The Third World wide web of Labour
We all know how frustrating substandard broadband is. The connection either keeps kicking out, or is so slow that your browser freezes. And don’t even try moving to another part of the house.
Well fear not, because Labour has a brilliant plan to solve our broadband nightmares: free full-fibre connections for every UK household and business by 2030, funded through partnationalisation of BT and a tax on Google, Apple and other tech giants. Job done.
Except there’s a problem, and it’s the same one that haunts every major economic policy the opposition conjures up: it is the stuff of fantasy, hurriedly drawn up in an attempt to win votes, with no real thought as to whether any of it is actually deliverable, or the true costs involved.
Still, when you’ve got an election to fight, who cares about reality? The numbers look like they were scribbled down on the back of a fag packet over a few pints. Labour says its “British Broadband” proposal will cost £20bn.
The boss of BT, no less, says that figure is poppycock. According to Philip Jansen, the man who runs Britain’s biggest broadband provider and therefore one assumes knows a little more about this sort of thing than John Mcdonnell does, the total bill is more like £100bn.
That’s five times Labour’s calculations, hardly a rounding error when you’re about to embark on an infrastructure project of this scale. How does Jansen arrive at his number? Upfront costs of £30bn to £40bn to roll out state-of-the-art broadband to 18m homes, a figure in line with the National Infrastructure Commission’s estimates; and the same again to give it away over an eight or nine-year timeframe.
Labour also seems to be omitting the bill for nationalising BT, a company valued at £20bn, perhaps because its sprawling shareholder base faces massive losses. Compensation would be determined by Parliament and investors will receive government bonds in exchange for shares, which will almost certainly be worth less. With more retail investors than any other listed company – thousands of current and ex-employees – that is value destruction on an epic scale.
The second stage of its plan to maintain the network is equally implausible. Labour says it would be funded through a new tax on multinational companies and would cost £230m a year to run the service. That assumes, of course, that any of those big companies will remain in the UK once the country is under the control of a Marxist government intent on a state-sponsored asset grab.
Those with any sense will either flee altogether or dramatically scale back their presence, costing thousands of jobs and investment. As for the upkeep of the network, telecoms analyst Nick Delfas at Redburn puts the real cost at between £1bn and £2bn annually.
Experts have also pointed out giving away free broadband would constitute state aid, which of course is illegal under EU law. So for a party committed to staying in Europe to dream up a key plan which is incompatible with doing so, that is rather unfortunate to say the least.
If Mcdonnell wants hard evidence that Labour’s latest election wheeze is doomed he should look to Australia, the only other country that has tried to build a state-funded national broadband network. The scheme has been beset by delays, cost overruns and claims that speeds are slower than those in Thailand and Paraguay.
Welcome to the Corbyn school of pie in the sky economics where Britain would become a Third World country.
Relationship breakdown
Winston Churchill and Franklin D Roosevelt first came up with the “Special Relationship” between the UK and the US nearly 75 years ago, but lately it has appeared a little lop-sided.
America has formally requested that the British entrepreneur Mike Lynch be extradited to face charges over the $11bn (£8.5bn) sale of his company Autonomy. Yet, these are the same authorities who refuse to hand over Anne Sacoolas, the US diplomat’s wife wanted over the death of 19 year-old Harry Dunn outside RAF Croughton in Northamptonshire in August. There’s nothing special about that.
‘Free broadband is the stuff of fantasy, with no real thought as to the true costs’