UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 714-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Environment, Food and Rural Affairs Committee

Rural Communities

Wednesday 28 November 2012

George Dunn, Harry Cotterell and david collier

John Moore and Malcolm Corbett

MR Ed Vaizey MP and Dr Rob Sullivan

Evidence heard in Public Questions 88-201

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

on Wednesday 28 November 2012

Members present:

Miss Anne McIntosh (Chair)

Barry Gardiner

Mrs Mary Glindon

Sheryll Murray

Neil Parish

Ms Margaret Ritchie

Dan Rogerson

________________

Examination of Witnesses

Witnesses: George Dunn, Chief Executive, Tenant Farmers Association (TFA), Harry Cotterell, President, Country Land and Business Association (CLA), and David Collier, Chief Rural Affairs Adviser, National Farmers Union (NFU), gave evidence.

Q88 Chair: Good afternoon and welcome, gentlemen. Thank you very much indeed for agreeing to be with us this afternoon as part of our inquiry into rural communities. Just for the record, if I could ask each of you in turn to introduce yourselves, giving your name and position.

George Dunn: My name is George Dunn. I am the Chief Executive of the Tenant Farmers Association.

Harry Cotterell: Harry Cotterell, President of the CLA.

David Collier: David Collier. I am the Chief Rural Affairs Adviser for the National Farmers Union.

Q89 Chair: Can I just ask each of you-and if you agree and have nothing to add then you do not need to comment if you do not wish-have you noticed any changes, for better or for worse, since the Rural Communities Policy Unit was created in the Department?

George Dunn: I think it is probably too early to say, Madam Chairman, in terms of the impact. There is certainly a lot of rhetoric and a lot of talk around. We thought that the CRC was doing a very good job. We were sad to see it go. There have been a lot of things said and a lot of things published, but we have yet to see necessarily a vast amount of improvement.

Harry Cotterell: Yes, I agree with George.

David Collier: We have seen both positives and negatives. If I might begin with a negative, when the CRC did consultation responses to Government Departments they were published for all to see. With the situation we have now the wiring is hidden, as it were. So we do not necessarily know whether the unit is giving an accurate rural perspective and, as far as I know, their views are not then shared with stakeholders. But in other ways they have engaged with rural communities and with farmers; that is both in terms of publications and also attendance at events and, of course, their support for the Rural and Farming Network. So there are positives as well as that negative.

Q90 Chair: Given the fact that you each represent organisations with rural businesses, do you believe that the Rural Statement is fit for purpose? Is it comprehensive? Does it cover all the issues that your members would wish it to?

Harry Cotterell: We welcome the Rural Statement. What we really liked about it was its emphasis on growth. We did feel that, in the run up to the Rural Statement, there had not been enough emphasis on growth, despite it being a Government priority, perhaps, within Defra. So, broadly speaking, we thought that it was a good thing. It was precisely that: a statement of where we are in any moment in time. It did not have anything new in it at its launch and, broadly speaking, we thought that the emphasis on growth, the rural proofing element and all the initiatives relating to broadband and diversification and growth in rural areas was all very good stuff.

I think probably our one concern about it was that it treats housing as purely a social issue. We understand affordable housing in rural areas is very much a social issue, but it is also one of the key areas in times of economic difficulty where you really can kick-start the economy. So we think that there should be an economic emphasis on provision of rural housing as well as a social imperative.

George Dunn: I would agree with Harry. I would add that we had a bit of a concern that the statement was trying to be all things to all men and did not really differentiate between the different aspects of rurality-upland, lowland, very remote, close to population centres, landlordtenant, etc. It tended to lump everything in together, which obviously means that the policy mechanisms are not exactly very astute in ensuring that the right objectives are met.

David Collier: I think our feeling is that, yes, it was a comprehensive statement and clearly it was quite a task to work together with several Government Departments in order to bring all those different strands together. It was a little bit disappointing that there was not more in there that was new. I think that our feeling was that there were some good commitments to action, but we do need to see action following through from the promises.

Q91 Chair: What do you think are the key barriers to growth for rural businesses and do you believe that the Rural Statement gives real teeth and power to address them?

David Collier: If I might go first on that one. I think that we would make the distinction between the barriers facing farm businesses and the barriers facing other businesses, including nonagricultural enterprises on farms. In agriculture and horticulture, the barriers include the unbalanced supply chains, regulatory burdens-including but not just planning-availability of skills and the training to get skills up to the mark, access to broadband and access to the limited grant funding. But if we were looking at farm diversification, I would say that we find that access to finance is more of a problem; that banks tend to be more cautious when a farmer is doing something nonagricultural where they do not have prior experience. Looking at the barriers as a whole, it is surprising how little has changed since 2007 when there was a Defra report on the barriers to farm diversification. It identified validity of market research, capacity to develop a considered business case, business skills and training, the availability of suitably skilled workers, regulatory controls, access to broadband, lack of specialist business advice and access to grants. So it is remarkable how familiar those things still are to us.

Harry Cotterell: I think David has covered the majority of the agricultural issues. The only one I would add is the weather. Do not underestimate the impact that the weather has had on the rural economy through the summer, on the harvest and on all aspects of agriculture and rural tourism, right across the board. But as far as growth for the majority of our members’ business is concerned, the planning changes that have come through the National Planning Policy Framework have been very welcome, there is no doubt about that. They will make it much easier for our members to diversify, expand and grow their business, but they are not the panacea, because at the end of the day you are not going to take the decision to grow based on the structure to which you have to operate. You are going to take the decision to expand your businesses based on the economic outlook that you are confronted with, and I think at the moment the difficulty is that there is not enough confidence in the economy going forward for people to take significant investment decisions.

I agree with David’s point about access to finance. It is much more difficult for diversified businesses, particularly if you separate them to minimise risk or incorporate them and take them away from the landed asset. If you are borrowing money to buy land and you are prepared to use that land as collateral, it is relatively simple to raise capital. Not so if you are doing, say, a renewable energy project with a diversified business.

The only other point I would like to make is that business rates on empty properties, which we come back to time and time again, are having a really disproportionate impact on speculative development in the countryside. I am afraid that no one in their right mind is going to convert a redundant farm building into a business premises unless they have a tenant completely signed up, because they know that if that does not work out they are going to end up paying business rates after six months on that, which is a really significant deterrent to diversification projects.

George Dunn: I would just add one issue to the list of agricultural matters that David and Harry have talked about. As you know, Madam Chair, we take a pretty parochial view of life representing the Tenant Farmers Association. The availability of sustainable opportunities for entry into and expansion and progression within the industry through agricultural tenancies is a real problem for us. It is the lack of willingness of the Treasury to look at some of the fiscal incentives and changes that have been proposed as long ago as 10 years in the Tenancy Reform Industry Group’s initial report and that have been further developed down the years. The Treasury appears to be disinterested in looking at fiscal means to encourage better practice for businesses to get access to tenanted land.

Q92 Chair: If we could move on to rural broadband, do you believe that rural businesses have access to broadband at the same speed and the same accessibility generally as businesses in urban areas?

Harry Cotterell: No. Sorry; you tee them up and I will hit them. No, absolutely not. We welcomed the Government’s commitment to provide a 2Mbps service by 2015. We are very concerned that that target is not going to be met.

Q93 Chair: But will it be at the same speed even if they meet that target?

Harry Cotterell: No.

Q94 Chair: And are you making that point?

Harry Cotterell: We are making the point that we think that by the time 2015 comes along 2Mbps will be ridiculously slow, particularly in the age and with the increase of digital by default, both in Government and in the world at large. We are really concerned about that. It is potentially a big problem. The only way that the Government can go, we feel, now is to introduce a universal service obligation. I think that is absolutely key.

Q95 Chair: Just before I hear from George Dunn, could you just be clear: what is the difference, in your mind, between universal obligation and access to each household?

Harry Cotterell: That is basically access to each household.

Q96 Chair: You do not think there is any nuance between them?

Harry Cotterell: No, but I think the universal service obligation puts the obligation on the provider-BT in the majority of cases, in the rural areas particularly-to provide. They have an obligation to provide. We would not be the first to do it either. I think it is already in Denmark.

Q97 Chair: I think Lithuania has the fastest speeds, which is very rural and quite hilly, but Denmark, obviously-I happen to be halfDanish-has a fantastic system, as does Sweden, and Finland as well.

Harry Cotterell: I know; the Danish are brilliant at everything. But I think they have a service obligation, which is that the provider is required to deliver.

George Dunn: The CLA has been a tremendously important lobby group on this particular aspect and has been quite terrierlike in the way that it has approach this business, and I agree entirely with what Harry says. The one thing I would add is that with this move to digital by default, particularly for things like VAT and perhaps for the Single Farm Payment in the future, the trite answer from Government that you can use an agent if you do not have adequate internet access is, frankly, appalling in today’s terms. It does add costs to businesses if you have to go down to use an agent to fill out whatever form you have, so we really must get this obligation in place by 2015.

David Collier: I would like to come in on broadband speeds, if I may. Our conclusions are that businesses really need to be moving towards 10Mbps, rather than 2Mbps; that mostly they do not need superfast broadband; and what we are now finding, of course, is that the European Commission, because of the European target of at least 30Mbps, is reluctant to fund or partfund any schemes that will provide anything less than 30Mbps. So anything that is, say, reliant on satellite and is only going to provide something like 10Mbps or 15Mbps cannot benefit from any public funding. So it seems that in a lot of instances we are going to be faced with a choice of feast or famine: either 24 to 30Mbps or practically none at all, when if we can get to something like 10Mbps everywhere then we really would be making progress.

Q98 Dan Rogerson: I just want to follow up on the point that you made, Mr Dunn, about completing applications and so on. A related issue: has this been an issue in terms of VAT returns?

George Dunn: It has been, yes.

Dan Rogerson: Have your members contacted you?

George Dunn: Yes. Quite a number of members have expressed severe angst at having to traipse off to their accountant to provide the necessary forms to the Inland Revenue.

Q99 Dan Rogerson: Especially for smaller people who are hardly trading anymore and older farmers.

George Dunn: Yes. I would particularly agree for those who are in the remotest areas who do not have access to the internet to any sensible extent. They are the ones who are saying, "We would love to be able to do this online, but we cannot".

Q100 Dan Rogerson: Did you take that up with HMRC when they made that change in policy, and what was their response?

