Tuesday, 29 May 2012

Super fast rural broadband to provide just 25 new jobs

UPDATE: Top 20 wealthiest wards In Lancashire (all rural) / Top 20 most deprived (all urban) with tables showing those rural wards increased their income during the recession whilst the the poorest saw their income fall.


Lancashire County Council and Lancashire LEP are currently spending some £32m on super fast rural broadband for the County.

The investment is part of the UK's £530m push for better broadband in marginal areas, with the funding coming from Broadband Delivery UK (£10.8m), the European Regional Development Fund (£16.5m) and £4.7m coming from from Lancashire County Council.

Lancashire County Council will bring super fast broadband to 97% of the county by 2014 at speeds in excess of 30 Mbps. Superfast broadband is already available to approximately two-thirds of Lancashire - predominantly in the less affluent urban areas.

I raised the matter again in the House of Commons last week. Serious questions have to be asked about this expenditure. What is the basis for this £32m subsidy?

Is is best value for money? Are their other projects this could be spent that will give a greater return? Should the tax payer be subsidising what is essentially a private business? Should the government be cutting funding and police numbers in Lancashire whilst using taxpayer money to fund SFRB? Are their other means of raising capital?

Questions that remain largely unanswered.

Why a huge public subsidy is the first question? One option is for BT to do the work nationally rather than the taxpayer. The cost of passing on those charges through a nationally agreed infrastructure agreement clearly is an unpalatable option for government. Another option is private finance such as the new Tax Increment Financing as contained in the Localism Bill. Surely this is an ideal project for such financing, each recipient levied a charge for receipt of an improved service.

The government accepts SFRB is a private contract between consumer and provider. It's whole rationale for a public subsidy is the wider economic benefits. This is a reasonable an argument that can be made in many parts of the country but each geographic region is different.

Ironically for rural Tories that lament for Margaret Thatcher, it was the denationalisation of British Telecom, turning it from public servant to a profit only business that has left Britain lagging behind and the taxpayer footing the bill for SFRB.

In Lancashire there seems little evidence, empirical or otherwise to support this economic argument. The fact is the scheme is costing a staggering £32m and problematically, will 'piggy back' the expensive to maintain electricity network.

Is there an economic case? It is difficult to see how it will create jobs. I look around the Ribble Valley and parts of Wyre and see a large population of retiree's and wealthy escapee's. People whom it has to be said have made a choice to live away from urban areas, away from advantages of an urban area. There is no escaping the fact that these areas have vast numbers of wealthy people who will benefit enormously and who could afford to pay for SFRB themselves.

The County Council's own bid  proposal stated 'that the scheme will create 25 new jobs and train 20 new apprenticeships. As part of the roll-out, a £3m fund will be established to help small and medium sized businesses in rural areas get the best out of superfast broadband.' Even accepting the County Council's own projections, it is difficult to see an economic case?

The optimism of just 25 new jobs is staggering set aside the investment. Edwin Booth, chair of the Lancashire LEP seems to state this is the second industrial revolution for rural Lancashire;

Edwin Booth, Chairman of the Lancashire Enterprise Partnership, said: ""Super fast broadband has a critical role to play in increasing productivity and innovation across all areas of the economy in Lancashire. We want a thriving economy here in Lancashire and this will help us to achieve it.

"In terms of providing the necessary infrastructure for business in the 21st century, creating this network could be as important as the construction of the canals and railways was to the Industrial Revolution.
Not only do the demographics suggest that upgrading from broadband to super fast broadband will not bring jobs, the geography does to. It's fine for new businesses that are media intensive, have no product to shift and don't meet clients but the question is how many will fit that category? Most entrepreneurs in the Ribble Valley or similar areas in Lancashire already have businesses in East Lancashire for a good reason. Infrastructure, jobs and skills.

Where is the County Council's evidence or the strategic plan to 'unlock' hi-tech business growth outside of well served urban areas? Where is the impact assessment this will have on those existing well served super fast broadband areas? Will this not just encourage IT migration and cause greater problems?

The reality is factories are not going to locate down miles of country lanes where they can't get planning permission and access is prohibitive. 

If it were to be successful it may well have the negative consequences of moving industry away from Lancashire's urban areas which already benefit significantly from hi speed broadband and where there are serious economic and social problems linked to low skills and employment. Conversely may see more pressure in development rural areas. The idea this is simply going to spawn bedroom entrepreneurs seems to justify an argument why this £32m investment shouldn't happen.

It may also see a geographical shift from East to West Lancashire. The east already has good access with the Globe Centre in Accrington being a hub and again, a successful SFRB may encourage investors not to locate in the East of Lancashire. I do not believe it will that impact. I do not believe it will have much impact at all and that is the nub of the issue.

