Stephen Timms MP

Ruralnet Conference

I want to do two things in my contribution this afternoon:

• First to highlight ways in which Government can apply levers to extend availability and take up of broadband to rural communities; and
  
  
• Secondly, give my impression of how social enterprise is making a difference around the country.

I salute all those communities around the UK who are working to demonstrate the value of their demand for broadband to infrastructure suppliers. There is a great ferment of innovation and energy at community level that I pay tribute to. It has been suggested that we have seen nothing like it since the advent of the railways. It is at any rate a powerful and welcome force.

The best approach for UK roll out of broadband is to develop a competitive market. We have seen that demonstrated powerfully in the development of mobile communications over the past decade, where we have benefited immensely from the intensity of the competition between the operators, and we want to see a comparable level of dynamism, innovation and growth with broadband. We want companies to have the opportunity to compete and win business on their merits. We want a competitive market delivering customer choice, value for money and the innovation, we need to realise the economic benefits of broadband throughout the UK.

At the national level we have seen rapid progress over the past year. A year ago, we had only just achieved our one-millionth broadband connection. Today we have over two and a half million, the number is rising by 150,000 per month, we have overtaken France to become the second largest broadband market in Europe, and the gap between us and Germany has halved in the past year.

But this audience needs no reminder from me that the national figures, though encouraging, provide little comfort in rural communities that make up the majority of the remaining communities to be connected. But we can point to a number of examples of how the market is proving effective and innovative, including in rural areas. The demand registration schemes promoted by BT and others have had a positive impact on investment. We heard recently how BT's scheme has led to availability increasing to 80%, well ahead of predictions they were making even a few months ago. Many of those who have been excluded by distance on enabled BT exchanges will benefit from the technology enhancement that is extending the broadband reach from 5.5km to 6km.

The Regional Development Agencies and a number of local authorities have supported private demand registration websites that have led to intervention in many rural areas. In this region, EEDA's "Connecting Communities" initiative and demand registration scheme has led to a number of delivery proposals that will improve the position of rural communities in the East of England. With the announcement a couple of weeks ago of 10 more clusters, EEDA will take availability that stood at 53% to 80% and up to 84% by the end of this year. This is no mean feat and they have not finished yet.

Technological development will help us on a range of fronts. EEDA has found that wireless broadband has proved a powerful tool in making these projects possible in those rural communities where ADSL will not arrive in an acceptable timescale. Alongside technological advances, we are also seeing the cost of wireless equipment fall, and I expect wireless to be a big element in the next phase of broadband development, notwithstanding the recent and very regrettable failure of Invisible Networks. We recently concluded a successful auction of fifteen licences in the 3.4 GHz band for fixed wireless broadband, between them covering the whole country, and I hope we shall shortly see services rolled out to sharpen competition and to reach new areas not previously served.

I welcome the increasing number of Local Loops being unbundled. Satellite also has a role - visiting rural broadband projects in Sussex earlier this year I was able to see examples of satellite pilots under the "Wired Sussex" programme, which benefits from competition between twelve satellite broadband service providers.

There is another very important Government lever I want to highlight. Last November in his speech to the "e-Summit" at Westminster, the Prime Minister announced that we plan to bring together demand for broadband services across Education, Health, criminal justice system and other public services worth over £1 billion over three years.

Nine out of ten rural households are within just 2 km of a primary school, and every single primary school will have at least 2 Mbits/s two-way broadband by 2006. Six out of ten rural households are within the same distance of a secondary school that will have at least 8 Mbit/s two-ways.

I was the Minister for Schools before moving to DTI and it does not require too much imagination to see how big an impact on learning broadband can have. With the Curriculum Online programme now going forward with the support of the BBC, there is a growing wealth of superb material available online and we can see the prospect of young people increasingly being able to follow a wider range of courses, and being able to work at a speed which suits them best. The opportunities are immense.

Over 90% of libraries already have broadband. What I would like to see is every public library becoming a wi-fi hotspot, so that students, with others, will be able to go into their local library with their wireless-enabled laptop. Increasingly, all laptops will be wireless enabled. My department's Rural Broadband Unit is working with Resource, the library resources agency of the Department of Culture, Media and Sport, to see how this can be delivered.

What I want to ensure is that we use Government's investment in as intelligent a way as possible - planning our procurement of course so that we secure the best value for money for the public sector, but also so that we make the maximum contribution in rolling out broadband to those areas where the commercial case is the hardest to make at present. And I think we have come up with the way to do that.

