superfast internet packages, and those that do not get speeds they were promised.

As at September 2019, only 57% of covered properties had signed up to superfast broadband packages. This may be because consumers are not aware that faster services are available, may find their existing service sufficient or consider superfast packages too expensive.

Under the Superfast Programme, suppliers were able to maximise coverage across the UK’s hardest to reach premises by starting with the easiest. The properties left behind were largely the hardest and most expensive to reach and, mostly, in rural and remote areas. Rural stakeholders therefore strongly support an outside-in approach for the Future Programme. While the Future Programme, using the existing State Aid ruling for the Superfast Programme, will focus initially on premises lacking 30 Mbps, it may prioritise other objectives in later phases when it achieves a new State Aid ruling. If it prioritises the timeline, there is a risk that the same properties will again be left behind. Suppliers may also find it more attractive to focus on areas where they will gain the greatest potential returns, rather than where there is the greatest customer need. Such an approach risks widening the gap in broadband provision, particularly for rural areas. This means that, by the end of 2025, some premises may still lack superfast speeds, let alone gigabit connectivity.

The way in which the Department set up the Superfast Programme makes it difficult to assess performance. It is difficult to assess programme performance as the business case lacked programme-specific measures against which to judge success. For example, the Superfast Programme’s primary objective of 95% UK coverage was achievable only in conjunction with industry roll-out. A 2013 research paper commissioned by the Department projected a return of £20 for every £1 of public investment across all of government’s broadband interventions – which included the Superfast Programme. To date there has been no collective evaluation of what these interventions have achieved. The Department has conducted a formal evaluation of the Superfast Programme and concluded that, over the seven years to 2019, it had delivered £2.70 to £3.70 for every £1 of public investment. It has also conducted a separate cost–benefit analysis of its voucher scheme but differing evaluation periods make it difficult to say whether the Department will achieve its projected returns. The Department expects the Superfast Programme’s impact to increase over time.

Good data can help to maximise value for taxpayers’ money by enabling the Department to select an optimal balance of expensive and less expensive interventions. Its approach is to group individual premises into clusters, and then group clusters into contract bundles. It may choose to combine premises in a way that allows for cross-subsidisation within each contract. The way in which the Department determines bundles will be critical to successful delivery. The Department acknowledges that the data are imperfect and has told us that it recognises this is a potential risk. We have not seen the Department’s plans for mitigating this risk.

(...) The Department believes that lengthy contracts with too many premises and high numbers of change requests caused delays on the Superfast Programme. Change requests arose because of the need to avoid subsidising premises which had not yet been connected by the contracted supplier but in the meantime had been served commercially by another provider. Failure to remove these premises from the contract resulted in overbuild. Both the Department and suppliers told us that the contract change process to remove such premises and substitute them with alternatives was long and onerous for all parties. For its Future Programme, the Department is introducing more contracts of shorter duration involving fewer premises. Its rationale is that there will be less opportunity for individual contracts to be affected by other operators changing their plans while work is under way.

(...) The Department is increasing its capacity and capability at the same time as addressing the challenges posed by the availability, accuracy and consistency of data, set out above. It has much to do in a short time frame. In our report on Challenges in using data across government, we found that investing in new technology and tools does not in itself guarantee that the underlying data are of good enough quality. The challenges of data quality need to be overcome to achieve the potential for longer-term efficiencies.

The Superfast Programme has shown that future success will depend on good data and local knowledge. To maximise value for money, the Future Programme should avoid funding premises that are already covered, or which suppliers plan to cover without subsidy. These are becoming more difficult to identify as the number of suppliers increases and because there is no single map or database of current and planned broadband installations. There are now more than 20 suppliers building new infrastructure, many of whom are not required to submit coverage data to government. Identifying premises for intervention therefore needs comprehensive local knowledge. With the Superfast Programme, local experts and contacts were also critical, for example, in organising street works and engaging with local communities. The Department told us that it recognises data as a potential risk but is still planning how to address it. There is a further risk that pressures on local government finances may lead to existing teams in local bodies being disbanded, with a consequent loss of local knowledge.