HC Deb 21 March 2002 vol 382 cc419-22
3. James Purnell (Stalybridge and Hyde)

What progress is being made towards the Government's targets for broadband communications. [42847]

The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander)

The UK Online annual report, published in December 2001, detailed progress towards our broadband targets. Broadband services in the UK had continued to develop over the year and 60 to 65 per cent. of the country is now covered by an affordable broadband technology.

Progress is being made by industry and Government. Last year, we announced a £30 million fund to encourage broadband roll-out. This week, I detailed how that money would be spent in each region and, earlier this month, I welcomed BT's announcement that it was looking to reduce wholesale prices for broadband technologies.

James Purnell

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

Mr. Alexander

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

Michael Fabricant (Lichfield)

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

Mr. Alexander

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

Jim Knight (South Dorset)

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

Mr. Alexander

I certainly pay tribute to my hon. Friend's concern with this issue. I would make a central point: the public sector's aggregation work is absolutely key to the roll-out of broadband services in rural areas; it is the fundamental means by which we change the risk and reward balance through which investment decisions are taken in the private sector. I can also assure my hon. Friend that very considerable work is taking place not just in the Department of Trade and Industry, but right across the major spending Departments, anticipating the comprehensive spending review, to address exactly the issue that he raises.

Mr. Philip Hammond (Runnymede and Weybridge)

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

Mr. Alexander

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

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

Mr. Richard Allan (Sheffield, Hallam)

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

Mr. Alexander

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