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Broadband Communications

3. James Purnell (Stalybridge and Hyde): What progress is being made towards the Government's targets for broadband communications. [42847]

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): The UK Online annual report, published in December 2001, detailed progress towards our broadband targets. Broadband services in the UK had continued to develop over the year and 60 to 65 per cent. of the country is now covered by an affordable broadband technology.

Progress is being made by industry and Government. Last year, we announced a £30 million fund to encourage broadband roll-out. This week, I detailed how that money

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would be spent in each region and, earlier this month, I welcomed BT's announcement that it was looking to reduce wholesale prices for broadband technologies.

James Purnell: I thank the Minister for that answer, which will be particularly welcome to small businesses in my constituency that are trying to use the potential of new technology to widen their markets and customer base. Does he agree that the announcement by BT in particular shows the importance of competition in achieving the goals that the Government have set? Will he also reassure the House that he will help businesses in rural areas to connect to broadband in the same way that businesses in city areas already can?

Mr. Alexander: I would certainly agree with my hon. Friend's comment that we need an extensive and a competitive market in this country, and I know of his long-standing commitment to this area of Government policy. Indeed, the £2.7 million that was recently allocated to the north-west will address the specific concerns of the small businesses that he addressed in his question.

Michael Fabricant (Lichfield): The Minister boasts that there is 60 to 65 per cent. broadband penetration in this country, but there is broadband and broadband, isn't there? At the great risk of sounding like an anorak and boring the entire House, broadband is 1.5 megabits a second, and the hon. Gentleman is not talking about that sort of bandwidth. The penetration of real broadband is only 25 per cent. We lag at 22nd in the world for broadband penetration. Will the hon. Gentleman stop being complacent and say how we will become No. 1, not No. 22?

Mr. Alexander: I certainly would not wish to bore the House, but the current generation speeds of 384 kilobits, up to 10 megabits, comply with the UK Online target that was set. However, the substantive point that the hon. Gentleman makes in relation to the challenge of meeting our targets is important. I am sure that he will agree that prices are falling, ADSL has reduced to less than £30 a month and take-up is rising—it is up more than 500 per cent. on last year. So we face two challenges: first, how we achieve a more extensive roll-out of broadband services and, secondly, how we drive usage across those networks. We are making real and substantive progress on both those challenges.

Jim Knight (South Dorset): Will the Minister focus on the point made by my hon. Friend the Member for Stalybridge and Hyde (James Purnell) about what progress is being made in broadband roll-out in rural areas? In areas such as Dorset, which I represent, what progress has been made has largely been through the education sector. Bournemouth university is working with a business park and the learning and skills council is working with a group of small businesses. I am particularly interested in what work the Minister is doing with the Department for Education and Skills, so that the regional broadband consortiums and similar bodies link in with small business access to broadband.

Mr. Alexander: I certainly pay tribute to my hon. Friend's concern with this issue. I would make a central point: the public sector's aggregation work is absolutely

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key to the roll-out of broadband services in rural areas; it is the fundamental means by which we change the risk and reward balance through which investment decisions are taken in the private sector. I can also assure my hon. Friend that very considerable work is taking place not just in the Department of Trade and Industry, but right across the major spending Departments, anticipating the comprehensive spending review, to address exactly the issue that he raises.

Mr. Philip Hammond (Runnymede and Weybridge): I am sure that the Minister will agree that one of the great potential advantages of broadband is in reducing the significance of geographical location for business, thus supporting the regional rebalancing of the economy. But does he also recognise that the telcos, whose investment will determine the roll-out of broadband in the United Kingdom, are heavily capital constrained and debt burdened and that they will inevitably invest where returns are quickest—principally, in London and the south-east? Will he tell the House what specific proposals the Government have to stimulate investment in other parts of the country, so that broadband's true potential can be achieved?

Mr. Alexander: I am indeed surprised at a Conservative party spokesman advocating balanced regional economic growth throughout the United Kingdom, but, be that as it may, I will take the point that he makes in two parts. First, he is right to identify the need to ensure that the public sector leverages its investment in broadband effectively in a way that affects investment decisions by the private sector. Across Government, we spend approximately £1.7 billion a year on information and communications technology. One of the fundamental challenges that we have set ourselves is to discover how we can leverage that investment more effectively to address exactly the point that the hon. Gentleman raises.