In a tilt to the real reason, the County Council have also stated that they will set up a £500,000 community fund aimed at working with communities to get super fast broadband to those few remote properties not reached under the main scheme. Is reaching out to communities an admission that this is not all about economics in Lancashire?
Geoff Driver, leader of Lancashire County Council, stated: "it will revolutionise the way that people in the county, especially in rural or deprived areas, connect to the wider world."
This case would have merit if deprived or poor lived in Lancashire's rural area but they do not. To balance the merits of the case of the backs of the poor is revealing in itself.

Lancashire does have a rural poor and poor farm workers for whom I am concerned about too. Such benevolence is synthetic with the Tories having scrapped the Agricultural Wages Board and a minimum wage for agricultural workers. Farming has existed without the internet for eternity and mobile devices and 4g will be of greater significance than landline SFRB.  The reality is much of Lancashire's rural hinterland is a playground for the wealthy and that's the problem.

So is this all about faster internet shopping for 200,000 who Lancashire County Council and Lancashire's LEP claim? Who are these 200,000 and where do they reside? It's a simple question that clearly required a an obfuscation from the County Council;
At this stage we are working on high level assumptions across Lancashire which demonstrate that there are significant areas were broadband does not exist , which when translated into a number of premises represents in excess of 200,000.

Over the next few months we will be working up a more detailed analysis of the precise areas. However under our proposals we intend to use part of the ERDF funding for demand stimulation and this can be targeted to any part of Lancashire where good broadband coverage exists. This will help businesses who can access broadband to make the best use of it. In Hyndburn, there are approximately 3,262 premises that cannot and/or will not be able to access broadband without intervention

I will be in touch following the next round of analysis. If you would like any further information about our proposal please do get in touch. We expect a decision before the summer recess, so any interventions you feel are appropriate would really make a difference.
My question to Lancashire County Council was a request to provide a breakdown by the numbers of beneficiaries per each of the 14 boroughs. I would cynically ask how the County Council can contradictorily say they are 'working on high level assumptions' and know that precisely know that 'In Hyndburn, there are approximately 3,262 premises that cannot and/or will not be able to access broadband without intervention'. It does not help there cause when LCC refuse to give out the numbers of beneficiaries for each borough.

This is more than economics, it's about geography and political demographics.
LCC's figure for Hyndburn's broadband exclusion of 3,262 would equate uniformly to some 46,000 homes/premises in the 14 Boroughs across Lancashire, not 200,000 that the County Council have quoted. The remaining 150,000 it is assumed are additional residents in rural areas.

The figure's may be disputable but they also reflect my assumption that this is a 'rural Tory broadband issue' and it won't be cheap to maintain either.
Then there is the reality of delivering this. LCC believe they are going to piggy back Electricity North West's over head infrastructure, an infrastructure that is leasehold and has ground rents, that requires the highest standards (and costs) of health & safety dealing with high voltage electrical cables - with commensurate delays and an electrical maintenance contract and approval. All the transmission network is contractually leased from landowners. Agreements that restrict their use and which will need to be renogotiated and rewritten. How many electricity poles are their in Lancashire?

I have met ENW regarding the issue and understand the increased costs (and limitations) involved in future maintenance of using ENW's electricity network to deliver SFRB to rural homes.

What are the alternatives? The Police. The government has removed Police funding leading to 600 police officers and 250 back room staff losing their jobs and putting at risk the safety of it's citizens. Should those savings but used for this project? The County Council are also spending a further £4.7m after deep cuts in services.

As for capital investment £20m would upgrade the East Lancashire railway. Surely better value for money ? I think if you posed the question to Hyndburn residents the vast majority would agree. I accept Hyndburn is not a rural community with 4,000 of 80,000 of benefiting from rural broadband improvement.

Lancashire County Council's case may be more plausible if it had made a more thorough economic case and if it had been more transparent about the supposed benefits.

The reality is this £32m that could have been spent in industrial areas where the benefits would have been far greater, with the that would be far lower. The main beneficiary of this £32m expense will be consumers who will be provided with faster internet shopping improving the attractiveness of Lancashire's idyllic rural areas.

I am not against rural broadband per se or denying others but is this our / LCC / LEP priority for Government funding in austere times? £30m investment would surely be more beneficial in real infrastructure and ensuring businesses in urban are connected at 100mbps as in rival economies.

County Council press release at the time.
Here are some suggested talking points in addition to the material I sent out last week.

• As one of the largest local authority areas in England, Lancashire has applied for less Broadband Delivery UK (BDUK) funding than any other council(s) of a similar scale.

• We have secured access to £16.5 million from the European Regional Development Fund (ERDF) but the requested £13 million in BDUK funding is required to unlock the ERDF funds.

• We also have the opportunity to bring in up to £30 million of private sector investment into Lancashire; again, underpinned by the BDUK funding.

• In summary , £13 million BDUK investment unlocks approximately £46 million in other public and private funding.

• Lancashire's procurement process is ahead of other UK regions and will see the first new connections go live in the new year, 2012.