Councils stay silent as Ministers propose broadband ‘salvation’

The full scale of the waste of public funds on South Yorkshire’s failed superfast broadband network is revealed today through an assessment by Government officials which suggest 90 per cent of South Yorkshire can be given access to high-speed internet at a cost of just £10m to the taxpayer.

The publicly-owned Digital Region project covered only 80 per cent of the county and yet cost taxpayers an estimated £155m before being abandoned in August. It had drawn in just 3,000 paying customers – less than three per cent of the 108,000 it needed to break even – and was costing more than £1m per month to prop up.

Now the Government wants South Yorkshire to fall into line with every other part of the country and sign a deal with a private sector technology firm – likely to be BT – to extend the area’s existing commercial broadband network to more remote areas, and so ensure 90 per cent of the county has superfast coverage.

Officials at the Department for Culture, Media and Sport (DCMS) believe this approach would cost taxpayers just £10m – just over six per cent of the eye-watering cost of Digital Region.

Under DCMS’s proposals, the Government’s rural internet quango Broadband Delivery UK (BDUK) would put forward half the money, with South Yorkshire’s four local authorities expected to find the rest.

A DCMS spokesman said: “BDUK is ready to discuss how to take forward a project to deliver 90 per cent superfast coverage in South Yorkshire with the four local authorities involved.

“BDUK has earmarked (£5m) funding for a South Yorkshire project – as for the rest of the country, we would expect that BDUK would provide 50 per cent of the necessary public funding and that local funding - including the option of European funding sources – would provide the other 50 per cent.”

South Yorkshire’s four Labour councils – Sheffield, Rotherham, Doncaster and Barnsley – which drew up and part-funded Digital Region beside the now-defunct regional development agency Yorkshire Forward, have refused to comment, stating only that they are “aware” of the proposal.

The revelation that South Yorkshire could enjoy a comprehensive broadband service for just £10m means Digital Region stands exposed as one of the most wasteful public sector projects the region has witnessed in decades.

The four councils and Yorkshire Forward had initially said the scheme would prove practically cost-neutral for taxpayers when it began in 2009, with the authorities pouring in tens of millions of pounds in loans which they expected back when their 500-mile broadband network drew in enough customers to be profitable.

But it failed to take account of competition from other providers, chiefly BT, who quickly began rolling out their own superfast networks. And matters were complicated further because Digital Region needed BT’s technical assistance to connect customers to their network, leading to a bitter dispute.

The scheme began posting catastrophic losses before the network was scaled back. Even then, local authorities and Yorkshire Forward were forced to pour in ever-increasing amounts of money to keep it afloat. A £25m EU grant had to be repaid and eventually the Coalition – which acquired Yorkshire Forward’s 50 per cent shareholding after the agency was wound up last year – decided to pull out altogether.

The four councils still hope to find some way to sell the network to a private firm, but refused to say whether they will accept the Government’s £5m offer.

In a two-line statement, Rotherham Borough Council chief executive Martin Kimber said the four authorities are “obviously aware of the Government’s proposals.”

He added: “However, as this is linked to Digital Region Ltd, the future of which is yet to be decided, we are unable to comment on the plans at the moment.”