What is the difference between Gainshare and clawback?
The contract held with BT for phase 1 is based on a gap funded model, where public subsidy is used to fund the gap between what the private sector believes the cost of delivery to be and what they are prepared to invest from their own resources. Part of the decision on the level of investment from the supplier is based on the baseline and forecasted levels of take up and revenues generated by the supplier. Where this baseline is exceeded, a clawback provision was set out in the contract for excess subsidy to be paid back to the local body. This “Clawback” is calculated at the end of the deployment phase of the contract (years 1-3) and then subsequently every two years, with a final year calculation.
BT’s bid was based on a 20% take up level which has already been exceeded, with the current Take Up across the programme standing at 43%. BT chose to make an early offer to each local body up to an agreed value of £129m across the UK against the future pot of clawback owed to each local body. In the case of CDS the confirmed amount offered is £4.8m based on the Total Homes passed and Take Up levels for the programme in March 2016. This early clawback is Gainshare.