Not only have we detailed this week the money allocated to each of the regions and devolved Administrations of the United Kingdom to try to ensure that regionally balanced economic growth takes place, but we have ensured that the plan that we have devised allows central Government to capture the insights garnered by the pilot projects that that money will facilitate. That is smart policy making to ensure that, in a competitive framework, we achieve the regional economic balance that the Government are certainly sincere in wanting.

Mr. Richard Allan (Sheffield, Hallam): Does the Minister accept that although the recently announced price cuts by BT are welcome, they do nothing to help the third of the population who are not connected to ADSL-enabled exchanges, and that that is not confined to rural areas, but includes suburban areas, such as large parts of Sheffield, where people still cannot connect? Does he have anything positive to offer many of my constituents—including me, because my office is connected to a non-enabled exchange—in terms of a timetable to ensure that all the exchanges will be enabled so that businesses do not suffer this lack of competitiveness?

Mr. Alexander: Obviously, BT faces a number of commercial decisions in taking forward what is a wholly new strategy for the company of focusing on broadband.

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The present figures are approximately 50 per cent. cable coverage across the United Kingdom and 60 per cent. enabled exchanges. It is an important challenge for BT, if it is sincere in wanting to drive forward further broadband connections, to move higher the number of about 1,010 exchanges which are at present enabled. I have form in this regard, because five months ago I challenged the company to lower its prices. I would be happy to reinforce that today by challenging it to enable more exchanges.

Sub-post Offices

4. Mr. James Clappison (Hertsmere): What assessment she has made of the prospects for sub-post offices. [42848]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The Government are committed to maintaining a nationwide network of post offices. We have allocated £270 million over three years for modernisation of the network. In January, we announced our support for a compensation package for the urban network restructuring programme to be undertaken by Post Office Ltd. Detailed discussion of this and an investment support package is continuing and a state aids notification will be submitted shortly.

Mr. Clappison: While the Secretary of State may say that she is committed, is it not the case that last year a record 547 sub-post offices closed and that sub-post offices faced a further loss of business through the introduction of automated credit transfer? Can she give an assurance for her Department that the universal bank is on course to be delivered at the same time as the introduction of automated credit transfer—in April 2003? Apparently, it has already been delivered to the wrong address once and had to be redirected. Can she assure us that it will not be lost in the post altogether?

Ms Hewitt: I will not take lectures on post office closures from a member of the Conservative party, given that there were 3,500 post office closures under the Conservatives. In the last nine months we have seen a welcome reduction in the rate of post office closures. As the hon. Gentleman should be aware, we placed a requirement on the company to avoid preventable closures. Discussions are progressing on the universal bank and the project is on track.

Dr. Ashok Kumar (Middlesbrough, South and Cleveland, East): What steps are being taken to strengthen the management of the network?

Ms Hewitt: As my hon. Friend the Minister for Employment and the Regions said last month, a new chief executive has been appointed for the post office network. David Mills, the new chief executive, has an excellent track record in retailing and will be able to bring that experience to exploit the extraordinary potential of what is our largest retail network. He will take up his job next month and immediately start going round the country to talk to sub-postmasters and their customers. I look forward to the proposals that he will no doubt wish to put to the board and Ministers for further strengthening the post office network.

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Brian Cotter (Weston-super-Mare): On 1 March in response to a question I asked, the Secretary of State indicated that 73 post offices are currently under consultation with regard to closure. In the majority of cases nobody is applying to take them over. Does the right hon. Lady agree that that is not in the least surprising, given the uncertainty over the profitability of sub-post offices and the uncertainty that continues, following the answer just given, on the universal bank? Can we have more certainty, particularly about the universal bank, because there is no real commitment that it will be a profitable concern sufficient to make up for the lack of profitability as regards other Government measures?

Ms Hewitt: It is perfectly true that there are some sub-post offices in urban and rural parts where it is not possible to get somebody to come forward and take over. That in part reflects the fact that we have within urban areas alone about two-thirds of the population living within half a mile of two and sometimes up to five sub-post offices. Some of those sub-post offices are struggling to survive commercially. That is why we have agreed with the company and the National Federation of Sub-postmasters a programme both for compensation and investment to ensure that sub-post offices will indeed have a good commercial future. As I said, we have already committed £270 million over three years to implement the recommendations of the comprehensive performance and innovation unit report to ensure that customers and sub-postmasters alike have confidence in the future of the post office network, which is vital to the social fabric of our country.

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