George Dunn: Yes, we did. There was a pretty lacklustre response, which is the one that we have heard-that agents are the way to go. Indeed, the RPA is now looking to develop the use of agents in relation to its service provision on the back of what HMRC has done.

Q101 Sheryll Murray: On this point, do you have any idea of the numbers per area? I know in south-east Cornwall a lot of mine use the NFU offices themselves. If you could come up with specific numbers, I think it might be quite helpful.

George Dunn: I do not have any numbers for you today, but I can write to you.

Sheryll Murray: If you could write to us with those, it would be very helpful.

Harry Cotterell: On Mr Rogerson’s point, I entirely agree with what George said about HMRC, but I think the real frustration from our members in terms of lack of broadband is that when you have a customerfacing business; that side of things does matter, rather more than the tax thing, which you can probably get round.

Dan Rogerson: Just to explain, one of the reasons I raised this is that I have had some farmers, particularly older farmers or exfarmers, who just really do not want to get a PC. It is not even the broadband; the main issue is they do not particularly want to do things online.

Q102 Chair: Can I just ask, specifically to the CLA, how many notspots will there be by 2015?

Harry Cotterell: I will write to you on that one, Madam Chairman.

Chair: That would be helpful.

Q103 Ms Ritchie: This question is to all of you and again it is about the Rural Community Broadband Fund. Will the Government’s broadband strategy, as it currently stands, satisfy the demands of your members?

Harry Cotterell: I think the short answer is no. Our concern has been that the Government’s priority is speed, whereas ours is access to greater areas. The policy driver throughout is higher speeds, the ability to do more and more, driven by the commercial aspect of the internet in cities.

Ms Ritchie: Rather than accessibility.

Harry Cotterell: Exactly. We think that their intentions are absolutely right. We cannot argue with the commitment, but we are concerned about delivery because we do not have a universal service obligation and there is therefore no commercial imperative for the providers to deliver on the ground. Until there is an obligation we are pretty sure that, whatever BT say, they probably will not end up delivering. We are also concerned that the funding that is being utilised and has gone out so far on the Rural Community Broadband Fund is not going to deliver on the 10% that BDUK funding is going to fail to deliver on. We think that it is probably going to do, at best, 4%, so only 40% of the area that it is targeted to do and maybe as little as 2% of the total area, i.e. 20% of the targeted area.

David Collier: I would add to the point, if I may, that the sparser you get the more expensive it is going to be. I think BT is spending something like £2.5 billion on the first two thirds of the population, and it is going to cost a lot more than £20 million to reach the last 10% of the population. I do not know whether we would be able to confirm the CLA figures. It sounds to me optimistic that the £20 million might get to 4% of that last group-I think that is what you said. I think our view is that of the £300 million that was announced by the then Culture, Media and Sport Secretary in August, a large chunk really needs to be directed towards the last 10% of the population if we are going to provide that last 10% with a decent broadband service.

George Dunn: All I would add to what has already been said is that this underlines the point about ensuring that we have a range of technologies available to us and that it is slightly concerning, from what we heard from the NFU, that there may be some public funding difficulties with some of those technologies, because accessibility is going to be key.

Q104 Ms Ritchie: Do you believe the Government should be doing more to support technologies other than the roll-out of fibre?

George Dunn: I would say yes, as I have just answered. I preempted your question; I do apologise. Yes, a range of technologies need to be looked at here; we should not be ruling anything out.

Q105 Ms Ritchie: Do you welcome the Government’s plans to relax restrictions for the deployment of broadband infrastructure?

Harry Cotterell: Yes.

David Collier: Yes.

Harry Cotterell: In the Growth and Infrastructure Bill, yes.

Q106 Ms Ritchie: This is another question about the issue of penetration or accessibility into hard-to-reach rural communities. How have your members with slow or no broadband access coped with the increasingly digital-by-default approach of the Government? I think you have already maybe stressed some of those points, but if you could just answer that point.

David Collier: Can I come in on that? We were talking about HMRC and I think particularly VAT returns, but if anything things are going to get worse over the next year or two, because the PAYE annual returns are having to be done online. We will move fairly quickly to a situation whereby if someone is paid weekly then the PAYE records will need to be filed weekly. We have the situation that I think has been briefly alluded to, that when we have the next programme for the CAP, from 2014 onwards, the intention is to have the single payment paid online. We have of course the universal credit, which is going to be online, and there are always pressures to move other things-cattle movements and so on-online. I think our view would be that, yes, it should be the primary route in a lot of instances, but for the time being, until the provision of broadband has caught up, there must be an alternative-one that preferably does not involve driving 20 or 30 miles to a market town in order to get that particular piece of business done.

George Dunn: There has been a range of solutions that people have been using, including some of the notforprofit sectors, like the Upper Teesdale Agricultural Support Services up in the north-east, which will provide a service for people to be able to do things online. But really we should be using those for the sorts of people Mr Rogerson was talking about: those people who do not feel that they can access it because of their age or whatever. We should not be using those systems for people who want to do it and should have the access there to be able to provide that. So, yes, a range of solutions have been found, but we really need to be able to have this rolled out for farmers to be able to do it themselves where they want.

Q107 Ms Ritchie: So your assessment of the Rural Community Broadband Fund would centre on the issue of accessibility and something needing to be done in that area.

George Dunn: Yes.

Harry Cotterell: Yes.

Q108 Sheryll Murray: Can I turn to the Mobile Infrastructure Project? The Government has reduced the scope of this project from improving access to six million people to helping about 60,000 households. As it now stands, will this project address sufficiently the problems of lack of mobile connectivity in rural areas?

George Dunn: It is certainly a much more difficult issue to get a handle on. We feel that the Government has been promoting more the broadband side. We are not too sure how joined up the thinking is on the mobile side, but we cannot see, from what is in the package at the moment, that there will be sufficient scope to increase the amount of coverage that will be required. We are nowhere near a commitment or an obligation in relation to the mobile coverage.

Q109 Sheryll Murray: I know it could have possible implications for your members, for instance, from a safety aspect, because if an accident happens out in the fields and there is no mobile coverage it leaves them quite isolated, does it not?

George Dunn: Absolutely, and in terms of the business that we do as an organisation, the amount of calls that we take during the day on a mobile phone has greatly increased, and if you do not have that coverage then you are exposed in a number of different directions.

Harry Cotterell: I think the difficulty is that the measurement is in numbers of households and quite often you do not need a mobile in your household because you, hopefully, have a landline and maybe even broadband. It must be area covered, because in our businesses people are remote. They may be near home, but they may be two, three or four miles away. They may be a market that can be remote and it is terribly difficult, if you are not utilising area as a measurement, to get a true reflection of what is being delivered. We do welcome, though, the £150 million that has come. We think that can only benefit coverage and we would definitely be pushing your point about the health and safety aspect of mobile phones and lone working, which is so often the case now in the countryside. People are out there working by themselves and their lifeline effectively is a mobile phone.

Q110 Sheryll Murray: I do not know whether you have any reports, but I know, in particular, fishermen have reported since they moved from analogue to digital phones the coverage at sea was greatly diminished. I do not know whether you have any information about whether any of your people that you represent have noticed the same.

Harry Cotterell: I have no idea, I am afraid.

George Dunn: Nothing has come up.

Q111 Neil Parish: Good afternoon, gentlemen. I want to turn to planning now. To all of you, are the Government reforms to the planning system enough to allow farmers to diversify, particularly those based in national parks, and what more could the Government do?

George Dunn: Shall I kick off again from my very parochial standpoint? Obviously, tenant farmers are business men and do not want the planning system to get in the way of expanding their businesses. But it can be somewhat of a doubleedged sword, because the more flexible and freer you make the planning system, the easier it is for the landlord to be able to look at change of use, for example, on a particular piece of land and serve notice to quit on the tenant to give up that land. Now, we have received assurances from the Government in relation to the NPPF that the ability of the tenant to claim the impact on his personal circumstances as a planning consideration in the process would remain. We obviously have the consultation, which we are still waiting for the results on, on the change of the Use Classes Order and if it is easier for a landlord to take buildings or land and change the use class then we could see some of our members being more vulnerable. So we are absolutely looking flexibility in the planning system, but also for sufficient protection for tenant farmers who are perhaps more vulnerable when the planning system becomes easier for landlords to use. We do not see what there is to gain for rural growth by allowing somebody to trounce somebody else’s business in order to do another business. So as long as there are the appropriate safeguards in place, the planning reforms are reasonable.

Q112 Neil Parish: That is an interesting point. I think I had better turn to Mr Cotterell now, had I not?

Harry Cotterell: We welcome the NPPF. I refer to my earlier comments that the economic climate is probably going to drive growth more effectively than the framework, but we are convinced that the various changes to the framework will encourage people to diversify and grow their businesses. That is all good news. The presumption in favour of sustainable development is excellent news. It is effectively, though, a planled planning system. The local plan is going to be so important, and the neighbourhood plan as well if you have one or if your neighbourhood has the intention of putting a plan in. So it is incredibly important that those plans are, first, absolutely correct in terms of growth and that they are going to encourage sustainable development and, secondly, that they come up with the various housing requirements; i.e. that they are a plan for growth rather than a plan to prevent any form of development. So we are concerned about the roll-out, and we are already seeing that certain local authorities are cherrypicking parts of the NPPF that they like and ignoring the other parts, but we have already heard that the Planning Inspectorate are coming down fairly firmly in their decisions on that kind of operation.

I think in terms of the Growth and Infrastructure Bill there are a few planning measures that we are very interested in. They are not that focused on the rural areas. We are pleased that the Government are bringing forward a proposal to reduce the amount of preapplication paperwork that is required before an application is validated. One of the problems we have in the rural areas-I am sorry I am going on at length on this, but it is such a big problem for our members-is that the majority of our members and the majority of rural developments are very small, and the paper requirement is pretty much the same for a small development for an extension in the countryside as it is for a supermarket on the fringe of a town. Therefore, we are very happy that there is a proposal to reduce the amount of paperwork.

Q113 Neil Parish: And also the national parks in particular, as the question here is targeting. Is there a particular problem to get planning in national parks?

Harry Cotterell: Our members always find that national parks are more difficult to achieve planning in, for obvious reasons, but the NPPF applies to national parks as much as it does to any local authority and we will have to see. The proof of the pudding in that case will be in the eating.