By the end of next month, we shall have set up a Regional Aggregation Body - or RAB - in each of the English regions. Each of them will bring together the public sector demand for broadband in their region - initially from schools and the health service, and the Department of Education and Skills and the Department of Health have signed up to be the anchor clients for the RABs. I would expect that other departments with more modest requirements for broadband are also likely to join in. The RABs will then go out to the market and seek bids from service providers to meet not the separate requirements from each of the Departments, but the aggregated demand from all of them. Substantial, assured long term demand from the Government dramatically lowers the risk to investors and changes the business model for broadband fundamentally in rural areas. It will make it much more attractive to telecoms companies to make the capital investment to provide broadband backhaul in new areas. It means that there will be sufficient demand to justify investments from the service providers in many more places than would be the case if each department proceeded on its own.

We have looked very carefully at the impact aggregation can have. We carried out a very detailed study of the East Midlands region, looking at all the public buildings likely to need broadband, and what the impact would be of providing the backhaul capacity to meet the needs of all those exchanges where there were enough public buildings to warrant the investment. When we did the work, around 67% of households in that region were connected to exchanges with enough backhaul to support broadband - rather less than the national average. When the gains from public sector broadband aggregation were factored in, that proportion increased to 94%. And the other regions can expect comparable gains.

Access to broadband is a key issue for economic development and job creation in rural areas. We need to avoid an urban-rural divide opening up through inadequate provision of telecommunications services in rural areas. Public sector broadband aggregation is the key to resolving that challenge.

There are a number of key advantages from the fact that we will be doing the aggregation at the regional level. It means we can complement the very strong commitment to extending broadband access among the Regional Development Agencies, who will be supporting the RABs. It also means we will see a variety of approaches being developed and will be able to benchmark the RABs against each other - and we will be able to take the best ideas from the best performing RABs and spread them as best practice among the others. We shall be using the market as a powerful lever for improving private sector performance within a framework managed in the public interest by the public sector.

Broadband makes what the Internet has promised for so long a reality for individual consumers. But for broadband to really take hold in our lives, more needs to be done to stimulate compelling content. The technology alone is not persuasive; consumers have to see a marked difference from their current experience. Downloading images faster may not do it for me, but talking to friends while both of us surf a holiday website, view its video clips and plan our next winter break just might. Content and delivery have to match my lifestyle if I am to buy it.

The major existing content providers, such as the BBC and the big Hollywood studios, will have a major part to play. All the big ISPs around the world need to think in a strategic way about what will drive broadband adoption. The UK is also rich in smaller companies with great potential as broadband content developers. We have been looking at the market barriers to content developers realising their potential, and looking at possible solutions.

We are seeing some great use of the web by the public sector. A broadband experiment by the Telewest cable television provider in Birmingham last year demonstrated the very high level of demand for good quality online information from the National Health Service. NHS Direct Online gets half a million hits a month. Increasingly I believe we will see public sector agencies providing content that will drive up broadband take up.

But as consumers increasingly take up broadband, we do not want the opening up of a rural-urban broadband divide. So Alun Michael, the Rural Affairs Minister, and I set up the Rural Broadband Unit to make our response to the challenge of rural broadband more coherent. We wanted better co-ordination between our Departments and to help bring a focus to rural broadband, including among the Rural Development Agencies who are all deeply concerned both about broadband and rural development. The Rural Broadband Unit has been identifying best practice energetically and supporting relationships that help improve understanding of the key issues and get those messages out.

I know that RuralNet and several community-facing organisations represented here today have met with members of my Unit as they have worked to take a grip of the issues and spread the word around Whitehall, the regions and local authorities. With your help they are close to publishing a guide to help give a rounded view of the benefits of community broadband as a first step. Other projects are in hand to make the best of the "best of breed" ideas that they have found.

It is my intention with Alun Michael that the Unit should help speed things up, make the best use of available resources and sharpen the focus of supply- and demand-side players.

The figures speak for themselves - with 80% of the UK currently able to get broadband - the figure falls to 40% for market towns, 12% for rural villages and around 2% for remote rural communities. Beyond the levers I have described, the availability of alternatives to ADSL and cable make community action a viable alternative.

Last autumn I undertook a seven-day tour of social enterprises - 25 different enterprises from Cornwall and the Rhondda Valley to Newcastle and Hull, turning over between them £75 million and employing over 2,000 people. Since then I have been with social enterprises in Belfast, Nottingham and Aberdeen. I have enjoyed that programme immensely and it has been an object lesson for me in the potential of this sector.

I was deeply impressed by the stunning Eden Project in Cornwall, where Tim Smit's vision of Eden has produced 1,700 jobs in the South West and given Cornwall the third most popular paid attraction in the country, with tropical gardens under giant glass domes. It is transforming the economy in a part of the country that has been among the most hard-pressed in the past. Struggling hotels and boarding houses are being repainted and expanded. The project is focusing on buying food and other supplies from local firms - they invited 500 local firms to a supplier's conference and 478 of them turned up. Visitors are buying the local Cornish ice cream in vast quantities, instead of the national brands.

