4G auction raises £1bn less than expected

£3.5bn has been pre-spent; just £2.35bn will be arriving in the coffers.

The auction for the 4G mobile communications spectrum has raised just £2.34bn, over £1bn short of expectations. Since the money has been effectively pre-spent by the chancellor in the most recent budget, the discrepancy will be extremely problematic for the Government's budget plans.

The £2.34bn will buy five companies — EE, 3, O2, Vodafone and a new operator "Niche Spectrum Ventures Ltd" (owned by BT)  — access to the 4G spectrum. This will allow those operators to run mobile broadband throughout much of the UK, and is partly enabled by the switch-off of analogue TV, which freed up part of the 4G spectrum for alternative use.

While the Chancellor was apparently greedy in assuming that Britain could earn £3.5bn from the sale of the spectrum, the last auction like this, held under Gordon Brown's treasury, raised £22bn. But the 3G sale was markedly different from the 4G one. Held in the midst of the dot-com boom, the hope for revenue from the new technology was inflated beyond the realms of possibility, and a concerted PR campaign on the part of the government running for three years beforehand ensured that hype reached fever pitch.

Take, for example, Webvan. The company was founded with the promise of same-day delivery in the San Francisco area on a number of basic products — it was, basically, Ocado. But unlike Ocado, it had a market cap post-IPO of $8bn. Ocado, undoubtedly better than Webvan in every aspect, but ten years later, went for a quarter of that. In other words: the 2010s are not the 2000s when it comes to making big money from technology.

The 3G auction was also successful, however, in managing expectations. The general assumption was that "licences would sell for a total of about £2-4 billion", according to Ken Binmore and Paul Klemperer, authors of the definitive look at the auction. If this Chancellor has made one mistake, it was overinflating expectations — and if he's made two, it was writing those overinflated expectations into the nation's budget. His hubris will sting this morning.

4G iPads. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The 5 things the Tories aren't telling you about their manifesto

Turns out the NHS is something you really have to pay for after all. 

When Theresa May launched the Conservative 2017 manifesto, she borrowed the most popular policies from across the political spectrum. Some anti-immigrant rhetoric? Some strong action on rip-off energy firms? The message is clear - you can have it all if you vote Tory.

But can you? The respected thinktank the Institute for Fiscal Studies has now been through the manifesto with a fine tooth comb, and it turns out there are some things the Tory manifesto just doesn't mention...

1. How budgeting works

They say: "a balanced budget by the middle of the next decade"

What they don't say: The Conservatives don't talk very much about new taxes or spending commitments in the manifesto. But the IFS argues that balancing the budget "would likely require more spending cuts or tax rises even beyond the end of the next parliament."

2. How this isn't the end of austerity

They say: "We will always be guided by what matters to the ordinary, working families of this nation."

What they don't say: The manifesto does not backtrack on existing planned cuts to working-age welfare benefits. According to the IFS, these cuts will "reduce the incomes of the lowest income working age households significantly – and by more than the cuts seen since 2010".

3. Why some policies don't make a difference

They say: "The Triple Lock has worked: it is now time to set pensions on an even course."

What they don't say: The argument behind scrapping the "triple lock" on pensions is that it provides an unneccessarily generous subsidy to pensioners (including superbly wealthy ones) at the expense of the taxpayer.

However, the IFS found that the Conservatives' proposed solution - a "double lock" which rises with earnings or inflation - will cost the taxpayer just as much over the coming Parliament. After all, Brexit has caused a drop in the value of sterling, which is now causing price inflation...

4. That healthcare can't be done cheap

They say: "The next Conservative government will give the NHS the resources it needs."

What they don't say: The £8bn more promised for the NHS over the next five years is a continuation of underinvestment in the NHS. The IFS says: "Conservative plans for NHS spending look very tight indeed and may well be undeliverable."

5. Cutting immigration costs us

They say: "We will therefore establish an immigration policy that allows us to reduce and control the number of people who come to Britain from the European Union, while still allowing us to attract the skilled workers our economy needs." 

What they don't say: The Office for Budget Responsibility has already calculated that lower immigration as a result of the Brexit vote could reduce tax revenues by £6bn a year in four years' time. The IFS calculates that getting net immigration down to the tens of thousands, as the Tories pledge, could double that loss.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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