We think the right to apply direct to the Planning Inspectorate will not very often be used by CLA members, because the scale of development means that you should be able to sort it out, but we do think it is probably useful to have that sanction available at the end of the day to encourage planning departments in local authorities to work better. The section 106 affordable housing thing I think is really much more an urban one and I will not go into that now unless you particularly want me to.

David Collier: I would agree with much of what Harry has said there. Our starting point would be that farmers need flexibility to be able to alter buildings and, in some instances, construct new ones. Clearly they cannot merely put up replicas of 18th and 19th-century buildings. They need to be able to use modern buildings and have a decent span. Yes, we do have more problems in national parks than in some other areas, but, as Harry was saying, it is for obvious reasons. What we do find is that national park officers often have a better understanding of farmers’ needs than planning officers in some other areas, so there are positives as well as negatives associated with living and farming in a national park. I think that we are concerned about the way in which green belt policy is being applied in areas closer to towns. In fact, we were so concerned about the way that a couple of glass house appeals had been decided recently that in midSeptember we wrote to the Communities and Local Government Secretary expressing concern about what was happening there, because it was accepted by the inspectors that the glass houses were agricultural-

Chair: I am so sorry, we will be interrupted by a vote at four and we were hoping to have concluded your evidence by then. If we could keep the answers a little briefer.

David Collier: Right. Suffice to say we are concerned about the way green belt policy is being applied, so we have asked the Secretary of State to clarify matters.

Q114 Neil Parish: On the Home on the Farm scheme, which is where you are trying to get a home for somebody on the farm, is that working? Do we need to do more?

Harry Cotterell: It is a difficult one, because we welcome it, but we were sceptical about its ability to deliver, because quite often farm buildings that have not thus far been successfully developed may not lend themselves to being converted in the way that the scheme envisaged. We think there are other, better ways of delivering housing on farms than the Home on the Farm scheme.

Q115 Neil Parish: It is absolutely logical to have it in areas where you need a house and there are no houses in the vicinity, especially if it is a very rural area. Do you have any ideas that you want to put forward to us that we can put down in evidence? It would be interesting if you could write to us on that particular one, because it is something I particularly feel strongly about.

David Collier: We will do that.

Q116 Chair: Could I just briefly ask about fuel poverty, which now, certainly in North Yorkshire, is represented in the cost of filling up a car to drive and the cost of heating your home? What measures do you think could be taken to reduce fuel poverty, particularly in cold parts of the country where there is perhaps no public transport?

Harry Cotterell: I think the difficulty in the rural areas is that you are reliant on probably only one or a maximum of two types of fuel to heat your house, and it is almost invariably not the cheapest form of fuel, which is gas. Central heating oil, which is often thought of as the rich man’s fuel, is not; in the rural areas it is everyone’s fuel and I think that is a big problem.

In terms of transport, I think it is a given. We all accept that one of the major disadvantages of living in the countryside is that you are reliant on a car, and we always follow the fuel prices very carefully.

George Dunn: There may be something that can be done in wider policy areas, for example the way in which council tax is applied and the way in which vehicle excise duty is applied, to lessen the burden on those very rural areas. But it is a knotty problem that is not going to go away very easily. If there was an easy solution we would have found it by now.

David Collier: On fuel poverty, we worked with the other members of the Rural Coalition in lending support to a private Member’s Bill that would have enabled people to buy winter fuel when the fuel was cheaper than at its peak. That would seem to be the sort of measure that might help people in the most need, but of course it does not help with transport fuel.

Q117 Dan Rogerson: Just very quickly on the national parks issue: my colleague Tim Farron asked a question in the House the other day about democratisation of planning in national parks where there is no representation in the same way that other local authorities have. Is that something you would support exploring or not, in terms of achieving more representation for the people who live and work in the area in how planning decisions are taken? Is that something that you would support?

George Dunn: The planning system has always relied upon individuals who are elected by and from the local area to provide solutions. It certainly needs to be looked at again in relation to the national parks set-up, yes.

Q118 Dan Rogerson: Local Enterprise Partnerships are obviously playing an increasing role now that they have found their feet, have their strategies in place and are bidding for money that the Government is putting in place as well. Are you satisfied that rural interests have been represented well enough in the drawing up of those strategies and in the work of the Local Enterprise Partnerships?

Harry Cotterell: It varies. Some Local Enterprise Partnerships are quite ruralfacing; others are not. I think our members were hugely enthusiastic about the prospect of LEPs when they were mooted, and they have tried to engage as much as possible. But at the end of the day, it is very difficult to see how they are going to deliver unless they have some form of funding purpose in the way that the old RDA used to have. If the Heseltine review comes to pass, the LEPs have a stellar future ahead of them, I would suspect, but if it does not, one thinks that they will probably end up being talking shops and consultees for the planning process and not much more than that.

David Collier: I think I would agree with Harry that LEPs need more resources, but there are things that they could do now before they have a major increase in the resources available to them. You may be aware that last week the Commission for Rural Communities published a report on how Local Enterprise Partnerships are serving rural areas. We were pleased to see that they picked up a number of the points that the NFU made about the linkages between different parts of the economy: promoting interaction between different economic sectors, and having sub-groups that include industries like agriculture along with kindred sectors, rather than divorcing rural affairs from others. So there are a number of things that can be done. The CRC recommended that every LEP board should have a rural representative, and that would seem to make sense.

Q119 Dan Rogerson: Given the pressures of time, if all three of you have ideas of good or bad practice that is around, without wanting to name and shame anyone, but just general ideas what is working well and what is not, I think it would be useful for us to have something. Perhaps we can have some contact with BIS over how that is working.

We referred earlier to the changes to the Commission for Rural Communities and what has come to replace it, the Rural Communities Policy Unit. Are you satisfied with the level of engagement that you have all had with it and the way in which it is working?

David Collier: Broadly speaking, yes. There are some frustrations. The Rural and Farming Networks seem to be operating reasonably well, but we are not hearing from Defra what is happening with meetings of the chairs of the various network groups from around the country. We are not being sent the minutes, so it seems that Defra is reluctant to engage with national stakeholders and prefers just to engage with those networks. It would seem to be an opportunity missed.

George Dunn: I would just say that there is a grave concern that we have such a multilayered approach to life that some of these groups are falling over each other in trying to outdo one another for profile. There is a sense that there is a lot of talking going on and there is a concern that we measure success by the amount of talk and paperwork that is produced rather than action on the ground. We just are worried that the complexity of the system is becoming a problem.

Q120 Dan Rogerson: Are there any specific measures you think the Government should look at in terms of how the Rural Communities Policy Unit works in order to ensure that the views and challenges facing some of the hardesttoreach communities are reaching Government, not just within Defra but also in terms of its role in leading across all Departments on rural policy? Is there anything you think that they should be doing now to improve that reach?

George Dunn: There is a real need to harness the views, expertise and skills of those at a very local level, absolutely. Certainly in the discussions that we have with our members-and I have said this many times-they feel disenfranchised in the whole system, in that they believe they have solutions perhaps at a very micro level to issues that need to be resolved and finding a way for filtering those up is often very difficult. By the time they do get filtered up they have been changed or forgotten altogether. So there needs to be that twoway conversation with the local people to ensure that the skills and the knowledge that they have about the places that they work and live in are taken on board. That is why we were so pleased with the CRC uplands report, because they bothered to take the time to go out and listen to nurses, teachers, doctors, farmers and land users on the ground and produced a really rounded report. We are a bit concerned that what we have now does not provide for that mechanism.

Q121 Dan Rogerson: It is the outward reach into communities.

George Dunn: Yes.

Harry Cotterell: Nothing to add.

David Collier: Nothing further. I agree.

Q122 Ms Ritchie: On the issue to do with CAP reform and the need for some resolution, a delay in CAP reform will lead to a gap in agrienvironment funding. How confident are you that this will be avoided and transitional payments will be put in place?

Harry Cotterell: Very, are we not? The Minister has been quite clear that that will not happen. I am sure there will be a delay in the reform package, but I would be horrified if I heard anything but the fact that it will continue as agreed until the package is implemented. I do not think there is any question that it will not be though, is there?

David Collier: Certainly my understanding is that the single payment would carry on, but there could be disruption to payments under agrienvironment schemes. We could be talking about a long gap when there are no capital grants available, and so we could be going from 2012 right through to 2015, 2016, perhaps as long as four years, without any support in terms of capital grants, and that would be a concern. It is important that the Commission does come up with transitional arrangements as soon as possible, because we are concerned that if member states are asked to work on the basis of legitimate expectation of a legal framework being put together, they could go off the rails, and that would be very unfortunate.

George Dunn: I think that you also need to bear in mind that there are some wider considerations with regard to the inertia with the policy. If you look back to the last CAP reform in 2003-and it is an issue for the agriculture tenanted sector-having had a yearonyear increase in the amount of let land in the agricultural industry, we fell off a cliff in 2003 as landlords reserved their position pending the implementation of CAP reform. We are already experiencing that now as landlords are reserving their position with regard to what happens next and, therefore, the supply of agricultural land for tenants is going to diminish over the next few years while we wait for the CAP to be resolved.

Q123 Ms Ritchie: At what point in the next year do you think there needs to be a signal from Defra-a clear message-about funding of agrienvironment schemes and rural development schemes?

George Dunn: As Harry said, the clear signal has been given already. So, as far as agrienvironment schemes are concerned, the signal has been given.

Q124 Ms Ritchie: Could we move on to the issue of rural proofing and this process of the proofing of Government policies to ensure that they reflect rural issues? The Government have committed to commissioning an external review of the impact of its forthcoming rural proofing package. Would you be prepared to engage with the external review?

Harry Cotterell: We would positively welcome engagement with it, absolutely.

George Dunn: I would agree with that.

Q125 Ms Ritchie: Do you have any examples of existing or forthcoming legislation that may have a disproportionate effect on your members?

Harry Cotterell: The one I gave earlier, rates on empty property, was effectively an urban piece of legislation to increase lettings in urban areas, which had a completely distorted impact in the rural areas.

David Collier: I think the points about the drive to digital would apply particularly to rural areas as well, since you are something like 50% more likely to be in a notspot if you are in a rural area.

George Dunn: Things like the rebanding of properties for council tax, if that is going to happen, are constantly on the agenda for a lot of my members who are living in quite large properties, but they are required to live in those properties by virtue of their tenancy agreements. There are some issues related to that as well.

