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15 November 2019

Is Labour’s promise of free broadband for all a good policy?

Broadband is every bit as much an essential piece of infrastructure in the modern world as motorways. 

By Stephen Bush

Labour have pledged to provide free fibre-optic broadband to every household and business in the United Kingdom, and to do it by nationalising parts of BT Broadband – which, the party estimates will cost £20bn up front and £230m a year thereafter. It will be paid for by a tax on multinational tech companies.

The policy does something that John McDonnell has long been keen to do: to turn the party’s proposals on nationalisation from something broadly popular but abstract into something with a tangible and direct benefit. The party will also hope that it will trigger a big row – an opportunity to talk for several days about the proposal, and to move the electoral conversation away from Brexit.

For the Conservatives, it presents them with a dilemma. Do they go for a full-throated attack on the policy – or do they keep to their own themes of Brexit, the police and the NHS? 

Labour will hope having a big tangible policy offer will ignite an election campaign that most voters seem to be paying little attention to – and to their benefit.

Enough about the politics – what about the policy? It’s a proposal in three parts: firstly, to provide fast and high-quality broadband free at the point of use; secondly, to do so by nationalising parts of BT; and thirdly to fund it all by taxing multinationals. 

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The strongest part of the proposal is the case for free at the point of use broadband. It’s every bit as much an essential piece of infrastructure in the modern world as motorways, and the positive externalities to me, a taxpayer, paying for your unlimited broadband are clear. The upsides to paying for unlimited use of motorways are less clear – and the shared costs to hiding the carbon price of certain individual choices are not only clear, but large.

What about the mechanism? The model that has worked well in Slovenian cities and is spreading out across that country, which is a global exemplar of how to make a country greener and cleaner, is universal free at the point of use WiFi paid for by the government. Labour wants to do something different – to provide broadband itself. Without the detail of how Labour would run BT differently, it’s hard to see what Labour is actually getting for its £20bn, and means all we can do is assess the costs of this approach, both financially and also the loss of the ability to switch providers in the event you are unhappy with one. (A benefit of privatisation that does apply in this instance but noticeably does not in the case of water or the railways.)

And what about the funding? It’s not sustainable to at once want to move the British economy away from the free market, happy home for multinationals model of the last 30 years and to continue the New Labour-era approach of using the fruits of those industries to fund the public services.

I know I’m at risk of becoming a broken record on this but the big hole in Labour’s approach is that its radicalism on policy is not matched by radicalism on taxation. The failure to make an open and honest argument for broad-based tax rises might yet leave Labour badly exposed to a Conservative attack that the party is not being candid about who will pay for Britain’s transformation.