The Treasury has offered more details of its £1bn investment in digital communications announced as part of the chancellor’s 2016 Autumn Statement.
Autumn Statement promises funding boost for broadband – Photo credit: BBC Parliament
Philip Hammond announced the creation of a National Productivity Investment Fund, which will spend £23bn on housing, transport, digital connectivity and research and development between 2017-18 and 2021-22.
Of this, £740m will go towards supporting the government’s widely-trailed pledge of encouraging the market to roll out full-fibre connections and 5G across the country.
As well as the already announced £400m Digital Infrastructure Investment Fund – which will have to be matched by private finance – Hammond also announced a set of tax breaks for broadband suppliers.
This will see companies received a 100% business rate relief for new full-fibre infrastructure for a five-year period from 1 April 2017, which the government said would support roll out to more homes and businesses.
The idea is to help smaller businesses by reducing the costs of fibre broadband, but big providers like BT have campaigned against the proposed new business rates, with the telco saying that the move would lead to higher process for consumers and businesses.
The productivity fund will also back a series of trails for integrated fibre and 5G, which is needed to support the ever-increasing amount of internet-connected devices and new technologies like driverless vehicles. More details of this will be given in the 2017 Budget, the document said.
In addition, the fund will offer local areas support for investment in a bigger fibre “spine” across the UK, while part of a separate, extra investment in the Local Enterprise Partnerships across England will also be used to support digital connectivity.
Commenting on the statement, Shaun Collins, chief executive of wireless analysis firm CCS Insight, said that any investment in the UK digital backbone was welcome, but that it “only offers a small step” in the right direction.
“Realistically 5G services are unlikely to be available before 2020 in the UK,” he said.
“High quality broadband has become essential to support an increasingly digital workplace and home. The UK has lagged behind other nations and this had to be addressed quickly.”
Tech industry representative body TechUK agreed, saying that the full costs of deploying the networks would be “many times greater” than the £1bn announced, and that public funding must be “targeted carefully”.
The Autumn Statement also indicates that the government will spend £450m of the NPIF cash on trials for digital signalling technologies on the rail networks, with an aim of expanding capacity and improving reliability. A further £390m will be spent on ultra-low emission vehicles, renewable fuels, and connected and autonomous vehicles.
More broadly, Hammond said that the government’s 2015 spending review plans would remain in place, with departments still expected to achieve efficiency savings worth a total £3.5bn. However he added that, as an incentive, they would be able to reinvest up to £1bn of this in “priority areas”.
Hammond also announced that this would be the last Autumn Statement, to be replaced with a main budget set piece in the autumn and a smaller Spring Statement, which will not be a major fiscal event.