Q126 Mrs Glindon: What tangible differences will farmers have noticed so far as a result of the work of the Farming Regulation Task Force?

George Dunn: A lot more paperwork, I think. There has been a plethora of consultation exercises on aspects of the MacDonald review. As yet, there has not been too much by way of concrete action, I am afraid.

Harry Cotterell: I agree with that.

David Collier: I think we are beginning to notice signs of improvement-of inspection regimes taking account of membership of farm assurance schemes, so that it is less likely that a farmer will be inspected if they are a member of a scheme. It might be a good thing if farmers occasionally had a letter from an authority to say, "The reason we are not inspecting you this year is because you are a member of a farm assurance scheme and are therefore having to comply with various different requirements".

Q127 Mrs Glindon: Overall or in general, do you have any other concerns or do you feel that the main concern is about the pace of implementation of the recommendations of the task force?

George Dunn: That is the main concern: ensuring that we drive the recommendations that Richard put together in a coherent and consistent way.

Harry Cotterell: I agree with that.

David Collier: Yes.

Q128 Chair: There are two other issues we would like to turn to, if we may, before the bell rings. Regarding the £5 million boost to the dairy industry that the Prime Minister announced in July, how easily are your member businesses able to access that package?

David Collier: We are expecting that particular scheme to be launched next month-in about a fortnight’s time, I think-so we do not know precisely what will be in there yet, but I think that Defra have been listening. We have said, on behalf of our members, that one of the things that they do need to try to encourage is the formation of more producer organisations, and that would be our top priority. So I hope that will be part of the grant application window that will open shortly and that farmers will be keen to take advantage of that money.

George Dunn: I would agree with David, but there is just one issue in relation to producer organisations and those who are already involved in cooperatives and whether they can take part.

Q129 Chair: Is there anything in the Rural Statement to reduce the trade deficit in dairy produce? I know this idea of exporting is on the cards, but is there anything in the Rural Statement itself to reduce the deficit in dairy?

George Dunn: I do not recall anything in the Rural Statement necessarily. I know that we have been talking to AHDB about what they do in terms of improving exports of dairy products abroad and I know they have some plans to put some resource into China, for example, in that respect. It is important from our perspective that the levy boards do become rather more export-oriented in the way they do their business.

Chair: It would be helpful when the package is launched if we could perhaps hear if there are any particular difficulties from farm businesses at the time. That would be very helpful if we could hear in writing.

Q130 Neil Parish: This is probably particularly to David Collier and the NFU. In terms of the engagement with Defra, when the cull area was announced in January were you made aware the results of the survey of badger numbers would not be available until October? I know it is one of the thorny issues in the badger cull.

David Collier: I do not have a lot of detail on that point, Mr Parish. We knew that the FERA were doing surveys. They were expected to do 50 sq km in each of the areas and they did some additional land. The assumption was that there would be, on average, 5.4 badgers per sett.

Chair: Could you keep the answer very brief? We will have to move on.

David Collier: Sorry, yes. There were some surprises in the data. We took account of delays associated with Olympics policing, the weather, and all sorts of problems. We looked at nittygritty issues, such as the state of the maize harvest and the conclusion was that it was the sensible thing to postpone until next year.

Q131 Neil Parish: Are you confident that that survey will be right by next July when the cull needs to go ahead?

David Collier: As I understand it, there will not be another survey, but there will be some more digging into the data, so we should get more information from the survey results that have been put together already.

Chair: Thank you very much indeed. I thank you on behalf of the whole Committee for being so generous with your time and making the contribution you have.

Examination of Witnesses

Witnesses: John Moore, Chief Executive, NYnet, and Malcolm Corbett, Chief Executive, Independent Networks Cooperative Association (INCA), gave evidence.

Q132 Chair: Gentlemen, good afternoon. Thank you very much for joining us and contributing to our inquiry into rural communities, with a particular focus on broadband issues. Just for the record, could I ask you to introduce yourselves, please?

Malcolm Corbett: Yes. My name is Malcolm Corbett. I run an association called the Independent Networks Cooperative Association, which has about 400 members and supporters-organisations-and they are a mix of private sector companies, large and small, Fujitsu Telecommunications being one of the larger ones along with Cable & Wireless, City Fibre Holdings and a range of others: AlcatelLucent and so on. We also have quite a number of public sector organisations, local authorities and some community members.

John Moore: John Moore. I am the Chief Executive of a company called NYnet, which is 100% owned by North Yorkshire County Council and was set up 25 or 26 years ago to do a public sector network in North Yorkshire, with a mind to use that in rural areas to facilitate business parks and community scheme. Therefore, the county council uses this company to lead its BDUK process, which presumably you will be quizzing me about shortly.

Q133 Chair: Excellent. I should declare an interest to colleagues that I obviously live in the area served by NYnet or hoped to be served by NYnet. Can I just ask about the ambition that we are seeking to achieve? The Government have set out that they wish to achieve, by 2015, 90% of homes and businesses having access to 24Mbps superfast broadband and that there will be basic access to at least 2Mbps. But we have just heard that it is the last 10% that is going to be the most expensive. Are you concerned about the ambition? Do you think that is the right ambition that is being set?

John Moore: From North Yorkshire’s point of view, I do not think we have a problem with the ambition, and with the contract we have with BT we are confident that we will get to 90% of premises with 25Mbps. Our 10% is worth about 40,000 properties and our concern is that even though they will get-and I think there was reference earlier to this universal service commitment-a minimum of 2Mbps, in fact when they have 2Mbps and the other 90% have 25Mbps, you have increased the digital divide and made it greater than it is at present, because the average in North Yorkshire is currently about 4Mbps. So to go from 4Mbps to 25Mbps for 90% of the premises is revolutionary, you could say. As far as the 10% is concerned, the county council has always had a vision that it wants to get as close as possible to 25Mbps across the whole county and therefore we have a strategy, which is running alongside the BDUKfunded contract with BT, to try to develop community projects to cover those areas. I am happy to describe that in more detail, if you wish.

Malcolm Corbett: I think that most INCA members would feel that we should aim to be a bit more ambitious in terms of the development of an infrastructure that is pivotal to economic development and sustainability over the next few decades. If you think back, the existing broadband has been around for about 10 years and prior to broadband existing, for most of us, many of the services that we take for granted today simply could not exist: the Amazon was a very long river; it was not something you bought things from and so on. We certainly did not use these devices for watching The Paradise on the BBC or anything like that. So we have had a lot of things happening over the past 10 years in terms of new services and applications, all of which consume a great deal of bandwidth. At the time when broadband services were first introduced, people like British Telecom were saying that we would never need more than 512Kbps and that 2Mbps was almost an unachievable and really unnecessary target to have. Today, 2Mbps is seen as being an entry service, and that is in just 10 years.

Q134 Chair: If I can just ask you in reverse order, Mr Corbett first, is it right that those premises-and particularly those the furthest away from the exchange at the moment-that currently do not have broadband access should be left until last in this bottom 10%? Is it right that the Government have used the two speeds that they have as the benchmarks? Should upload speeds have been considered as a criterion?

Malcolm Corbett: I think symmetry in services is very important, particularly from a business perspective. INCA is run by a set of people all of whom work from home, so, as a business, we require broadband both downstream and upstream to work successfully for us to be able to run our activities. Many people in rural areas are running businesses from home or small offices or small premises, so upload is important. Should the 10% be left behind? No, I do not think they should. There are examples that certainly we like to bring attention to from other parts of Europe and North America where rural communities are receiving, partly through their own efforts, services that are way in excess of most services available in the UK today: 100Mbps symmetric services are available in Sweden for €30 a month.

John Moore: I would not disagree with Malcolm’s comments about upload and symmetry; particularly for businesses I think symmetry is essential. As far as the 10% is concerned, we have a doubleedged sword here in North Yorkshire inasmuch as we kind of knew a few years ago there would be this problem, although we could not quantify it. It has taken the BDUK contract process to enable us to identify which communities will or will not get fibre to the cabinet and all the rest of it. So we have been quietly developing a number of pilot projects and we have done about half a dozen now in the country, so we understand what makes community projects work and makes them sustainable and costeffective.

In terms of being left behind, our North Yorkshire strategy is precisely not to leave them behind. Now we know where BT are going, we are going to progressively pursue a strategic overlay of our geographical area in sympathy with the BT roll-out. Whether we will be successful time will tell. Whether the money that we have will be sufficient only time will tell, but we have to try.

Q135 Dan Rogerson: You described the process of getting through the European consents and so on as tortuous. Do you want to talk to us about that and say what the problems were?

John Moore: In a sense, with NYnet and North Yorkshire County Council there is an element of luck, but you could argue you earn your luck. Because we had the company and the expertise in the company when the BDUK process was initiated, we had already had some experience of state aid because we needed to get some state aid to do some business parts we had done, and we were already contemplating going for European funding. The fact that it just takes so long means you have to have stamina and you have to accept that it will take so long. You have to do the ERDF process separate to the state aid process and we are also running the BDUK process. So I think unless you have a very knowledgeable team, I can understand why some authorities who may not have that skill-set in place are finding this process very difficult. I know BDUK have been trying to streamline that pragmatically and no doubt Rob Sullivan later on will explain how he has done that, but certainly from our point of view it was sheer bloody persistence, at the end of the day, that won through.

Q136 Dan Rogerson: You just accept it is taking a long time. Why do you think it does?

John Moore: You can be cynical about it. The approach we tend to take is a very pragmatic one, which is that the rules are what they are, we have our objective and we will do everything we can to hack through those rules to get to our objective, rather than being judgmental about the process, because you have to accept that there are processes, there are accountabilities and there are governances that need to be adhered to. You could argue that is a somewhat defeatist approach, but our approach tends to be a pragmatic one that we want the money, therefore we will go through the process to get it.

Q137 Dan Rogerson: Sure, and I accept that from your point of view it is, but from our point of view as the legislative and scrutineers of the process, if you like, it would be useful to know. If you have any specifics, you can write to us.

John Moore: Yes, I am happy to do that and we did try early on to give some pointers to BDUK, because we had some experience that the BDUK staff did not have early on, but I am happy to give some more detail to the Committee.

Q138 Neil Parish: Is it a problem that one company is winning all the contracts to roll out broadband? We know which company that is. Is there enough competition?

