A state-run monolith won’t do things any better
No one who remembers the 1970s thinks public ownership will fix our patchy broadband service
Free full-fibre broadband delivered by the state to every home and business by 2030? As election promises go, that’s a Labour whopper in every sense: a headline-grabber, a crowd-pleaser, possibly even, for a day or two, a campaign-changer – and an ideological fantasy that shadow chancellor John Mcdonnell must know in his heart he can never deliver.
But he has certainly hit a hot-button issue. With a miserable 8 per cent full-fibre coverage so far, reaching only 2.5 million households, the UK ranks 35th in the world broadband league. To find the best, you have to emigrate to Japan or South Korea. In Europe we lag behind Spain, Portugal and tiny Latvia; only Belgium, Cyprus and Greece score worse than we do.
More relevantly, since few of us are in a position to make global comparisons, let’s acknowledge, first, that internet access is essential for prosperity and well-being in the 21st century but is generally poorest in those areas of the UK that are categorised as “left behind”.
These are the places most lacking traditional job prospects, transport links and support networks – and therefore most in need of the online connections that allow people to work, study and start new businesses from home. On that theme, I commend a recent speech by Andy Haldane, the Bank of England’s chief economist (said to be Labour’s favoured candidate for governor), analysing the multiple disadvantages – including bad broadband – of Ashington, a former mining town in Northumberland.
This is symptomatic of the fact that UK broadband beyond the metropolis is patchy even in prosperous towns and suburbs – and much worse in rural areas – while the faraway call-centre service offered by BT’S Openreach division (which Mcdonnell would renationalise as “British Broadband”) is a frustration to millions.
When I invited Spectator readers to tell me their experiences of Openreach, I was inundated with angry anecdotes from the length and breadth of Britain. To be fair to BT, I referred them all to the office of its then chief executive Gavin Patterson, whose team eventually sorted out many of the problems. But it took an intervention at the highest level to get action, and the impression left was of a too-big-to-care company falling so far behind its own aspirations for fullfibre roll-out that it could only fight fires as they occurred rather than provide a truly first-class service.
All of which, in the view of Mcdonnell and his hard-left cadre, including many union leaders, makes this shareholder-driven semimonopoly ripe for renationalisation alongside the rail, water, electricity and postal services. Marxist coup d’état theory used to talk about seizing the power grid and the radio stations first, but a forced takeover of Openreach would be a special revolutionary victory: the capture of one of the UK’S capitalist citadels.
The £4billion privatisation of BT in 1984 was, after all – in the words of then chancellor Nigel Lawson – “the birth of people’s capitalism”. More than two million citizens applied for shares, including 96 per cent of BT staff. Investors in the US and Japan were readily persuaded to apply, too, as a proxy investment in Margaret Thatcher’s reinvigorated Britain. The whole huge transaction was proof of the potency of the City of London as a global financial centre.
And if “people’s capitalism” never quite took off and BT never really won customers’ affection, let’s not forget what the earlier state-run service was like: the endless wait for new lines, the clunky old technology, the absence of choice or customer care, the truculence of the heavily unionised workforce and, of course, the complete absence of competition. But if BT has undershot expectations and failed to maximise its contribution to growth and productivity, while at the same time, Mcdonnell would claim, over-rewarding shareholders and executives, why not hand broadband over to a state entity that would put “social purpose” (so fashionable these days) ahead of profit?
The answer, at least to anyone who remembers the Seventies, is simple. State-run industries, when we had them, were mismanaged, backward, strike-ridden contributors to Britain’s long-term economic decline. To create a new swathe of them, as Labour proposes, by issuing former shareholders with government bonds instead, would provoke a catastrophic collapse of investment confidence. To create a state broadband monolith offering a universal free service would result in huge costs for taxpayers and the extinction of all competition in the sector – when in fact vigorous competition in technology and service between multiple private-sector players is the only way we will ever get the broadband we want.
In short, Labour’s broadband policy has zilch to do with pleasing consumers, and everything to do with John Mcdonnell’s lifelong interest in bringing about the overthrow of capitalism. Let’s pray it turns out to be no more than a vote-grabbing, gone-tomorrow gimmick.