Wi-Fi (Swindon)

Part of the debate – in the House of Commons at 8:19 pm on 22nd March 2010.

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Photo of Anne Snelgrove Anne Snelgrove Labour, South Swindon 8:19 pm, 22nd March 2010

I understand the hon. Gentleman's concerns. The problem has been the process. I think that sufficient safeguards exist, but the cabinet member brief brought about all the secrecy. That is my concern-it is a very unusual process. The hon. Gentleman gives me an opportunity to say that I have a high regard for the officers and particularly the chief executive of Swindon borough council. I believe that the ruling Conservative group has placed pressure on those officers. Even if all seats are won by opposition parties at the local elections in May, that group will still be in power in Swindon. That is a difficult situation for officers to combat.

As I was saying, a number of questions arise about the robustness of Swindon borough council's contract with Digital City. Does it reflect the council taking on what appears to be 100 per cent. of the risk? That question is relevant if wi-fi does not succeed in attracting sufficient customers in a crowded market, because £450,000 of taxpayers' money will be lost. If wi-fi succeeds, will the contract bring the council sufficient rewards, or does the larger proportion go to the individuals behind the recently set up companies Digital City and aQovia? That should be subject to the council's scrutiny process, but it is impossible for me, my constituents or councillors of any party not involved in that enterprise, including the ruling Tory party, to find out, because the council determines that such questions are for Digital City-not the council-to answer. Digital City has provided basic information, but it cannot be tested through the normal democratic process, thus disfranchising councillors, MPs and their constituents.

No opposition councillor has had sight of the contract or the business plan, but at the beginning of this month the company had sold only five packages, rather than the 100 private-use packages and 25 business packages in the original loan conditions, and it had not managed to attract any private sector investment. It is clear from the cabinet briefing paper of 10 March 2010 that there had to be a significant downgrading of the original progress measures to allow the council to agree to the release of the second phase of the loan-£150,000.

Although that was agreed by the cabinet, in an unprecedented move last week's scrutiny committee meeting at the council referred the decision back to the next cabinet meeting on 31 March. I sincerely hope that the cabinet does the right thing and delays any further allocation of taxpayers' money until a full cross-party investigation can be carried out into the actions of councillors and officers-I mean an internal investigation, with councillors from the Tories, Labour and Liberal Democrats, and independents, who I am sure would be welcome. The robustness of the business plan and the loan agreement terms also need investigating, as does the lack of a tendering process, which gave an advantage to one company over others.

The technology used by Digital City is a wireless network with signals sent from boxes attached to council-owned lamp posts throughout Swindon. For that, Digital City needs planning permission and an electricity supply for the planned total of 1,400 boxes, which one of my constituents estimates will cost approximately £35,000 per annum. It is not clear whether Digital City or Swindon borough council will bear the cost. That is old technology, and whether it will produce the speeds quoted by Digital City remains to be seen, but there is scepticism that it will consistently provide speeds of 20 megabytes, which are crucial for wide take-up. Those who sign up for free wi-fi will not have access to the fastest speeds, creating the kind of two-tier network that was criticised by the Prime Minister in his speech today.

Digital City relies on Swindon borough council's connections, which I understand must be upgraded to take that into account at a cost of approximately £45,000. Although there is nothing wrong-in fact, it is good-with councils increasing their internet capacity, the issue is one of openness and transparency, because of the cost to taxpayers and the potential commercial gain by Digital City, which is not required to provide expensive infrastructure.

There are many opportunities for IT companies to provide digital access for Swindon homes, and we already have one of the highest take-ups in the country. It is a very crowded marketplace, with some of the largest companies in the country competing with small local businesses: our newest housing estate, Wichelstowe, provides fibre optic connections to all homes for both television and internet access; the Toothill estate in west Swindon is one of BT's pilot areas for comprehensive and very fast fibre optic connection; and an international company with headquarters in Swindon is upgrading its internet signal and considering making free wi-fi available after office hours within a 20-mile radius of its building. I welcome those initiatives, because they promote social inclusion and ensure a marketplace for my constituents that will keep prices competitive and offer a wide choice.