John Moore: Because we were one of the first authorities, we ran a process where we had at one stage six companies involved. They gradually fell by the wayside as a result of either the elements of our process or commercial decisions they made, and we ended up with two fairly near the conclusion. Some of the reasons for one of those two dropping out at the end have been fairly well documented. But from our point of view, we went through a legitimate public sector, OJEUapproved procurement process, which we are required to do and we have to therefore accept that it has produced value for money.

Q139 Neil Parish: And you are confident of that.

John Moore: It is difficult to know how to check it, because I check it with what other contracts do. Knowing, as we do now, the complications of costing a cabinet or costing a mile of fibre, you could come up with a very different answer between Rutland or North Yorkshire, Cornwall or Lancashire, frankly.

Malcolm Corbett: I think it has been quite a problem in the process. I think that when BDUK set out down this route they were hoping to have a number of different competitors in the framework, all of whom decided for one reason or another that the process was not going to work for them. I think there are certain lessons we can learn from that in terms of how we can structure things in future, because clearly there are concerns about whether we are going to get value for money; these have been publicly expressed. I understand that the Public Accounts Committee is going to be looking at some of these issues. If you only have one competitor-as a cabinet member from one local authority said to me, he would not spend £40 million on a road scheme with just one competitor in the process. He would want to see more competition than that, and I think we all would like to see that. Now, there are conditions under which we can inject more competition into future processes and I think we should be thinking about how to do that. That is certainly what INCA members are doing.

Q140 Ms Ritchie: This is to both of you. Is it the case that any network partly funded by the Rural Community Broadband Fund must be open access? If so, does that mean that local communities could end up doing the work larger telecommunications companies say is not economically viable, only to find the larger companies move in once the work is done and paid for by the community?

Malcolm Corbett: What the Rural Community Broadband Fund is for is really to have an experiment on what is the art of the possible in the most difficult areas, and I think it is great. It is a bit bureaucratic. I tweeted earlier that I was attending this Committee and asked if anybody have any comments, and comments came back about the Rural Community Broadband Fund saying that it is important because it is taking an economic perspective on this; it is important from an economic perspective that we get this stuff done. Secondly, unfortunately, some of its processes are a bit bureaucratic. However, it is pointing the way to finding approaches that can deliver very high-capacity services in deeply rural areas. It is a shame Mr Drax is not here, because I have some examples from Dorset where one project, for instance, is going to cover 6,000 homes. It is using the rural funding for a third of its investment. The rest it is raising from an EIS scheme, so a nice taxefficient scheme, so it is bringing in private and community sector funding. It will deliver fibre to the home in very rural bits of Dorset at a very affordable price.

Chair: We need to keep the questions and the answers quite short, if we can.

Malcolm Corbett: The question is: is it a problem that there are no service providers who are prepared to come and deliver services over those networks? To start with, no; later, yes. It is going to be an issue later on, but at this point in time, if the service providers like TalkTalk and Sky do not want to play, there is not much you can do about it, so you just have to get on and do things.

John Moore: Certainly in the pilot projects we have done it has been impossible to get the national players interested. We have literally had to use what you might paraphrase as men in white vans with ladders. We have an approach now where we are trying to be more strategic about the contracts we let, and I am very interested in some of the ideas that Malcolm has alluded to, to see if we can get some of those ideas into North Yorkshire. Because, frankly, without some of the more independent players coming in, despite my optimism about our strategy I can get a bit defensive about whether we will achieve it unless we can find our way through some of the funding challenges. Unless we can find ways of bringing private capital in linked to community capital in some way, I think it is going to struggle. I think North Yorkshire is understanding this problem now. Other authorities are ringing us up to find out, because they are realising that with their BDUK money, particularly if they are not getting ERDF, they are not going to get anywhere near 90%.

Malcolm Corbett: I think the real story here is that what your Department is doing is really useful. It is a little piddle of money compared to the main scheme, but it is helpful.

Chair: We only supervise it. It is the Department that does it.

Q141 Ms Ritchie: Is the Rural Community Broadband Fund the only way communities in the hardest-to-reach 10% can get Government support for broadband projects, and should it be given more funding? As the Chair said, we need fairly quick answers.

Malcolm Corbett: At the moment, no, of course it is not the only way. There are small private sector companies that are delivering services right now in those areas because they see a business case for doing so. So it is not the only thing. However, it is a very useful little scheme as it stands, and I think there are some lessons we can draw from that for the additional funding project, which is becoming common knowledge now, I think-the additional £300 million that could be made available. We can think about ways of making that money go an awful lot further than it otherwise would if we think of it in terms of investment and think how we can attract additional private and community sector capital into the process, and that is what I think we should be doing.

John Moore: The rural fund will not be attractive to North Yorkshire for the reasons that Malcolm has described, and I know community schemes in North Yorkshire are struggling with the process because of the rules of the process, so possibly it is more of an exemplar. What we are looking for is whether there is a pot of money that can be accessed, because the thing that strikes me is that if you are going to try and cover 10% over a geographical area like North Yorkshire, you will not get the universal coverage by accident. Somebody has to be strategic. One of the problems with the RCBF is a small area gets done that gets its act together, but who is going to do all the neighbouring bits and pieces and all the bits between the villages that BT’s fibre does not reach? So whether it is the local authority or whoever, somebody needs to look at the whole map, see where BT are and then ask how they are going to do all the other bits. There is not enough money in RCBF to do that.

Q142 Mrs Glindon: Should the Government do more to encourage local schemes, such as Broadband 4 Rural North? If so, what could they be?

John Moore: I am not familiar with that particular scheme. What we are finding practically is that communities, particularly when they become aware of funding, often then struggle with the bureaucracy, the procurement, the state aid and all the rest that is often attached to these schemes. So what we have tried to do with the projects that we have under way is to take all that on board and ask them to get some community sign-up, so we can then present a package to the market that says, "Here is the procurement process. Here is the patch of territory. There are Xhundred premises with Yhundred people willing to sign up. There we are; tender for it." That is where we are trying to get. Now, if Malcolm’s processes can feed into that, because some of his members are interested in that and can bring their investment potential and their technology, then we might have a happy solution.

Malcolm Corbett: I think that is right. There are many of these projects around the place, not just B4RN. B4RN is very famous, mainly because it has managed to raise a million quid out of its local community in order to make the investment in this process and they want to deliver very much a futureproof service. But there are quite a number of companies and communities delivering both fibre to the premises and high-capacity fixed wireless services, which can achieve an awful lot and do it incredibly cost effectively. We are seeing that right now. So, yes, the Government could do more to encourage this. We think that at least some of the £300 million that is becoming available needs to go in this direction, but we would rather see it going in a way that levers in far more private sector investment than we are currently seeing.

John Moore: I would not disagree with that.

Q143 Mrs Glindon: Is there a risk that the local schemes are more expensive for the end user in terms of monthly bills?

Malcolm Corbett: It is going to vary, but over lunch I heard today that there is a fibre to the home project in Bournemouth that finally launched its first services last month. They are offering a service that gives customers there 1Gbps-that is 1,000Mbps-downstream and 500Mbps up, and the cost is £25 a month. When we worry about Britain falling behind in terms of these league tables, that shoves Britain right to the top.

John Moore: That is an interesting example and good luck to Bournemouth, but as far as rural areas are concerned, if you are in one of the upper dales or in the moors in North Yorkshire and you have a wireless scheme, you might pay £50 to £100 for a connection and £15 to £20 a month for your megabits, but at least you have some broadband to put alongside your gas and electricity.

Q144 Dan Rogerson: Mr Moore, talking about technologies that are available, what technologies would be used to roll out broadband in North Yorkshire? For example, are you looking at fibre to the cabinet, fibre to the premises or something else?

John Moore: BT have the choice, because they have the substantial contract and it is a coverage commitment they have-a contractual obligation-but practically they will use fibre to the cabinet using preexisting copper wires. They will use some fibre to the premises, but the number of circumstances in which that is costeffective is quite limited in our area; it might vary. In theory, they could use wireless, but I suspect they do not want to and, in theory, they could use satellite, but again I suspect they do not want to, and, if they do, it will be because they have to meet their 2Mbps obligation in the really wild and woolly bits.

As far as our community schemes are concerned, wireless is the way we seem to be going and it can be very costeffective.

Malcolm Corbett: INCA members do not own any cabinets. They do not run copper networks. It is only the incumbents that run copper networks, which is BT and Virgin Media. All of the INCA members who are seeking to deliver these services are looking to deliver fibre to the premises and high-capacity fixed wireless services. That is futureproof.

Q145 Dan Rogerson: Can I just pick up on one issue there? I accept it is BT who were issued the contract, but what is your understanding of how many people would be potentially disadvantaged by the last component of that, the copper being part of that process? Would the distance from the cabinet then be a determinant of the final experience.

John Moore: As an alternative to having fibre to the premises?

Dan Rogerson: Yes.

John Moore: I would have to take advice on that. I do not know that calculation. What I am aware of is that 90% of the premises will get 25Mbps using either fibre to the cabinet or fibre to the premise. Within that, where that percentage would change, I would have to go away and advise you. The challenge in North Yorkshire is we only had so much money and we wanted to go for coverage. If you want coverage in North Yorkshire, you go for cabinets; you do not go for fibre to the premises.

Malcolm Corbett: The issue with fibre to the cabinet is that once you get more than 1.5 kilometres from the cabinet you do not get any uplift in speed over standard DSL services.

Dan Rogerson: Yes, because of degradation.

Malcolm Corbett: About 11% of homes, according to BT, fall into that category, but there are large rural areas where there are no cabinets anyway, so you have a double problem there. So it is a problem. You also have a continuing issue about upto speeds. With fibre to the cabinet type solutions you have to deal with upto speeds and the concerns about that.

Q146 Neil Parish: Do you welcome the measures set out in the Growth and Infrastructure Bill for the roll-out of broadband infrastructure? If you do, how will you ensure that the views of local residents are taken into account when deciding where to locate broadband infrastructure? It says that you can put it wherever you like.

John Moore: This is very interesting, because North Yorkshire has seven district councils, one unitary and two national parks, so we are having some interesting discussions with planners about where cabinets should be and where you put the European sticker on the cabinet. We are being advised by BT and are consulting with the planners on this basis, and hope that we can come up with some amicable solutions, because we do not want a situation where we say, "No cabinet, no broadband", because that does not solve anything. There clearly will be some issues. If the new planning guidelines help to overcome some of those and persuade the planners to be more flexible, that will be great, but I am holding my breath in the national parks.

