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PAC Report Casts Doubt Over Broadband and Other UK Infrastructure Projects

Monday, April 29th, 2013 (8:10 am) - Score 640
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The Public Accounts Committee (PAC), which is appointed by the House of Commons to examine public expenditure, has criticised the government’s £310bn National Infrastructure Plan (NIP) for being a “list of projects” that lacks a “real plan with a strategic vision and clear priorities“.

The coalition government believes that investing in and improving the United Kingdom’s infrastructure is “vital to the success of any modern economy“. As a result the NIP proposed a multitude of ways in which to upgrade everything from the country’s rail (transport) to its electricity and even broadband / mobile (telecoms) infrastructure.

Readers of ISPreview.co.uk will of course be most familiar with the relevant £830m Broadband Delivery UK (BDUK) scheme, as well as the related £150m Urban Broadband Fund (UBF), a £150m Mobile Infrastructure Project (MIP) and the £20m Rural Community Broadband Fund (RCBF) among other things. All those form just one fairly small part of the grander NIP.

But PAC’s new report warns that around 64% of the claimed £310bn commitment (i.e. roughly £200bn) is expected to come from the private sector. Unsurprisingly the members of PAC were “not convinced” that the plan was credible because of “the current economic climate, the cutbacks in public finances and the difficulty in raising private finance for projects on acceptable terms“.

PAC Report Statement (Extract)

The Treasury has identified 40 key projects and programmes. However, many of the programmes are broad categories and in total they include more than 200 individual projects.

This does not suggest a properly targeted and prioritised infrastructure plan. The Treasury will need to work more forcefully with departments, regulators, contractors and investors to agree the priorities for the projects that will be undertaken and the ways in which the costs both for consumers, through bills, and taxpayers, through various forms of support, will be identified and contained. This needs to be addressed urgently.”

The report also warns that consumers will end up bearing “the brunt of the costs of the projects” through higher charges, yet the burden they face has apparently “not been quantified“. This is perhaps to be expected as the private sector would naturally look to recoup its investment through higher charges, which is one reason why Ofcom effectively gave BT a period of grace to retain control over its FTTC/P solutions until after 2015 when more competitive remedies may be sought (that could benefit its rivals TalkTalk and Sky Broadband etc.).

Unfortunately the report itself tends to generalise and thus fails to cover specific areas like broadband. In fairness broadband is perhaps one of the few NIP linked projects that is actually proceeding, even though it is behind schedule (e.g. 6 months delay to state aid approvals). Meanwhile the related Growth and Infrastructure Bill (GIB) is only now, just two years before the first “end of 2015” target is due to be met (i.e. superfast broadband to reach 90% of the UK), nearing royal assent.

Likewise the related auction of radio spectrum for 4G mobile services (e.g. faster mobile broadband speeds with better coverage) actually occurred around several months ahead of schedule in order to help resolve the endless bickering between mobile operators. So at least the telecoms sector is making progress, even though until now most of that has come almost entirely out of the private sectors pocket.

The PAC Report Recommendations

1. The Treasury should assess how much investment can realistically be financed and develop a coherent strategy using tightly defined criteria to identify and prioritise projects.

2. Treasury should work with departments to ensure that the consideration of policy proposals takes into account their potential impact on infrastructure investment and that unexpected changes are minimised to provide greater certainty to investors over government plans.

3. The Treasury and departments should identify the support that will be required and the costs involved. Government support will be paid for by either the taxpayer or the consumer so openness and clarity about the impact of Government decisions is essential.

4. The Treasury should require investors to supply the information needed to facilitate transparency and should reserve the right to audit such information.

5. The Treasury should identify the impact of planned infrastructure expenditure on the disposable incomes of different types of households.

PAC Report – HM Treasury: Planning for Economic Infrastructure (PDF)
http://www.publications.parliament.uk/pa/cm201213/cmselect/cmpubacc/872/872.pdf

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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4 Responses
  1. Avatar ethel prunehat

    …Unsurprisingly the ministers were “not convinced”…

    ITYM the members of the PAC were not convinced, not the ministers.

  2. Avatar DTMark

    Ah yes, the “Keynesian strategy” of attempting to stimulate the economy in bad times via the spending of government taxpayer’s money.

    Sadly the bit that has been forgotten in the misquoting of Keynes is that what he advocated involved the government hoarding a surplus in the good times in order to spend it in the bad times.

    What he did not advocate is bunging cash borrowed money to private companies to entrench monopolies: the path to fascism with the government picking the winners and losers.

    • Avatar Bob

      I guess the politicians who cannot stop spending money are amending the strategy and are planning to put money aside from some future boom. That though would ignore the fact that the debt and the deficit would continue to grow so this future boom would need to be a mega sized one in fact it would probably be an economic bubble so not a good idea

      The only approach is spending cuts with a few well targeted tax breaks. A nice one would be a ZERO rate corporation tax on increased exports

      Say a company in 2012 had £10M of exports and in 2013 it had £12M It would pay no corporation tax on the £2M for 2013. In 2014 it would need to grow exports from £12M to get the Zero rate. The modest cost of this tax break should be recovered by improved balance of payments and more UK jobs, It might even entice some international companies to declare more of their profits in the UK

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