24.Government-supported rollout of broadband in Scotland is delivered by the Scottish Government’s Digital Scotland Superfast Broadband programme. Telecommunications policy, including wireless, telegraphy and internet services, are reserved matters, and the UK Government sets broadband and wider telecommunications policy. Broadband Delivery UK (BDUK), part of the Department for Digital, Culture, Media and Sport, is responsible for managing the Government’s funding for broadband delivery across the UK. The BDUK Superfast Broadband Programme is divided into three phrases:
The UK Government gave the Scottish Government responsibility for designing and implementing the superfast rollout programme in Scotland, to which the Scottish Government has also contributed its own investment. The Scottish Government provided this funding even though they were under no obligation to provide funding in an area that is clearly reserved.
25.The Scottish Government is currently delivering broadband through the Digital Scotland Superfast Broadband (DSSB) programme. DSSB is made up of a Highlands and Islands programme and a rest of Scotland programme and is the vehicle through which Phases 1 and 2 of the UK Government’s broadband policy was delivered. Both Governments contributed to the funding of DSSB with the Scottish Government providing £62.8m and the UK Government contributing £100.8m; the full breakdown of funding, provided by Audit Scotland, is shown below. The Scottish Government said that it is “committing unprecedented sums to extend broadband and mobile coverage in Scotland”.
DSSB aimed to provide 95% of Scottish premises with fibre broadband, initially by the end of 2017, this target was moved to March 2018. In January 2018, the Scottish Government announced that it had delivered fibre broadband to 95% of premises.
26.In addition to the £100.8 million described above, the UK Government allocated a further £20.99 million in February 2014 to support further rollout by Digital Scotland. The way that this funding was used has been the subject of intense debate between the UK and Scottish Governments, which we explored with Fergus Ewing MSP, Cabinet Secretary for the Rural Economy and Connectivity, and Matt Hancock MP, then Secretary of State for DCMS.
27.The Secretary of State said that the Scottish Government has “sat” on the £20.99 million that the UK Government had given the Scottish Government to deliver Phase 2 of broadband rollout. He said this has caused slow progress on broadband delivery in Scotland:
The latest funding [£20.99m] that we gave was announced in February 2014. It is a source of deep frustration to me that the procurement for that broadband roll-out, where we allocated the money in 2014, only began in December 2017, some three and a half years later, and indeed the procurement process chosen by the Scottish Government is a slower form of procurement than we use in the UK Government. That means that the roll-out of the subsidised broadband system in Scotland has been slower than it could well have been…
He said that, as a result, the UK Government will work more directly with local bodies in Scotland on broadband rollout on future broadband delivery, “in the same way as we do with English local authorities”.
28.In response the Cabinet Secretary said that DSSB took a different approach to procurement from local bodies in England. In England, individual county councils or local enterprise partnerships have responsibility for rollout: they operated a phased approach, with separate procurements for Phases 1 and 2 of the UK programme. The Scottish Government chose to design their programme as a large-scale rollout that covered all of Scotland, and combined Phases 1 and 2. He said that this meant that when the £20.99 million was allocated, DSSB was not complete:
we designed the DSSB programme, with local authority partners, to avoid the need for successive small-scale procurements. At the point when we were allocated the funds, the DSSB programme still had several years to run and the precise coverage to be delivered had yet to be finalised.
He said that because of this the Scottish Government could not launch another procurement to use the additional funding without risking legal challenge, and that this was discussed with UK Government officials at the time:
Had we launched another procurement at that point, before the DSSB coverage footprint was known, the uncertainty over the target premises would have made it impossible for any supplier other than BT to bid; and the whole process would have been at risk of legal challenge on that basis. This was discussed and agreed at the time with BDUK officials.
We also explored the possibility of adding the £20.99 million to the DSSB contracts but, this option was in fact removed by the UK Government, which allowed a UK-wide state aid agreement with the EU to lapse in 2015. It took a year for them to negotiate a new agreement with the EU, the terms of which precluded any further investment in the DSSB (and all other BDUK framework) contracts.