Q147 Chair: Could we just look at the £150 million investment that the Chancellor has announced enabling, he says, 6 million people in rural areas to receive improved access to mobile technology? Apparently, this how now been downgraded from 6 million people to 60,000 premises. Has that been impacted by state aid rules, and should we have foreseen the problems about state aid rules, Mr Moore?

John Moore: The only answer I can give you on that, because I am not familiar with all those statistics that you have quoted or the numbers, is that we have been approached by BDUK with an explanation of what they are intending to do to cover notspots, if that is what this is about, and they are talking about a pilot in an adjacent area to ours. But they were particularly interested in whether anything that we are doing or any of our processes could help them with what they need to do when North Yorkshire’s turn comes. But sorry, beyond that I cannot really help you.

Q148 Chair: Do you think 4G technology will help rural areas?

Malcolm Corbett: Yes, because it offers higher capacity for mobile services. All of our devices, our mobiles and these sorts of things, are eating mobile-phone capacity like mad and it provides an opportunity to deliver much higher quality and better services to consumers. So we see the future very much as being a fibre and wireless approach.

John Moore: If you are a highend user and you can afford it and you want lots of megabits, fine. We are just a bit worried about the coverage that it is required to have, and we suspect an area like North Yorkshire, once you get outside York and Harrogate, will be in the 2% or 3% that is not going to get it.

Q149 Chair: As the Minister is in the room, I find that 3G has less coverage on my mobile phone than 4G, and I do not think that is widely known.

John Moore: Frankly, North Yorkshire does not expect 4G to be the miracle in the rural areas.

Q150 Chair: But you would agree that 3G has been worse.

John Moore: To us, it has not made a major impact in the rural areas, no.

Q151 Ms Ritchie: This is about the performance of BDUK. Does BDUK have the necessary expertise to effectively administer the rural broadband programme?

John Moore: Are you talking about RCBF now or about everything since it started?

Ms Ritchie: The whole thing.

John Moore: I think, to be fair, they probably had some difficulties at the start. To run a programme like this you do need to streamline it and get advice about framework contracts and state aid and the other legal issues, and they have clearly had some issues around that. I think from our point of view, being one of the pilots, we have always found them very supportive. We have helped them get various processes in place. So it would be difficult for me to be critical of them, because they have been very supportive of us and have helped us to be the first authority that has got under way using their funding. We are now drawing it down, as we speak.

Malcolm Corbett: I think BDUK are very good people. This has been a learning process for everybody in the whole thing and there are a lot of lessons that are coming out of it. They certainly have competence in terms of being able to develop the whole policy process as it has been developed so far, but there have been some difficulties, i.e. lack of competition in the process. We need to find ways of addressing that and trying to bring more competition into the process, and we need to ensure that we think about how we can move towards a more futureproofed infrastructure in future. So I would say they are doing a reasonably good job right now, but there have been some serious problems along the way.

Q152 Mrs Glindon: Is Defra sufficiently well equipped to administer the Rural Community Broadband Fund?

Malcolm Corbett: They have some very good civil servants in there who know what they are doing.

Chair: And other resources

Malcolm Corbett: It is a very small fund, but from what I understand at the minute, I think there could, to be honest with you, yes.

John Moore: I think, from our point of view, I have difficulty trying to reconcile, as Malcolm has described it, a fund that can do exemplar projects with our more strategic approach, but that is because of where we are in the process. I think it would be helpful if there was some crossover of ideas between the Defra people and the BDUK people and sometimes I think it feels like they do not talk to each other.

Malcolm Corbett: I think they are talking to each other now.

John Moore: If they are talking now, that is fine, but perhaps they have not been in the past then, would be my observation.

Chair: Thank you very much for your forbearance during the delay when we ran over previously, and for taking us through this. If there is anything you would like to add in writing, we would be very grateful, but we are most grateful to you for making the journey and contributing to our inquiry. Thank you very much indeed.

Examination of Witnesses

Witnesses: Mr Ed Vaizey MP, Minister for Culture, Communications and Creative Industries, and Dr Rob Sullivan, Chief Executive, Broadband Delivery UK (BDUK), Department for Culture Media and Sport, gave evidence.

Q153 Chair: Minister, welcome. We apologise for running over, for reasons to do with the vote, but we are very grateful that you are here as Minister for Communications in the DCMS.

Mr Vaizey: And Rob Sullivan is outside, blissfully unaware that the ordeal has started.

Q154 Chair: Would someone like to invite Dr Sullivan to come in? I hope you are confident enough that we can start without him. The Government have pledged that by 2015 90% of homes and businesses will have access to 24Mbps superfast broadband and that everyone will have access to at least 2Mbps. Is that fast enough for rural areas, and are you disappointed that speeds and access generally in rural areas are less than in urban areas?

Mr Vaizey: I think there are two points in your question, Chairman. First of all, I think that the 2015 target is a very stretching and challenging target. We are running as fast as we can to meet that target. We may well get round to talking about specific procurement projects, but we are well under way in the sense that, broadly speaking, about half of the projects have been procured or are in procurement and the rest are forming an orderly queue. So it is a challenging target, and I certainly do not think we could bring it forward earlier than 2015.

In terms of rural coverage for broadband, clearly most of the broadband roll-out hitherto has been done by the private sector, essentially by BT and by Virgin Media. They have obviously made that investment in the areas where they are going to get the most customers and therefore the quickest return on their investment to justify that investment. I think the way that broadband is going and the demand for broadband is interesting, because there is very vocal demand for it, which I think has helped private investment. You will have seen, for example, that BT has very much accelerated its programme. It was going to cover two thirds of the country by the end of 2015 and will now, it says, achieve that target by the middle of 2014. So that is very welcome for the UK as a whole and I think it bodes well potentially for further private investment.

Q155 Chair: If we can do question and answer, rather than statements, if that is alright. We have been joined by Rob Sullivan, who is Chief Executive of BDUK. You are most welcome. So, Minister, is the delay due to the state aid agreement being reached in Brussels?

Mr Vaizey: State aid was certainly a factor, Chairman, in the sense that we applied in January and expected to get it through in March. The Commission came back with further questions and that kept resetting the clock. We are delighted we now have state aid approval, but I would certainly say it was a factor.

Q156 Chair: Minister, you are the expert. What speed do I need to watch the BBC iPlayer repeat of Parliament Today or my favourite programme, The Paradise?

Mr Vaizey: I think you need about 2Mbps, Chairman.

Q157 Chair: So when a constituent says to me that they cannot watch their BBC iPlayer without an interruption in my constituency, what would you answer to them?

Mr Vaizey: I would say that it may be the time of the day they are watching it. Sometimes the demand in an area for people using broadband can slow down the speeds. With Ofcom, we have certainly borne down very heavily on telcos that advertise quite high speeds and then do not deliver them-they might be advertising 8Mbps, but only delivering 4Mbps. Sometimes it is about the length that they are from the cabinet. There could be a range of factors that could be slowing down the broadband speed.

Q158 Chair: So do you recognise that there are slower speeds in rural areas than urban areas?

Mr Vaizey: Yes. That is why we have a £500 million programme to get broadband out to rural areas.

Q159 Chair: So when you originally announced the programme, it was stated that everyone would have access to at least 2Mbps under your universal service commitment. In the House of Lords report this has been changed to "virtually" every household. How many households will not be covered by your universal access commitment?

Mr Vaizey: I do not think we have a figure for that.

Chair: Could you write to us if you have a figure that we can use?

Mr Vaizey: Yes, we certainly could do that.

Q160 Chair: But you recognise that there has been a downgrade from universal service for every household to virtually every household?

Mr Vaizey: I would say it is more a clarification. Not every household has electricity and not every household has some of the services that people take for granted, but certainly to all intents and purposes we expect every household to have access to broadband.

Q161 Chair: If I could just focus on the 10%, how many communities based in the hardesttoreach 10% currently get superfast broadband?

Mr Vaizey: I am not sure I could answer that question. I do not know whether, Rob, you would have an answer to that. In theory none, given that they are the last 10%.

Q162 Chair: And by 2015?

Mr Vaizey: They should all have 2Mbps; that is the plan.

Q163 Chair: That is superfast, is it?

Mr Vaizey: The plan is to get 90% of the country covered with superfast and the last 10% to get 2Mbps.

Q164 Chair: But I represent the 10% and we want to know when we are going to get it.

Mr Vaizey: The plan is to do that by 2015.

Q165 Chair: But you said 90% would have it, not the 10%.

Mr Vaizey: No, the plan is to get 90% of the country access to superfast broadband and the last 10% to get 2Mbps.

Q166 Chair: So what are you, the Government, doing to encourage local next generation broadband projects, such as Broadband 4 Rural North?

Mr Vaizey: You just had North Yorkshire Net talking about how they are the first out of the block.

Q167 Chair: But they just told us that they have to fit in with the technology that BT are providing, so there does not seem to be much imagination about the technology that is out there.

Mr Vaizey: I think BT have put in quite a detailed submission to the Select Committee explaining that they are looking at a whole range of different technologies. Clearly I would not characterise it as "fitting in" with BT’s technology. I think BT is one of the most impressive global telecoms companies in the world. I think the technology it is using is as advanced as any other telecoms company in the world, and it will deliver superfast broadband service to many people. But BT is continually innovating and researching, particularly on how you can reach those who are hardest to reach with different ranges of different technologies, so I would not say there is a particular problem with the technology that BT is using. I would say it was cuttingedge.

Q168 Chair: So which technologies is the Government supporting other than fibre?

Mr Vaizey: We have always taken a technologyneutral position, so we start from the position that the local authority will procure the contract to deliver superfast broadband and the company it procures with will deliver that using the technology that is appropriate. We have not stipulated that it should be fibre or satellite or whatever. Clearly fibre will be, by and large, the main technology, but there will be other technologies used to reach the very hardest to reach to provide a more costeffective solution.

Q169 Chair: Are you going to sit on the sidelines? There was a conference in North Yorkshire looking specifically at this point and there was huge disappointment expressed; I think everyone was delighted that BT had the bid, but we are restrained by the technology that may not reach the 10% by 2015. Are you going to be flexible and help out here?