And I asked Tim Smit what was the aim of the Eden Project. He said: "It is to change the world". This is ambition on a grand scale! And he summed up very well for me what the new commitment to social enterprise is about when he told me, and I quote: "People are fed up with Kum Ba Ya around the camp fire, but there is a huge number of people who want to put something back." He's right - and social enterprise gives them the chance to do so.

Two of the most interesting projects I saw were on a much more modest scale in South Wales, both of them providing good examples of how the drive and determination of social entrepreneurs can empower individuals and communities and help them to access employment. One was The Arts Factory at Ferndale in the Rhondda Valley, which has its roots in work among people with learning disabilities but is now making a big contribution to developing people's skills across the community, with for example an environmental design business, which employs four people full time and thirty volunteers. They are working with United Utilities, whose Chief Executive I met this morning on the development of a windfarm on the hills above the valley, generating green energy for at least six and a half thousand homes and also providing a secure stream of income for the project. The digital divide is one of their main priorities and they made the point to me that their design business could expand significantly if broadband communications was available in the area - a point I want to come back to in a moment.

And another wonderful example from the tour was the Aberfan and Merthyr Vale Youth and Community Project. Aberfan had a terrible problem of youth unemployment - the only jobs available anywhere near were in Bridgend and the M4 corridor, but they were 50 miles away. There have been examples of the Government's New Deal programme providing unemployed young people with mopeds, but even with a moped a 50-mile journey is a formidable barrier. So the project hit upon the idea of renting out used Fiestas for £15 a week - just for the first three months of a new job, to give the chance for people to qualify for a bank loan to buy a car for themselves. And incidentally the project also trains up young people excluded from school and ex offenders to maintain the fleet of 15 old Fiestas, shortly to be increased to 40. Unemployment there has fallen from 27% to 7% - and it really is largely because that very simple idea has made it possible for the people to get to the jobs.

So those are my examples - all of them demonstrating the potency of taking the creativity and energy that characterise our entrepreneurial private sector at its best and applying them to the social and environmental problems that are among the toughest challenges that we face.

The reason we have been so enthusiastic about social enterprise in the DTI and Defra is because we have recognised its potential for promoting employment, providing key services where the conventional market has failed to do so and boosting local economic development - so contributing to our key goal of prosperity for all.

What we can see in social enterprises is that many of the most talented people - the most entrepreneurial people - are looking for much more from their work than just a wage at the end of the month. They want to be doing something they can believe in - making our communities better places, improving the environment, tackling poverty. And they want to apply their entrepreneurial skills to those goals - and the results are pretty spectacular.

It is because social enterprise has a key economic importance that responsibility for social enterprise lies with the Department of Trade and Industry. There are hardheaded economic benefits, which we need to capture. We overlook that at our peril.

So it is vital that we realise the potential of this. That means helping to start up new social enterprises and helping those already in existence to develop and grow. It is with this in mind that I welcome what RuralNet and The Phone Coop are attempting to put in place.

Corporate Social Responsibility and social enterprise are very fertile ground for innovation - skilled and experienced staff working alongside people from unfamiliar partner organisations, grappling with very important but unfamiliar challenges. The fact that responsible business practices can be a catalyst for innovation and creativity emerges as a significant justification for integrating such practices into the business mainstream. If partnering with social enterprise can contribute to the creativity of a company then that could lead on to very important business benefits. And I hope we will see more of those partnerships.

I mentioned what the Arts Factory said about availability of broadband allowing them to increase significantly the scale of their design business. Broadband does have the potential to deliver very large business, social and economic benefits - enhancing productivity, stimulating economic growth, safeguarding jobs and creating new employment. It opens up new ways of delivering key services like education, training, and healthcare.

I met a couple of businesses in Cornwall, where European Union has funded the ACT NOW project to implement broadband, and they illustrated this very well. One was a chain of print shops that has been able to shorten the lead time on its print jobs from three days to one day by replacing a van that used to carry around artwork with broadband. The other was a web marketing business which had relocated from London to rural Cornwall simply because they knew broadband would be available there - and they have expanded much faster in Cornwall, recruiting additional staff, than they would have been able to in London. And those two companies demonstrated very clearly to me just how potent broadband will be in bringing about the development of the rural economy which all of us want to see.

