UPDATE Gov Amend UK Digital Economy Bill to Protect Openreach Pensions

As expected the Government has today tabled an amendment to their Digital Economy Bill 2017, which will work to maintain the Crown Guarantee for members of BT’s Pension Scheme (BTPS) as part of Openreach’s separation from the main group.

Last week Ofcom confirmed that it had finally reached a voluntary agreement with BT on the future of their network access division (Openreach), which will now go through a process of “legal separation” (here). As part of that BT was initially concerned about the risks and costs of moving staff and their huge pension liabilities to the “new” company.

In response the regulator proposed that the existing Crown Guarantee, which requires the Government to foot the bill in the unlikely event that the company is wound up, should be maintained for Openreach staff who are members of BT’s pension scheme. However, this requires the Government to change their existing legislation and that’s precisely what they’ve done today.

Karen Bradley, Secretary of State for Culture, Media and Sport, said:

“The legal separation of Openreach is important for delivering better broadband for consumers throughout the UK.

A more independent Openreach which treats every broadband provider fairly should increase investment, bolster competition, and help give the country the connectivity it needs.

This amendment clears a hurdle identified by Ofcom by allowing the Government to maintain pension protections for BT Pension Scheme members who transfer to Openreach. It will help secure the voluntary separation of BT and Openreach and provide peace of mind to affected workers.”

The Crown Guarantee dates all the way back to 1984 when BT was first privatised and the Government wanted to protect workers’ pensions. Under the new approach some 32,000 staff will be transferred from BT and be directly employed by Openreach, which is a huge task. Today’s change is unlikely to receive any significant opposition when the Lords conduct their next DEBill debate on 20th March 2017.

UPDATE 17th March 2017

Ofcom has also just published a new document explaining why they consider that BT’s notification sufficiently meets their competition concerns, how they will monitor compliance with the new arrangements and ultimately assess whether they deliver positive outcomes for consumers and businesses.