Mr Vaizey: I think we expect whoever procures with a particular council to be flexible in providing the technology that delivers the appropriate solution, but I do not think it would be for the Government to mandate the technology solution provided by an operator.

Q170 Dan Rogerson: Good afternoon, Minister. I am interested in this question of technology. You have the kit being provided by somebody and then others selling products on that. In Cornwall we have a different process, in that we have the European bid to deliver it, but for those for whom the technology solution proves to be something other than fibre, would the end cost to them of the access to their 2Mbps or whatever be the same? Sometimes we get these issues about transparency of funding and no crosssubsidy and all the rest of it. Would they find themselves paying more for the same service or a worse service than someone a little bit closer to the company?

Mr Vaizey: My instinct is that they would pay the same as a retail customer. If you are talking about Cornwall in particular, Cornwall has put together a bid with BT and BT is providing that to a stipulation by Cornwall. In fact, Cornwall is probably going to be one of the best connected places not just in the UK, but probably in the world. But I would imagine, as a BT retail customer, they would still pay what BT retail customers pay, regardless of the technology solution that had been put in place, bearing in mind it is being provided effectively with public subsidy.

Dan Rogerson: I hope that is the case, but I am just concerned, particularly where, for example, it might involve satellite. Past experience has shown that those who could not wait and therefore in the short term have opted to get a satellite service by another provider have found themselves paying more. So I just hope that is the case. That is very helpful. Thank you, Minister.

Q171 Ms Ritchie: Minister, this is to do with the European Commission. The European Commission has said that it wants all EU citizens to have access to at least 30Mbps by 2020. What additional steps is the Government going to take in order to meet this target?

Mr Vaizey: The definition we ended up giving for superfast broadband was 24Mbps, but that is because Ofcom, when it does assessments of broadband availability and superfast broadband availability, has tended to use 24Mbps as its definition. But to be blunt, I think that the difference between 24Mbps and 30Mbps is irrelevant. I think if you are getting superfast broadband around 24Mbps then getting to 30Mbps and thereafter to 50Mbps and potentially up to 100Mbps is not a stretch. You are still going to use the same infrastructure. It is the technology in the cabinet that tends to change the speed, so that can be upgraded very easily, and we are already seeing BT doing that in places where it is already deployed. So I do not think that one should concern oneself too much about the difference between 24Mbps and 30Mbps.

Q172 Ms Ritchie: Is there any update on the EU’s proposals for the €8 billion from the Connecting Europe Facility and how might the UK benefit from such a fund?

Mr Vaizey: I hope that the UK will benefit from the Connecting Europe Facility. It obviously covers a whole range of different projects, such as transport and so on, and of course it is wrapped up in a much wider debate about the future of the EU budget, which is taking place at a very high level. The outcome of those budget negotiations will affect the amount of money available in the Connecting Europe Facility, but I certainly think there is, in principle, no reason why the UK should not benefit from it. We support the project in principle, but obviously we are disputing quantum in terms of the European Commission budget.

Ms Ritchie: And subject to the budget outcome.

Mr Vaizey: Yes.

Q173 Dan Rogerson: Why do you think it took so long to get approval? We heard a little bit about some of the barriers surrounding the whole issue from Mr Moore, but why do you think this European element took so much longer to arrive at?

Mr Vaizey: I think it was frustrating. I think it took far longer than we expected it to take. My understanding of the process is that we went in with our application and there is, in theory, a twomonth turnaround timetable, but if the Commission wants then to ask further questions about our application, effectively the clock is reset. The Commission did come back and ask further questions, but we did finally get it over the line.

I think there is also a point to be made about first mover disadvantage, if you like. This is a pioneering project, the £500 million Rural Community Broadband Fund, and I think it is very important to put it in context in terms of the rest of Europe. We are well ahead of the rest of Europe in putting together a project like this.

Q174 Chair: Is that because our speeds are so slow compared with Lithuania, Denmark, and Sweden?

Mr Vaizey: No, because we are much more focused on broadband than perhaps other Governments are. We were the first ones to come to the Commission with this proposal and therefore, in effect, they were dealing with us from first principles. If another country comes along with a similar proposal, they may well get a quicker turnaround time. I think that may well have been a factor, but I am not going to hide away from the fact that it was a frustrating process and far lengthier than we expected.

Q175 Dan Rogerson: Was the fact that there was one company involved part of their concerns? Did that slow it down?

Mr Vaizey: No. There are, in theory, two companies involved in the process-Fujitsu and BT-and we had up to, I think, 11 companies originally expressing interest, but I do not think that was a factor.

Q176 Neil Parish: On a similar theme in some ways, but not on the Commission, do you think that local authorities should be able to share details of procurement costs if it would mean that they were able to achieve greater value for money, especially when in a lot of areas you really only have one major player in the game, so to speak?

Mr Vaizey: If I understand your question correctly, Mr Parish, we are certainly not preventing local authorities from working together as they are in Devon and Somerset, and in other parts of the country in certain areas, particularly in devolved Administrations-obviously you have Wales as one, Scotland as one, and Northern Ireland as one. So we certainly would not discourage them from working together.

Q177 Neil Parish: It is just about being able to check that you are getting value for money out of the contract, especially when you do not necessarily have another bid necessarily to check it against.

Mr Vaizey: That is a very good point, Mr Parish. We take value for money very seriously and we have robust discussions with the companies with whom local authorities are procuring. Certainly that is the advantage of having a central procurement framework and having Broadband Delivery UK sitting, as it were, at the centre of this: that they can compare bids that are put in in a more competitive situation, or where there is only one bidder, they can compare and contrast bids put in in different parts of the country and then challenge the company involved on the figures to ensure that there is value for money. But I would want to stress to this Committee that we do take the value for money point very seriously indeed. We are not writing effectively blank cheques to providers. We are making sure that their business case is robust and properly tested.

Q178 Neil Parish: Right; we feel reassured on that one. What steps are BDUK taking to ensure that any company applying for a broadband contract gives a true reflection of the costs involved, again because of the few players involved?

Mr Vaizey: The companies concerned would put forward a business case. To a certain extent, they would put that forward on the basis of a series of assumptions such as the take-up of broadband, issues like churn, and potentially the different topography of each area that it was going into. BDUK would examine those figures and challenge them. I am now closely involved in the delivery, so we have weekly meetings to update on different local authority procurements, and if there are obstacles or causes of concern where we think that a figure looks out of kilter, we will robustly challenge it and examine it.

Q179 Dan Rogerson: We had a little discussion earlier on with the representative bodies-the NFU, TFA and CLA-about the digital by default policy: that across Government, relationships between citizens and the Government should be carried on through that means. Delivering that is obviously an area of responsibility for you. There are obstacles at the moment, as we have heard, to some constituents of MPs in rural areas engaging in that and being able to have access to it. Do you think it is fair that the Government is adopting this policy at this point?

Mr Vaizey: To a certain extent, digital by default is slightly beyond my brief. That is being driven by the Cabinet Office, but with key Departments, such as the Department for Work and Pensions, as I understand it, very much part of that drive. It is important that there is proper coordination so that the infrastructure is delivered and people can use services. But I do think digital by default is an important way of stimulating demand. It is important that we get our ducks in a row by continuing to move forward on digital by default, but mindful of people who cannot-as opposed to will not-get on to broadband. We must also work with the Cabinet Office on demand stimulation, so that people are aware of the benefits of broadband and are shown how to get access to it, and we in the Department for Culture, Media and Sport must continue to press ahead with the delivery of infrastructure. But I do agree with you, if I understand the implication of your question, that it is important to get those ducks in a row and coordinate it properly.

Dan Rogerson: I accept that it is a Cabinet Officeled process, but presumably you are involved in these discussions, because it is your area of expertise, or your Department’s area of expertise. There are two issues. One is whether people can get access to it and the other thing is this issue, as you said, of whether they choose to. So particularly for people who have perhaps not been used to using this and have engaged with the Government in a different way for a very long period of time, this is a problem. I just wanted to make that point to you really and hope that in your discussions you will take that back.

Q180 Neil Parish: Can you explain why only £10 million out of £530 million of BDUK money-1.8% of the total-is going to help the 10% hardesthit communities to get superfast broadband? Particularly because installation costs are going to be high and in many of our constituencies, of course, those are the people we are particularly worried about.

Mr Vaizey: I think this is talking about the Rural Community Broadband Fund. It is a separate fund, so in theory the big pot of £500 millionodd is meant to deliver the clear target of 90% superfast broadband and 2Mbps to the last 10%.

Q181 Chair: Can we stop talking about 2Mbps and can we talk about superfast broadband? We are asking about superfast broadband and why only £10 million out of the £530 million is being allocated to the hard to reach?

Mr Vaizey: I was setting the context, Chairman, so I would like to answer Mr Parish’s question.

Q182 Chair: Yes, but he did ask about superfast broadband, not 2Mbps broadband.

Mr Vaizey: I was putting his question in context. That is what the pot is for, but there is a separate fund to which BDUK has contributed £10 million and the Department for Environment, Food and Rural Affairs has contributed £10 million to allow individual communities, which would have been in that 10%, to apply to put in superfast broadband. That is led by those communities with their own bespoke solutions and, as you know from your briefing, something like 50 communities have passed through the test, as it were, and are potentially going to be in procurement over the next year or so.

Q183 Neil Parish: I can understand the logic that the Government is to provide as many people with superfast broadband as they can with the money that is out there, but a lot of us are quite concerned that people are going to be left out and that perhaps people’s expectations have been raised. We are always talking about rural broadband, and if the most rural people cannot get superfast broadband that is what worries us, really. Does that worry you also?

Mr Vaizey: We have started with what we think we can realistically achieve with the money that we have and then we have added to it. Defra has come on board, because it recognises the importance of broadband in rural areas, and said, "Can we use a £20 million pot smartly to get superfast broadband to certain part of that 10%?" It is not an ideal, everyonewins solution. As I say, we started from the other end of the equation. We started by considering what money we had and therefore what we could achieve with that money, and then whether we could add an additional bonus, if you like, on top of that programme.

Q184 Neil Parish: Talking of pots, there is quite a large pot coming from the BBC-£300 million between 2015 and 2017. What do you intend to do with that?

