Yorkshire’s digital revolution leaves £9m black hole

17 January 2012

A taxpayer-funded internet project in Yorkshire has made headlines after claims that it haemorrhaged over £9m last year.

Digital Region, a scheme designed to make faster broadband available to homes and businesses in South Yorkshire, had hoped to attract national internet providers such as TalkTalk or Sky for its operations. But without their backing and sufficient interest from the public, the project now finds itself on shaky ground.

The total loss during 2010–11 came to £9.2m, with the company overseeing the scheme said to have brought in just £167,000 so far, prompting concerns over the future viability of Digital Region.

Now regional development agency Yorkshire Forward, which loaned the scheme £30m of public money when construction work began in 2009, has been forced to pledge a further £4m of government-underwritten funds which the scheme can draw upon if it comes close to collapse.

Thea Stein, chief executive of Yorkshire Forward, said:

“The decision was made with the local authorities that Digital Region might need more money. Clearly the discussion has been had with central Government, as all Yorkshire Forward’s funding ultimately comes through them.

“We are committed to seeing Digital Region flourish, but like all start-up businesses it needs support.

“It’s important to state this is a guarantee – the hope is they will not need to draw it down.”

Council chiefs had talked of sparking a “digital revolution” in South Yorkshire, with the creation of a cutting-edge internet network powering economic growth.

The £92m project – which was designed to offer internet speeds five times faster than the national average – now boasts hundreds of miles of fibre-optic cables beneath Yorkshire, but the financial difficulties have thrown plans to reach 97 per cent of homes and businesses by 2012 into doubt.

Now the plan to extend the superfast service to more rural parts of South Yorkshire – a key part of the scheme’s original remit – may have to be put on hold until it has earned sufficient profits to do so.

David Cowell, the newly-appointed chief operating officer, issued a statement on behalf of the firm, saying it had made “considerable progress” in a “competitive market” over recent years, and that its focus “will now shift to promoting the network and meeting its operational needs”.