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Government funding blocking EU cash for local superfast broadband projects - expert

Thursday, December 18th 2014 by Hannah Langston

The UK government’s reliance on broadband grants is preventing community projects from receiving EU funding, according to a broadband strategist.

The EU restricts state aid – where taxpayers' money is spent on projects in the private sector – to avoid governments giving an advantage to certain companies over others.

Adrian Wooster, who helps communities get fast internet connections, told Cable.co.uk that the government is making it difficult for the local ISPs he works with to get state aid for superfast broadband projects.

“In the UK we have a tendency to start with grants and end with grants. From an EU state aid point of view that’s the most distorting type of intervention you can make so they’re always the hardest to get through state aid,” he said.

He highlighted that in Stockholm the local mayor invested in upgrading the city to fibre broadband and was soon followed by private investors who did the same.

“I think it may be that British civil services are more risk averse than a town mayor would be – that tends to drive a lot of things.

“If you invest in something you want a stake in it and you have to sit around a table and make decisions. Maybe our civil service don’t really want to do that.”

Mr Wooster argued that the UK government’s strategy of proving grants rather than investing money in projects could be looked at unfavorably by the EU.

“[The government] puts funding in where it’s just donated to the project – the public sector doesn’t want any return from it other than seeing the project happen so you’re immediately maximising the distortion to the investment market sources.

“The EU takes a very serious look at that and I suspect the EU never really understood why the UK thought their broadband market was so broken that it needed nothing but grants, when none of the other countries up to that point had,” he added.

However, Matthew Hare from rural broadband ISP Gigaclear has argued that this approach is not exclusive to the UK: “I think any government project in any country in the world is risk-averse. The government is not well known for being at the cutting edge.

“Other countries have taken very different approaches to those in the UK but other countries have quite a different telecoms infrastructure,” the chief executive said.

A spokesperson for the Department for Culture, Media and Sport previously said: “Our model does require ongoing engagement as both the public and private sectors are investing. Also, at least a dozen broadband projects currently have EU funding through the European Regional Development Fund.

“Our preferred approach is the gap funding model which the NAO agreed has reduced cost and transferred risk to the private sector.”

Earlier this year the EU introduced new state aid rules, designed to make it easier for public money to be spent on broadband projects. As a result broadband projects valued at less than €70 million (£57 million) won't have to be notified or approved by the Commission – regardless of whether they involve rolling out superfast networks, or just basic connectivity.

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