£80m lost as disastrous broadband scheme axed

Sir Steve Houghton.
Sir Steve Houghton.
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THE plug was finally pulled on the disastrous Digital Region broadband project yesterday with council leaders in South Yorkshire admitting the final cost to local authorities could be more than £80m.

That is on top of almost £45m of public money lent to the project and later written off by now defunct regional development agency Yorkshire Forward.

And last month Business Minister Michael Fallon revealed the Government might have to spend a further £45m to extract itself from the venture which he described as “fundamentally flawed”.

Council leaders hope the sale of the superfast broadband network constructed under the streets of South Yorkshire, along with negotiations over European Union grants, could yet reduce the £83.3m hit to the local authorities in Barnsley, Doncaster, Sheffield and Rotherham.

The councils called time on the project yesterday after advisers warned that continuing with an earlier plan to find a private sector partner to run Digital Region would cost £12.5m more than closure.

Barnsley Council leader Sir Steve Houghton said: “When we originally set off with Digital Region the aim was to accelerate broadband connectivity across South Yorkshire because the evidence from the past was that South Yorkshire was always at the back of any kind of programme.

“We wanted to achieve that by Digital Region providing some of that connectivity and by increasing competition in the marketplace and getting other providers to come in.

“We have got 80 per cent coverage across South Yorkshire now but it has been done more by other private providers doing it rather than Digital Region so we have got the outcome we were looking for but not through the original plan.”

He added: “Clearly there are lessons to be learned because Digital Region hasn’t performed as anticipated. We need to understand why and make sure no one gets in that position again.”

Launched in 2009 to put South Yorkshire at the forefront of the broadband revolution, Digital Region was supposed to be almost entirely self-financing, with the public sector loans that got the project off the ground expected to be repaid as subscribers signed up.

But Digital Region only managed to attract 3,000 paying customers, a fraction of the 108,000 originally forecast, leaving mounting costs to be picked up by the taxpayer.