November 15, 2019
Their fantasy broadband plans are simply another thing they wouldn’t be able to deliver – and would leave everyone paying higher taxes to cover the cost.
Nicky Morgan, Secretary of State for Digital, Culture, Media and Sport said:
“Jeremy Corbyn’s fantasy plan to effectively nationalise broadband would cost hardworking taxpayers tens of billions.
“Corbyn is clearly so desperate to distract from his Party’s divisions on Brexit and immigration that he will promise anything, regardless of the cost to taxpayers and whether it can actually be delivered. What reckless idea will be next?
“Only a vote for Boris Johnson and the Conservatives will get Brexit done, keep our economy strong and deliver on the issues that make a difference in voters lives - investing in our NHS with 40 new hospitals, cutting crime with 20,000 more police, introducing an Australian style points based immigration system, and giving businesses and families the economic certainty they need to plan for the future with confidence.”
At the very least, Openreach alone holds assets of £12.5 billion, which a Labour government would need to pay for. Labour haven’t allocated any funds for this (BT, Your guide to Openreach, 2017, link).
Labour claim it can be completed for £15.3 billion, but BT have said that it would cost £40 billion (BBC, News at Ten, 14 November 2019, archived).
Openreach’s annual report states that at the financial year end 31 March 2019, it employed 32,454 people, with a salary bill costing £858,605,000 a year. Labour state ‘No workers will be worse off with all current workers in broadband infrastructure and broadband retail services being guaranteed jobs in the new public entity (and being guaranteed the same or better terms and conditions)’. Labour have not set aside any funding for this (Openreach, Annual Report 2018, p. 20, 13 August 2019, link).
Labour claim it would cost £230 million a year, however, Openreach currently charges broadband suppliers £69.59 per household, per year. Openreach are connected to 31.9 million homes and businesses, meaning an annual cost of more than £2.2 billion a year (Openreach, accessed 14 November 2019, link; ISP Review, 24 July 2018, link).
This £83 billion costing includes the one off costs of acquiring Openreach and the completion of the full fibre network, plus annual costs of staff salaries and maintenance costs, all as above.
Labour say they will not pay the market value for the firms they plan to renationalise, but Clifford Chance say ‘that’s not what the UK precedent is and that’s not what international law says’ (The Today Programme, 16 May 2019, archived)
Of the 25 groups slated for renationalisation by Labour, 12 have major shareholders entitled to protection under ‘Bilateral Investment Treaties’, which are designed to protect investors for state interference and unfair expropriation (Financial Times, 14 August 2019, link).
BBC Business Editor Simon Jack said:
‘It is very unlikely Parliament will decide to pay above market value and it could be quite a steep discount and that could mean a hit to millions of savers, millions of whom own BT shares to their pension fund’ (BBC, News at Ten, 14 November 2019, archived).
Carolyn Fairbairn said:
‘It’s the opportunities that renationalisation would destroy and the way it would make millions of people poorer in their old age’ (CBI, 28 March 2019, link).
There are 700,000 small private investors in the firm. Share values will drop on the news that Labour is planning to nationalise BT without compensation, hitting their savings (This is Money, 28 January 2017, link).
Clive Carter, Ofcom’s Director of Strategy, said:
‘In the UK, we want to see multiple, competing networks in the vast majority of the UK. Why do we want that? Why is the idea of nationalisation and a single monopoly bad? I think what has been shown right across Europe is that competition is what drives investment. Its the risk and fear that someone else is going to come along and eat your lunch that pushes you to invest and innovate’ (Telecoms, 30 November 2018, link).
James Foreman-Peck, Professor at Cardiff Business School said: ‘the privatised telecom industry seemed to deliver; prices came down, waiting lists for telephone vanished in the early 1980s and never reappeared, most faults were cleared quickly, and even public telephones began to work’ (BBC News, 3 December 2004, link).
A World Bank study found that the privatisation of BT led to a benefit to consumers of £4.15 billion and £2.25 billion to the Government (World Bank, Welfare consequences of selling public enterprises, 1994, link)
In June 2010, almost 3 million homes and businesses did not have access to basic broadband speeds of at least 2Mbps (DCMS, Policy Paper, 8 May 2015, link).
Their plans to provide nationwide internet access at a speed of 2 Mbps were described as ‘unambitious’ (House of Lords Communications Committee, Public Service Content, 8 April 2009, p.92).
A report by the Commission for Rural Communities found that ‘many rural businesses are already adversely affected by inadequate broadband connectivity and the negative effect of the digital divide is increasing’ (Commission for Rural Communities, Mind the Gap: Digital England – a rural perspective, June 2009, link).
Commenting, Therese Coffey, Secretary of State for the Department of Work and Pensions, said:
“Corbyn’s Pension Tax will see ten million savers facing a huge bill forcing them to delay their retirement for almost three and a half years.
“This is just one of the ways a Corbyn government would hammer hardworking people on top of his plans to hike up taxes by £2,400 a year, as well as the cost of his plan for unlimited immigration and the chaos of 2020 being dominated by two more referendums – one on Brexit and another on Scottish independence.
“Only Boris Johnson and the Conservative Party can get Brexit done with a deal, get parliament working again and turbocharge our economy to unleash Britain’s potential.”