Council Sets Out Details for Review of Aylesbury Vale Broadband ISP

The Aylesbury Vale District Council in Buckinghamshire has set out details and a timetable for their review into the Aylesbury Vale Broadband project, which after concerns over rollout progress and funding was recently sold (FTTH network assets) to UK ISP Gigaclear for an undisclosed sum.

Officially AVB was supported by a significant pot of investment in the form of a publicly funded commercial loan from AVDC (extracted from the New Homes Bonus fund of £1.536m), which itself acted as a 95% shareholder (most of AVBs directors work for the council). The provider claimed that it had been steadily building the network out to cover around 2,000 premises in several villages, until the sale (here).

Despite this the provider and those behind it have continued to face a stream of criticism from opposition councillors (here), many of which relate to concerns over AVB’s financial management, service uptake, rollout progress and public accountability etc. Sadly a lot of the project details remain shrouded in secrecy due to issues of confidentiality, which makes it challenging for the public to tell fact from fiction.

However a meeting of the council’s Audit Committee, which took place yesterday, has effectively signalled the start of a review that will conclude by the end of April 2018 (taking 15-18 days to complete at an agreed rate of £1,000 per day) and focus on AVDC’s governance arrangements over its investment in AVB.

The ‘Draft Terms of Reference‘ also state that AVB is reported to have drawn down £1.250m of funding from the loan agreements. These were said to have been approved by AVDC in April 2015 (£200k for a pilot project in Hogshaw, North Marston and Granborough parishes), £550k (October 2015) and £500k (April 2016). Interest on this was chargeable at 7.5% pa, with the first loan repayable by 2022 and the second and third in 2023.

Draft Terms of Reference (Introduction)

Council scrutinised the investment and progress of AVB through a number of forums:

• Cabinet’s sign-off of the original AVB Business Case (March 2015) and revised business plan (September 2016).

• Economy and Business Development Committee (September 2015, March 2016 and September 2016).

• Finance and Services Committee reviewed appointment and remuneration terms of AVB’s Managing Director (July 2016).

An internal audit review of the Council’s governance arrangements over the investment in AVB was presented to Audit Committee in March 2017 and is publically available. This report noted areas where governance arrangements should be improved and made a series of recommendations. These included but are not limited to:

• Standardisation, consistency and regularity of financial and performance reporting against the approved business plan to enable the Council to more fully assess the risk of its investment in AVB and report to Members.

• Clarity on the roles and responsibilities of the Council’s existing scrutiny committees in oversight of the Council’s commercial ventures.

• AVB’s concern around the treatment of confidential information.

• Greater clarity around recharging costs between the Council and AVB.

• Potential for conflicts of interest amongst directors.

• Formalisation of arrangements for the draw-down of funds against the Council approved loan facility.

The findings were also communicated to the Directors of AVB in a letter (May 2017), along with a proposed set of actions for the consideration of AVB Directors that would support the achievement of the recommendations. A follow up internal audit review was conducted in September 2017. This noted little progress on implementation of the recommendations raised.

The revised AVB business plan was due to be presented to Cabinet for approval in September 2017, but at that time it was reported that the competitive landscape in which AVB was operating had changed. The revised business plan was deferred for the AVB Board to review future direction in light of competition in the market place.

In November 2017, the General Purpose Committee agreed to move forward with an offer for the acquisition of AVDCs interests in AVB. Additional funds were also approved to provide operational finance up to the conclusion of sale and to cover the residual liabilities of AVB in the event of a shortfall between sale price and net liabilities.

The sale of the assets of Aylesbury Vale Broadband to Gigaclear plc completed on 30 December 2017. Gigaclear is the leading provider of full fibre broadband in rural locations and the acquisition will enable Gigaclear to serve the seven villages connected through AVB, as well as expand the ultrafast fibre-to-the-premises network further across Aylesbury Vale.

The review itself is due to be undertaken by the Council’s externalised internal audit team (BDO) but there’s a question mark over the effectiveness of such an audit, not least since “information considered confidential and commercially sensitive to AVB (either by its Directors or its Board) is not disclosable.” The review will also not examine AVB’s day-to-day operations, decision making or internal processes.