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News | Published November 15 2019

Labour promises free broadband to all ahead of December general election

Labour’s latest pledge has seen the party promise full-fibre broadband for all homes and businesses by 2030 should it win December’s general election.

The financing for the project would come from partly nationalising BT, notably its Openreach digital network business, while introducing a new tax for huge technology corporations.

Shadow chancellor John McDonnell outlined the £20 billion plan, saying that it would provide broadband to “the whole of the country”.

The party also claims the new free-to-access network will “eliminate bills for millions of people across the UK”.

The new plans renege on comments that McDonnell himself had made back in July, which suggested that he had no plans to nationalise BT. The telecoms giant’s share price fell by three per cent before regaining ground in the wake of the announcement.

Prime minister Boris Johnson labelled the plans a “crackpot scheme”, which would cost £83 billion over the course of a decade and leave the taxpayer short by “tens of billions”.

Johnson has already outlined Conservative plans to deliver “gigabit broadband for all” backed by £5 billion of investment, which McDonnell has criticised for being “nowhere near enough”.

A report from industry regulator Ofcom earlier in 2019 revealed that seven per cent of the UK has access to full-fibre broadband, with the government having provided the inferior superfast model to 95 per cent of homes as of December 2017.

Under Labour’s plan, shareholders in BT would be compensated through government bonds, with the party having taken legal advice to ensure among other matters that pension funds with investments in BT are not compromised.

It is the latest in a string of Labour nationalisation plans, following party promises to take water and rail into public ownership, but McDonnell said that adding broadband to the list would be the “limit of our ambitions”.

A Labour government would form a new British Broadband entity to oversee the network, with its estimated £230 million per year maintenance to be provided for by taxes on corporations such as Apple and Google.

McDonnell said: “We think they [the big corporations] should pay their way and other countries are following suit”.

The party is yet to reveal how the taxation will work, but Labour say it will have the potential to raise as much as £6 billion.

Should competitors in the telecoms market not comply with giving access to British Broadband, then they will be forcibly nationalised according to McDonnell.

TechUK, a body representing numerous UK technology companies, has called the proposals a “disaster”.

Its chief executive, Julian David, said: "These proposals would be a disaster for the telecoms sector and the customers that it serves.”

Meanwhile, BT’s chief executive Philip Jansen told BBC Radio Four in the wake of the proposals that Labour’s plans would not be a “straightforward” matter and that the party had underestimated the costs of rolling out fibre broadband nationwide.

BT has suggested that the cost of providing full fibre to every home and business in the UK would amount to roughly £40 billion, doubling Labour’s estimates. Jansen also said that the effect of nationalisation on BT pensioners, employees, shareholders and investors warrants careful consideration.


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Authored by

Scott Challinor
Business Editor
@theparlreview
November 15 2019

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