We have to use every available resource in the search for broadband solutions. So I am delighted to be able to confirm today that, in response to a proposal from Malcolm Corbett and Simon Berry, the Rural Broadband Unit, together with the DTI's Social Enterprise Unit have agreed with Alun Michael's department Defra to support RuralNet and The Phone Coop in a two-year project to improve the delivery of support in this area. I have often heard from successful community enterprises that finding a reliable and coherent source of good quality advice can be very 'hit and miss'. This development should help to deliver the experience of successful social enterprises for the benefit of communities around the UK. The pioneers in social enterprise development will see their lessons picked up by a wider audience of those only now starting out along the social enterprise route - some may not yet know that this option is open to them. By supporting this joined up approach by RuralNet and The Phone Coop, I hope to see community activists linked up and supported with central resources.

And I hope that equipment and service players, who will benefit from successful community action on broadband, will offer their support too.

Co-operatives UK, the apex body for co-operatives that is represented here today has been very active in this area. I am looking forward to visiting the Alston Cybermoor project next month - a community based broadband project that has become a co-operative. Co-operatives UK has put together an incorporation toolkit including sets of model rules, geared specifically towards the needs of communities working to bring broadband to their area. I am delighted to be able to launch the toolkit here today and to encourage you to visit the Co-operatives UK display for further information.

Because we recognised the economic potential of social enterprise, Patricia Hewitt, the Secretary of State for Trade and Industry, and I launched our ambitious strategy for social enterprise July 2002. We set out a three-year programme to show how, working with others, we will promote and sustain social enterprise activity.

The strategy highlighted a number of barriers to the growth of the social enterprise sector. Our aim is to tackle these barriers and to achieve three key outcomes:

1. To create an enabling environment for social enterprises;
2. To make social enterprises better businesses, including improving the availability of finance and funding for them; and
3. To establish the value of social enterprise.

I want to stress, as does our document Social Enterprise: a strategy for success that we cannot achieve alone our vision of dynamic and sustainable social enterprise. We need to work with colleagues across Government and with individual social enterprises and support organisations, to deliver the strategy's goals.

To help Create an enabling environment we are:

Among other initiatives introducing a new legal form, the Community Interest Company, which is being designed for social enterprises wishing to incorporate as not-for-profit-distribution companies. A team has been set up within DTI to develop the concept and consider whether its creation would achieve the goal of a strong new brand for social enterprises, locking in assets for the social purpose for which the enterprise was set up.

A consultation has been completed and the Government's conclusions in response are due out later this month.

To help make social enterprises better businesses we are working to improve support for social enterprises from business support organisations including DTI and Business Links. It is essential that business support provided by the DTI and its agencies should be available to social enterprises as to others, and that it should in practice be accessed just as much by social enterprises too.

We are working with the Small Business Service (SBS) to spread best practice through the Business Link social enterprise network and we work closely with the Regional Development Agency Social Enterprise Network. On my tour last autumn I visited Co-active in Plymouth that has a contract with Business Link locally to provide business support to social enterprises in Devon. In some places, though, the support is not yet at the level we think it should be.

We are also considering a number of proposals to develop training and information packages for social enterprises, including business and finance training.

The Bank of England reviewed sources of finance for social enterprise and they published a report in May followed up by a meeting of experts chaired by Barbara Phillips and Andrew Robinson of Natwest/RBS have been working on this and a report will emerge in the New Year.

To help establish the value of social enterprises we have let a contract for a project to review current knowledge of the sector and provide the methodological basis for a further project to conduct baseline research to establish a clear understanding of the scale of the sector. Social Enterprise London says that there are over 100,000 social enterprise jobs in London alone - we don't have a well-researched figure for the country as a whole. The first stage has been completed. The Report recommends the methodology for undertaking a UK wide social enterprise mapping project. The DTI's Social Enterprise Unit is considering the recommendations.

I hope that gives you a flavour of some of the work going on. We have set up two groups to monitor, and advise on, our work. These are an Interdepartmental Group of officials within Government and an Implementation Group of external stakeholders.

The third meeting of the Implementation Group took place on 22 September, with my colleague Nigel Griffiths in the chair as the Minister who since the reshuffle has been leading our policy work on social enterprise.

So we are wanting to push back the barriers to social enterprise, and to bring the provision of broadband services within its scope. In the past there have been parts of the country where it was taken for granted that you would never get a job. We are determined that that will change for good, and that, building on the new stability in the economy, we will see in every community a new spirit of enterprise, a new confidence in being enterprising - creating jobs and services, building communities and contributing to our key objective of 'Prosperity for All'. Social enterprises are a key piece of the jigsaw.

There is a lot to learn and this conference provides a great opportunity for learning. And I am pleased that co-operation within government has led to support for the principle of co-operation underscored today. Thank you for what all of you are doing. Let's work together now to bring about stronger social enterprise, and more of it, to deliver the kind of changes in our communities that all of us want to see.

Thank you.