Mr Vaizey: That is not a decision we have taken at the moment. We are using the money that we have at the moment to deliver, as I say, the targets that I have talked about. But as 2015 draws closer and we get further along with this programme, no doubt ideas will emerge to use that money in additional ways.

Q185 Neil Parish: You have fallen quite nicely into my trap. So if we are not getting superfast broadband out to these 10% of people by 2015-I hope we are, but there will be some people, I think we have to accept, who will not get there-will you be pushing for some of that money to be used for these hardertoaccess people?

Mr Vaizey: I am glad I have fallen into your trap, because what I would say, Mr Parish, is that I would want to have a dialogue with people who have a keen interest and knowledge in this area, such as yourself, to explore ways in which a future Government could use that £300 million after the 2015 election.

Q186 Neil Parish: Why is fibre the only technology covered by the fund when other technologies might be cheaper and less complicated to deliver, especially in rural areas?

Mr Vaizey: Rob may want to come in on this, but as far as I am aware, again-sorry to sound like a stuck record-we are not mandating fibre. Fibre is obviously the easiest solution for the vast majority of homes that will be covered by this programme, but BT looks at things like white spaces, 4G, wifi, satellite and other solutions. It says in its note, for example, it is looking at satellite price for residential means. So we would rely on BT or Fujitsu to come up with technical solutions to meet the target that the local authority had set in its procurement, but obviously the vast majority of that will be fibre, because you can get to most homes most quickly and most easily with fibre.

Q187 Neil Parish: Under the current system there is a risk that only affluent rural communities with the capacity to prepare bids are accessing the fund, leaving poorer communities further marginalised. Until people know how far broadband is going to be rolled out, these private operators, for want of a better expression, are not going to come into the market.

Mr Vaizey: I think it is an unanswerable question, in a sense, Mr Parish, because clearly we have the fund. I do not think we would be in a position to go out and identify individual communities that could use the money. We would rely on people to come forward to us whether that involves more affluent communities. I do not think we have done a particular study on the wealth of different communities that have come forward. I am searching for the list, but I think, broadly speaking, the bids we have received cover quite a wide range of the country. I would not presume to talk about the relative wealth of different parts of the country, but we go from north to south.

Q188 Ms Ritchie: Minister, on the Growth and Infrastructure Bill, what evidence is there that the additional protection afforded to designated landscapes has acted as a barrier to or delayed the roll-out of broadband?

Mr Vaizey: It is certainly the case that communications providers came to us and said that there were a great deal of additional costs involved in rolling out broadband. They made a very clear case to us that they would be able to roll out broadband more quickly and more cheaply, potentially cover more parts of the country, and potentially deliver that broadband more quickly if these changes were made. We have made legislative changes but we are obviously going to consult, clearly, on the detail. It is important to stress that this is not going to be a broadband freeforall. There will still be codes of conduct, codes of practice. There will still be a requirement to consult with communities and with the local planning authority. But I think it is important that we recognise that we cannot have our cake and eat it. We cannot, on the one hand, have rural communities saying, "We desperately need broadband in order to grow and expand our businesses and participate in the digital economy", and at the same time put up a lot of hurdles to rolling out that infrastructure.

Q189 Ms Ritchie: In the November 2011 consultation on overhead telecommunication deployment, the Government said that it would not relax protections for designated landscapes. What has happened in the last 12 months to prompt the Government’s change of mind?

Mr Vaizey: I will correct myself if I am wrong in answering this question, with a letter. As far as I am aware, we have not changed our approach on poles, but we have recognised the concerns that communication providers had in terms of the bureaucratic obstacles they faced in putting up cabinets, using private land or seeking planning permission.

Q190 Mrs Glindon: At the party conference in 2011, the Chancellor announced a £150 million investment that would enable 6 million people in rural areas to receive improved access to mobile technology. Subsequently, this has been reduced to only 600,000 premises due to problems with state aid rules. Minister, why did the Government not foresee the problems with state aid rules before the announcement of the scheme was made?

Mr Vaizey: What we wanted to put in place was a Mobile Infrastructure Project that would deliver mobile to notspots, and it is important, I think, to distinguish between a notspot and a partial notspot. A notspot is where you cannot get any mobile coverage from any operator, and a partial notspot is where you can get coverage from one operator but not from another. Clearly we wanted to undertake a detailed assessment. Ten key trunk roads will also be covered as well. So, to a certain extent, the amount of people who will benefit is a moving target, because some of them will be on the road, but we think it is a very important initiative to get universal mobile coverage, which is something that people have wanted for a long time.

Q191 Mrs Glindon: Just specifically on the issue of state aid, obviously there were complications with that.

Mr Vaizey: I am not aware of it. Rob, do you want to address the question about state aid?

Dr Sullivan: Yes. I think it was not an issue with state aid. We are seeking a separate state aid approval for the Mobile Infrastructure Project and that is progressing to the timetable, so the two aspects are not related. As the Minister said, what we have completed as part of the preparation is highly detailed modelling, down to a much more detailed level, to identify exactly where the total notspots are, and the number is just less than was first expected. Just to clarify, I think it is 60,000 premises that we are talking about, rather than 600,000, but that is not connected to state aid.

Q192 Mrs Glindon: Does the change in ambition in the Mobile Infrastructure Project mean that rural areas are at risk of being permanently left behind, not just in accessing reliable voice data but also in wifi?

Mr Vaizey: I do not think there is a change in ambitions. As I say, I think we can only really put the Mobile Infrastructure Project in areas where there is no mobile coverage at all, because obviously if one mobile operator has deployed masts at their own expense, they do not want other mobile operators to be deploying them at the Government’s expense. But I do think that we set-and indeed we listened to Parliament on this very closely-challenging coverage obligations for 4G, up to 98%, rising from 95%, and the difference between 95% and 98% is quite significant. So I do not think there will be a danger. But again, I think we have learned from the very cooperative nature in which we put together the rural broadband project in the way that local authorities have come to the table and the recognition that we should make planning rules more flexible in order to reduce costs. I think we can work with local authorities to address some of the poor coverage of mobile in rural areas and I think what I would like to look at over the next few months is working with local communities to see, where there is poor coverage, whether local communities could work with mobile operators to address that poor coverage.

Q193 Chair: But you will accept that 60,000 premises down from six million is a sizable drop.

Mr Vaizey: It is a sizeable drop.

Q194 Chair: And when you talk about asking local communities to work with the providers, that is presumably at the cost of the local communities.

Mr Vaizey: It is the germ of an idea, but some people have come forward and said, "We would have a mast in our community and we would not charge rent" or "We would provide the land for free if it meant that we could get better mobile coverage". So that is an offer that has come from communities. It is not something that we have demanded from them or asked from them, but if communities are going to come forward and make that kind of offer I think it would be incumbent upon me, as the Minister, to try to facilitate that conversation to see if it is one that could be progressed.

Q195 Chair: Are you aware that Farmers Weekly raised concerns that rural areas are missing out on superfast funding in May this year? They are saying that despite the large number of methods that rural people can use for broadband delivery, the grant is only for fibre optic broadband under the Rural Community Broadband Fund, and arguably that is the most expensive and complicated method for rural areas. So by definition, you seem to have chosen the most expensive and most complicated method for the most limited funds.

Mr Vaizey: I do not recognise that accusation. As I have said already in my evidence, we are not stipulating the technology, but nor would I accept that fibre optic is the most expensive and most difficult.

Q196 Chair: I am sorry, Minister, to correct you, but my understanding is that under the Rural Community Broadband Fund that is the only technology that is available.

Dr Sullivan: The state aid approval that we have just secured from the Commission also covers the Rural Community Broadband Fund, so this means now that all of those 50 projects will have cover. And because, as the Minister said, the main rural programme already provides the commitment to standard broadband to near-universal level, that means that the community projects, when they are seeking to be state aidcompliant, at a minimum they essentially have to provide superfast. But again, as the Minister said, they have to provide beyond 24Mbps. In doing that they have access to any technology that provides that outcome.

Just coming back to one of the other points about the delay to the main state aid approval, we had to fight very strongly to make sure that wireless technologies, where they were able to provide superfast, were allowable within our state aid approval.

Chair: Under that broadband fund.

Dr Sullivan: Yes, exactly.

Q197 Chair: Under the Rural Community Broadband Fund. So that is a misunderstanding on behalf of Farmers Weekly.

Dr Sullivan: I think it is, because as long as the technology can provide more than 24Mbps then it should be in scope. We are certainly not, and it would not be admissible under state aid to be, technologyspecific in that way, nor would we seek to force a particular solution. You have already provided a number of examples of very innovative community schemes that are using wireless and other technologies, so certainly we do not want to take those out of scope.

Q198 Chair: Minister, were you aware that 3G is not widely accessible in areas like North Yorkshire and other rural areas of the country?

Mr Vaizey: Yes, we are aware that coverage is not as good as it could be and it is not as good as it would be in urban areas.

Q199 Chair: Then what impact do you think 4G technology will have on rural areas?

Mr Vaizey: I do not think 4G is going to be a magic bullet and I think again we are lucky in this country in the sense that the roll-out of mobile has been done by the private sector at no cost to the taxpayer, and the private sector will be rolling out 4G. Again, by definition, just as I said at the beginning of my evidence, commercial operators will go first to where they will get the most customers in order to get their return on investment, but 4G will roll out. We have advanced, as you know, the roll-out of 4G by six months, and indeed Everything Everywhere is already rolling out 4G as well. But it will take a number of years before it starts to really penetrate rural areas. But as I say, we did listen to Parliament and the coverage obligation has been increased on one of the licence holders that gets 4G spectrum.

Q200 Chair: Just a final question: when do you think the last 10% will have access to superfast broadband?

Mr Vaizey: To a certain extent, that goes to what Mr Parish was saying, without wishing to set any hares running. As I say, we have set the target of 90% superfast by 2015. At that point, no doubt, there will be a discussion about the last 10%-already having 2Mbps-and whether one could go further, and there will be those who will point out that there is potentially money on the table that could achieve that. But we are looking to 2015; we have not looked beyond 2015.

Q201 Chair: So we are not expecting superfast broadband in rural areas before 2015.

Mr Vaizey: We are expecting it for 90%.

Chair: You have been very generous with your time. Thank you very much indeed for being with us and apologies for the late start. We are very grateful to both of you. Thank you very much indeed.

Prepared 5th December 2012