However, the entry into the marketplace of a council-backed company-effectively, it is publicly subsidised-will have a detrimental effect on small and medium-sized IT companies in Swindon. Several local companies have raised considerable concerns with me, particularly about the lack of opportunity to tender for the business and the loan given to Digital City during the worst recession for many years, when most SMEs were finding it impossible to get loans at a decent rate of interest, especially brand-new companies without a track record. Had Digital City gone instead to a high street bank for a £450,000 loan on the evidence of its business plan and ropey marketing strategy, I imagine it would have been laughed off the premises. The rate of interest on the loan has not been disclosed. As I said, it has been described as a loan on commercial terms.

In addition to the loan, Digital City has been given council premises for its headquarters at no cost to the business, and free access to council officers' time and advice. Councillors and officers claim that the council premises have no value and Digital City would enhance the offices, but that is at odds with the cabinet member briefing note of 12 October 2009, which states:

"The space will be made fit for office occupation and this cost will be met through the existing corporate repair and maintenance budget."

This is a massive subsidy, as all small businesses will know that start-up office costs are a big initial outlay for new ventures. In addition, the briefing note acknowledges that Digital City will need to install wireless boxes on council-owned lamp posts and states, in advance of any discussion at planning committee:

"The Council will also grant Digital City licences to install equipment at a number of its facilities across the Borough. Discussions are continuing around the possible need for Planning permissions to be granted."

Again, any business that has had dealings with council planning departments will know what a massive commercial advantage the automatic granting of licences gives, alongside officer help through the planning process if needed.

Swindon borough council, unlike Essex county council, does not have a small loans scheme for local businesses, so there are no opportunities for other SMEs in Swindon to take advantage of a council loan in the way that Digital City has. While Swindon borough council states that the loan is at "commercial rates", there is no evidence of what these rates are and how they compare to what was being offered to similar SMEs last year, when interest rates averaging 15 per cent. and secured against their own homes were being quoted to my constituents. Was this a condition the council set for the directors of Digital City? I very much doubt it.

There is no question but that all this provides Digital City with an unfair advantage in a crowded market. To state in a response to my constituent Chris Watts, a local businessman, that

"the council hasn't spent any cash on this, only officer time", is to be economical with the truth and insulting to small businesses in Swindon. Until this venture was announced in November last year, Swindon borough council's interest in providing free internet access across the borough was not apparent from its published strategies and appeared, at most, a long-term aspiration. Other providers of this service have thus been excluded from bidding to offer a similar service.

A number of constituents have raised their concerns about the protection of communities from radiation hazards, including those associated with wi-fi communications systems. I am assured by the Department of Health that there is to date no consistent evidence that exposure to radio waves adversely affects the health of the general population, although the Independent Advisory Group on Non-Ionising Radiation is currently reviewing radio frequency exposures, including those from wireless networks. The Health Protection Agency considers it sensible to adopt a precautionary approach to the use of any new technology.

Had the borough council been better prepared, it could have prepared information in advance for residents. In fact, the lack of information available for residents on any issue relating to wi-fi is quite breathtaking. A question asked by an opposition councillor about the provision for a family to object to a transmitter being located level with and 6 feet away from their child's bedroom window has not been answered by the council. Because of the secrecy surrounding the project, a mature debate on this subject has been impossible and it was left to me to provide information to residents.

I deal now with the relationship between Swindon borough council officers, councillors from the leading Conservative group and the directors or owners of Digital City, aQoviaand Avidity Consulting. Underlying concerns about the lack of competition is the possibility that the individual behind this venture, Rikki Hunt, may have had access to privileged information that gave him an unfair advantage when putting his proposition to the council. Mr. Hunt is the chair of Swindon Strategic Economic Partnership. Until the end of 2009, he was also a non-executive director of Swindon Commercial Services Ltd, which is Swindon borough council's direct services company and the main contractor to Digital City for installation and maintenance of its wireless network. That would have given him access to senior councillors and council officers and, potentially, access to commercially valuable information not available to competitors.

