Rural broadband: Where has all the money gone?

By Jane Wakefield
Technology reporter

Image source, Getty Images
Image caption,
Places like Cumbria still have homes with very slow broadband speeds

Internet and network providers have asked the government to clarify why its promised £5bn investment in rural broadband has been reduced to £1.2bn.

Industry bodies said they wanted clarity on how and when the remaining £3.8bn would be allocated.

The change was announced in Chancellor Rishi Sunak's spending review.

The government has also watered down its election pledge to reach every home in the country to the lower target of 85%.

Providing all homes and businesses in the UK with gigabit broadband speeds by 2025 was one of Boris Johnson's most ambitious election pledges.

It came with the promise of £5bn to get the job done - but in the spending review it was announced that only £1.2bn of that would be made available over the next four years.

'Surprise to all'

The Independent Network Co-operative Association (Inca), which represents small alternative broadband providers, said it would be pressing the government to make the full funds available earlier.

"The whole point of the funding programme is to ensure that hard-to-reach areas don't get left behind in this massive upgrade to the UK's digital infrastructure," said chief executive Malcolm Corbett.

"For more than a year, the sector has been told that £5bn would be allocated to ensure no homes and businesses were left behind in the gigabit digital revolution. However, the chancellor's spending review allocating just £1.2bn in the period 2021-25 came as a surprise to all in the industry."

And he added that investments from BT as well as from the smaller network providers Inca represents were made on the understanding that "government will play its part too".

The Internet Service Providers' Association (Ispa) also said it wanted "clarity" on how and when the money would be spent.

The Department for Digital, Culture, Media and Sport told the BBC: "We remain committed to ensuring the UK's hardest-to-reach areas benefit from our record £5 billion gigabit broadband investment.

"We will continue working with the industry to maximise rollout in rural areas to get as close as possible to nationwide coverage by 2025."

It is expected that commercial rollouts of ultra-fast broadband will reach up to 80% of homes and businesses anyway - but for the remainder, where the commercial cost of connecting premises is considered to be too high, subsidies from the government will be crucial.

According to Ofcom, there are almost 600,000 homes and businesses that do not have access to a broadband connection higher than 10Mbps.

When Boris Johnson stood for the Conservative leadership in June 2019 he described the policy of Theresa May's government - which would have seen every home get full fibre broadband by 2033 - as "laughably unambitious".

But his own plan to give everyone a gigabit connection by 2025 was seen as laughably ambitious by some in the broadband industry. It did, however, focus minds, and we have seen the rollout of full fibre accelerate over the last year.

But now the government is, very quietly, admitting that the sceptics were right - that target just cannot be achieved. This is not a U-turn, a source insisted - "we were always explicit that it was challenging" and both the pandemic and the decision to exclude China's Huawei from sensitive networks had made things even harder.

And the reason why only £1.2bn out of the £5bn set aside to reach the "uncommercial" 20% of homes will be spent by 2025?

That's because government conversations with broadband suppliers made it clear that they just could not spend that money in such a short timeframe.

When I put that to someone at a major broadband firm, I could almost hear his eyebrows being raised over the phone.

The industry has been pressing ministers for more clarity on how and where taxpayers' money will be spent. Now, with much less cash available and the 2025 target dropped, the danger is that companies will concentrate on building their networks in areas where they can make a commercial return - and put their plans for rural Britain on the back-burner.