Agenda Item No: 3
27th March 2012
Corporate Report Format
To the Chair and Members of the Cabinet
Digital Region Limited
Relevant Cabinet Wards Affected Key Decision
The Mayor All S347
Digital Region Ltd is a company set up to provide high speed broadband
across South Yorkshire.
In December 2011 each of the four local authorities agreed to further funding
to enable the company to operate up to the end of March 2012 in order to
allow time for further exploration of the operating model. In addition,
Rotherham MBC was tasked with leading on exploring the options for Digital
Region moving forward.
The attached report aims to assess the potential options for Digital Region.
REASON FOR URGENCY
A decision is now required urgently by shareholders of DRL ie the 4 South
Yorkshire Local Authorities and Yorkshire Forward/BIS regarding options for
DRL, including committing more funds to implement a new business model.
The Board is meeting on Monday 26 March to consider its options and will
need a degree of certainty that a shareholders decision is imminent regarding
the option of a new business model.
The Chair of the Overview and Scrutiny Management Committee and Vice-
Chair of the Regeneration and Environment Overview and Scrutiny Panel has
been consulted and has agreed that this matter is sufficiently urgent to
proceed under the Rule 16 Special Urgency provisions.
The Appendices to this report are exempt under Paragraph 3 of
Schedule 12A of the Local Government 1972, as amended (information
relating to the financial or business affairs of any particular person,
including the Authority holding that information) as they contain
commercially sensitive information that may be subject to negotiation at
a later date.
Agree that Digital Region Ltd adopts a new business model aligned to Option
2, within the attached report.
Attached at Appendix A is a report prepared for Digital Region shareholders
by Rotherham MBC with input from all the shareholders and interested
parties. The report has examined the options for Digital Region.
Cabinet is asked to consider the content of the report and attachments and
consider the 2 options presented.
As outlined within the attached report, two options have been identified and
considered. The preferred option is to enter into a process to procure a
supplier to takeover operations and management of the Digital Region
network in order that the network is available to and used by as many people
and businesses as possible in South Yorkshire.
REASONS FOR RECOMMENDED OPTION
The preferred option is to procure a new business model for the Digital Region
based on a cost/benefit assessment, as outlined in the attachments
IMPACT ON THE COUNCIL’S KEY PRIORITIES
Priority Theme Mayor’s Priorities for 2011/12 Implications of this
1. Creating a strong, Drive forward the Doncaster economy Super-fast broadband
connected and inclusive Get the balance of public and private will provide greater
economy transport right opportunities to attract
Promote Doncaster as a tourist inward investment and
destination business growth
leading to a more
Regenerate Doncaster's town centres sustainable economy.
2. Developing stronger Encourage community harmony and Greater opportunity for
communities cohesion. Treat people as individuals, access to super fast
not by reference to labels and artificial broadband to most
groupings areas of the borough
3. Increasing and Raise housing standards
4. Protecting and Continue to improve education and skills
improving all our Build on a strengthening Children's
children’s lives Service
5. Improving health and Encourage attitudes of self-reliance, self- Super-fast broadband
support for independent improvement and mutual respect within could lead to
lives Doncaster communities procession of care
services through the
6. Tackling crime and Reduce crime and all forms of anti-social
anti-social behaviour behaviour
7. Creating a cleaner Continue to protect the environment from
and better environment developers, decay and architectural
8. Internal Ensure local people get value for money
Transformation from council services
RISKS AND ASSUMPTIONS
The attached appendices clearly identify the risks and assumptions
associated with both options.
The Council’s involvement on the Digital Region project was authorised by S2
of the Local Government Act 2000 the so-called “well-being” power.
As outlined in the report, the Council is a party to a number of legal
documents, including a Shareholders Agreement with Rotherham, Barnsley
and Sheffield Council and Yorkshire Forward (now BIS).
Detailed legal implications are set out in Appendix C to this report.
In the budget report agreed on March 8th the Council set aside £630k on an
ongoing basis per year in contingency to meet the potential costs of DRL. This
figure was based on the costs of revenue repayments on capital that would be
borrowed (together with associated capitalisation of liabilities approval from
the government) to fund the Council’s estimated liabilities for DRL.
By using the 12 /13 contingency the aim would be to achieve a successful
procurement, as set out in the attached report. Under almost all procurement
scenarios the overall costs to the Council are likely to be less than the
predicted costs of the alternative option. Officer’s judgement is therefore that it
is worth committing the sum of £630k at this stage in order to secure the
future of the broadband network and to attempt to reduce the Councils current
commitments to DRL and reduce future risks.
Further information on the financial implications is set out in Appendix C to
South Yorkshire Chief Executives, the Mayor, Cabinet Member for Finance
and Corporate Services; Environment; Trading & Support Services.
Separate briefings have been arranged for the Group Leaders and Chair of
the Overview and Scrutiny Management Committee and Vice-Chair of the
Regeneration and Environment Overview and Scrutiny Panel.
This report has significant implications in terms of the following:
Procurement X Crime & Disorder
Human Resources Human Rights & Equalities
Buildings, Land and Occupiers Environment & Sustainability
ICT X Capital Programme X
The attached report and appendices.
REPORT AUTHOR & CONTRIBUTORS
Director of Finance and Corporate Services
Director of Finance and Corporate Services