It has been too easy for those concerned to hide behind various companies and to deny the public access to the full facts, yet the public are paying for those companies' activities and the directors are, as far as I can ascertain, accepting no liability. By virtue of his close association with Swindon borough council, Mr. Hunt may have been in receipt of privileged information in relation to the council's plans for widening access to the internet, as well as those of the economic partnership. As a consequence, it is possible that a conflict of interest could arise in his company's approach to the council, as covered by section 175 of the Companies Act 2006, under which a director has a duty to ensure that they avoid a situation where they have, or can have, a direct or indirect interest that conflicts, or may conflict, with the interests of the company. The information made available to the public by Swindon borough council provides insufficient evidence that no such conflict has arisen or that the council made efforts to assure itself that such a conflict had not arisen.

There has been considerable interest in the scheme from councils across the country-and, indeed, some councils from abroad-which is why we should look carefully at the business plan and the public service model offered. As I have said, rolling out internet access to the whole population is a good idea. The Government have stated so on numerous occasions and in various publications, and today the Prime Minister took that support further, giving Martha Lane Fox a role in co-ordinating the Government's digital activities. It is right that councils should be involved, but plenty of other good ideas have gone bad when people seek a commercial advantage through councils. We know what happened in the past when over-close relationships developed between councillors, council officers and property developers.

It has been suggested by Conservative councillors, including the leader of the council, that anybody who asks questions or raises concerns-or, indeed, anybody who even reports these in the local press-is working against an excellent initiative and against the interests of our town. That attitude worries me considerably. Asking pertinent questions is a legitimate activity in a healthy democracy. Probing questions should be welcomed, not pushed to one side or deflected by smokescreens. The job of elected members is to explain and promote their policies. They should not be secretive or defensive about that, nor should they abuse their position with officers. What has happened is a failure of the political process, and whatever errors of judgment have been made, officers must not be made convenient scapegoats. The scheme arose from discussions among councillors.

It is an irony that the internet has provided access to much of the information that I have detailed in this debate. Talkswindon members have sifted through council documents and company documents that are available online, and although it still took dedication and time to find the relevant information, that was a matter of days and weeks, rather than the months and years that it used to take.

Although I do not believe that there has been corruption on the part of officers, the process put in place at the behest of Conservative leaders of the council lays open the possibility of future corruption. I repeat my plea to the cabinet to delay any further allocation of taxpayers' money until a full cross-party investigation can be carried out into the actions of councillors and officers. Mrs. Spelman is quoted on Digital City's website as saying:

"We want to see a flowering of this all over the country".

My message to her is that she and her party's councillors need to have much more probity before they rush headlong into schemes that have the potential to waste hundreds of thousands of pounds of taxpayers' money, disadvantage small businesses and threaten the reputations of local councils.

There are still serious questions to be answered. Did this sorry mess come about because leading Conservatives wanted to keep the initiative secret, not just from opposition councillors, but from members of their own group, in case it was scuppered at an early stage owing to the flimsy business plan, or because they were scared that credit could be claimed by others? Although the blame lies squarely at the door of leading Conservative councillors who insisted on secrecy, were council officers unable or unwilling to challenge the Conservative group, which will still be in power on 6 May? Did officers insist on one of their own number sitting on the Digital City board because they were concerned about the closeness of Mr. Hunt to councillors and the council processes, and did they recently realise that this decision would instead compromise them and therefore decide to run a mile from it? What safeguards are now in place to protect taxpayers' money and ensure a level playing field for the small businesses in Swindon? I hope and trust that my hon. Friend the Minister will help me get some serious responses to those pertinent questions.

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