The Scottish Government has said that it will use the £20.99 million as part of the total £600 million of funding for the Reaching 100% (R100) programme, which is the next stage of their rollout plan and aims to deliver broadband to the final 5% of Scotland.
29.In response, the Secretary of State said that the design of the DSSB procurement was not different from the process followed by local authorities in the rest of the UK, arguing that a number also chose to “fund and buy broadband delivery as a collective rather than individually. He said that “other local bodies have undertaken the same exercise and have been able to procure a second contract” and added:
To be clear, BDUK advised the Scottish Government to follow the same procurement path as other local authorities and gave guidance on how any build overlap could be managed. There was no formal agreement between BDUK and the Scottish Government to not follow this advice.
There is clearly a difference in opinion on whether there had been agreement between the two Governments on how this funding was to be used, which we have not been able to resolve during the course of the inquiry.
30.We explored with witnesses how the two Governments have worked together on broadband delivery. Aberdeen City Council told us that the relationship was broadly positive saying that “on the whole, the UK Government, the Scottish Government, Local Authorities and supplier communicate well”. Others had a more critical view: Scottish Rural Action told the Committee that lack of interaction between the two Governments “blocked” progress, and Hugh Aitken, CBI, and Stuart Mackinnon, FSB, both argued that a more “joined-up” strategy was needed between governments and other stakeholders.
31.Both ministers described how the officials from both Governments have worked together on previous programmes, and continue to meet regularly to discuss future policies such as the UK Government’s Universal Service Obligation. The Secretary of State said:
I have been very, very clear throughout this process that […] the work together at a technical level must continue. My officials have worked with the Scottish Government to try to speed this along, and we remain open to doing that as much as possible. In a way I would love to get to the position where we can put the debate behind us.
Fergus Ewing MSP proposed “resetting the relationship” between the two Governments, saying that establishing “constructive relations with the UK Government” was essential to overcoming the challenges of improving Scotland’s broadband coverage.
32.During the course of this inquiry, it was clear that there is intense political disagreement between the UK and Scottish Governments about the rollout of broadband in Scotland. We note that the issue of how £21 million was scheduled into procurement processes has led to disharmony between the two Governments, that all parties initially contributed £412 million to this programme and that £600 million is committed to the R100 programme. Whilst there is clearly discord over the different approaches adopted by both Governments, they are united in wanting to provide broadband coverage to the whole of Scotland. We welcome the acknowledgement from both ministers that the relationship needs to improve and their commitment to building on the collaboration that continues to take place between officials. We recommend that the UK and Scottish Governments take steps to improve their relationship on broadband delivery and find ways to effectively work together to provide coverage to the whole of Scotland, putting past disagreements behind them.
45 Ofcom, , 2017
46 ISPreview article,
47 ISPreview article, , 8 February 2018
48 Thinkbroadband.com, “”, accessed 13 July 2018
49 House of Commons Library briefing, , 2017
50 House of Commons Library, , March 2017
51 Audit Scotland Progress Report, , 2015
52 Scottish Government ()
53 HIE refers to Highlands and Islands Enterprise
54 Fibre broadband refers to the technology used to deliver broadband (having fibre cable running to the cabinet) and is not a measure of speed. Superfast broadband in Scotland (30Mbps) currently stands at 93.4%.
55 Scottish Government, , 22 October 2017
56 Digital Scotland, , accessed 18 July 2018, ISPreview.co.uk, , 20 January 2018, ISPreview.co.uk, , 14 December 2017
57 Scottish Government, , 17 April 2018, The Scotsman, , 22 January 2018,
58 Department for Culture, Media and Sport, UK Government ()
62 Fergus Ewing MSP, , 3 May 2018
63 Fergus Ewing MSP, , 3 May 2018
65 Secretary of State for DCMS, , 13 June 2018
66 Secretary of State for DCMS, , 13 June 2018
67 Aberdeen City Council ()
68 Balquhidder Community Broadband (), Scottish Rural Action ()
70 , . We discuss the USO further in Chapter 4.
Published: 23 July 2018