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Devon UK Use BT Broadband Gainshare to Tackle Council Deficit

Monday, Jan 15th, 2024 (9:04 am) - Score 1,520
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The Devon County Council (DCC) in England has confirmed that it plans to use £7.8 million returned by BT, which relates to the clawback (gainshare) mechanism in past rural broadband upgrade contracts, to help plug the local authority’s financial deficit – instead of reinvesting it into further broadband upgrades.

Just to recap. The UK Government’s original Superfast Broadband (SFBB) programme, which was managed under the Building Digital UK (BDUK) framework, included a clawback (gainshare) clause in its state aid supported contracts with network operators like BT (Openreach). This essentially required the operator to return part of the public investment once take-up (customer installs) passed a certain point in their intervention areas (usually 20%).

NOTE: The original SFBB project attracted around £2bn of public investment from both the government and local bodies (councils etc.), which helped to extend fixed “superfast broadband” (30Mbps+) ISP networks – mostly via FTTC technology (plus some wireless and FTTP solutions) – to reach around 97-98% of UK premises.

The value of this grew as take-up grew, and the government generally pushed to see this funding being reinvested back into further broadband improvements, which did generally happen – often as part of various extension contracts. But outside of the contractual period (often c.7 years, though this may vary), each council would eventually reach a point where they gained greater freedom over how the clawback could be reinvested (i.e. it could be reinvested in non-broadband areas too).

According to the final evaluation report for the original SFBB programme, network providers were expected to return £147m to the public sector (in 2019 prices) because delivery costs were overstated. Network providers were also expected to return a further £714m (in 2019 prices) to the public sector due to higher-than-expected take-up (largely driven by the bigger Phase 1 contracts that all went to BT). But the exact total won’t be known until all of the related contracts, across several phases, have fully run their course (potentially c.£900m for clawback).

All of this brings us to the latest budget monitoring report from the Devon County Council (DCC). The report clearly notes that the local authority plans to use the money they get back from BT via clawback to help plug their budget deficit, rather than push it back toward future broadband upgrades, which in the current climate is perhaps much more understandable.

Extract from DCC’s Budget Report

Non-service items, which include capital financing costs, interest earned and business rates pooling gain income, are now forecast to underspend by £5.9 million, an improvement of £9.5 million from Month 6.

The most significant elements of this change are the Authority’s £7.8 million provisional estimate (with final sum expected to be confirmed in March 2024) of its share of income from the clawback from Connecting Devon and Somerset Broadband phase 1 contract (now expected to be released a year earlier than anticipated) and the release of £1.5 million from the transformation contingency.

A related report from the Midweek Herald includes feedback from a council spokesperson, which appears to suggest that the local authority doesn’t need to use the clawback to support further broadband-related investments because the UK Government’s new £5bn Project Gigabit programme essentially supersedes it.

As a result, councils who are facing huge financial pressures are looking to reinvest their remaining share of the gainshare money to protect vital public services and minimise the need for budget reductions,” added the spokesperson.

Project Gigabit aims to extend networks capable of delivering download speeds of at least 1000Mbps (1Gbps) and uploads of at least 200Mbps to 85% or more of UK premises by the end of 2025, before rising to “nationwide” coverage by around 2030 (here).

However, it’s important to note that not even Project Gigabit expects to achieve 100% coverage (government statements use c.99%), as some areas are simply too expensive to reach via full fibre (FTTP). Likewise, 99% is more of a target than a guarantee, so there’s always the potential to fall short.

Each local authority can of course choose for itself how to reinvest the clawback post-contract, and many are reinvesting it into broadband – often by harnessing temporary loans (until clawback is formally released to pay those off) or extending existing contracts with BT etc.

In other cases, some councils have linked clawback to funding boosts alongside the government’s gigabit voucher schemes or the launch of new community broadband initiatives. But clearly Devon is taking a different approach, which further down the road may leave them with less flexibility to tackle any remaining gaps in connectivity.

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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 X (Twitter), Mastodon, Facebook and .
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Comments
8 Responses
  1. Avatar photo Andrew G says:

    Given that national government have failed to address local authority funding problems, I can understand DCC’s decision. However, many authority budget problems are structural, that public services are costing more to deliver than the authority’s income. And that means any shortfall can’t be properly fixed by unplanned, one-off contributions, so it seems likely that DCC will be having problems next year.

    Using this money in this way is a bit like a bad pothole repair. The underlying damage still exists, but some filler will temporarily disguise it. The proper fix here is unfortunately higher taxes or reduced services.

    1. Avatar photo Matt says:

      or efficiency, or not wasting money on stupid stuff, like most councils.

      Open book finances where its easy to see what of the public purse has been wasted would make a big difference to the decisions made, I’m sure.

      (e.g. Essex county council paying someone £500k for some social media messaging/group running)

      They should be pushed to get value for money, including in their wages.

    2. Avatar photo Bob says:

      The big problem is the way the UK is run. Everything is either centrally funded or locally funded which is not a vary efficient way to run things

      Having England run on a more Federal basis would reduce costs be more efficient sand would aid levelling up

      The existing county councils etc could be absorbed into Regional Councils. Who care who runs IT,Legal HR , etc

  2. Avatar photo Anon says:

    “or efficiency, or not wasting money on stupid stuff, like most councils.”

    Get involved then. Either run as a councillor, or pressure local and national politicians to ensure local government is run free of this vast pool of inefficiency.

    “Open book finances where its easy to see what of the public purse has been wasted would make a big difference to the decisions made, I’m sure.”

    For at least a 30 day period each year, you have open book access to any local authority’s accounts. If you’re an elector for that council you also have the right to pose questions to the council’s auditors. In addition to the open book period, many local authorities do publish very detailed information – my country council publish a near 300 page statement on their accounts.

    “e.g. Essex county council paying someone £500k for some social media messaging/group running”

    Can’t speak for the detail, but most councils pay either their own staff or a company to run their social media and web activity. And that can reduce the cost of running an enquiry line or call centre, better serve residents with information on what the council do, lower the cost of providing council services, and improve the functioning of local democracy now that local newspapers are all but dead. But hey, you’re the expert, and that’s £500k of pure waste.

    1. Avatar photo Frank Butcher says:

      A most excellent reply, well done!

  3. Avatar photo Guy Cashmore says:

    Almost pointless giving Connecting Devon & Somerset more money anyway, they have failed to spend multiple millions, I’ve actually lost track of how many contracts and builds have failed. Much of the area is still waiting for ‘Phase 2’ construction to even begin, other areas completed it years ago.

    Meanwhile the CDS board continue to receive six figure salaries, zero accountability, you couldn’t make it up.

    1. Avatar photo MikeP says:

      Latest fiasco – most recent (Jan 2023) “progress” update from CDS commits to the rollout schedule on the Airband website being updated monthly.
      Discovered from their community liaison that design for our area, which will, according to the clearly-never-been-updated page, be RFS in Spring 2024, won’t start until later this year. We clearly won’t be delivered before contract end at the end of this year. Have no idea where that will leave us, Jurassic Fibre having walked away.

  4. Avatar photo Bob says:

    Can they do that. I assume the money came from central government for Broadband rollout so may be limited to being used for that

Comments are closed

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