The Free Market is Analogue

Labour's broadband plans would bring Britain's infrastructure into the 21st century while helping workers and businesses - exactly what the free market has failed to do for decades.

Labour’s manifesto may not be out until Thursday, but the party is already making headlines with its nationalisation commitments. In addition to its proposals on rail, mail, energy and water, Labour plan to satisfy the 78 per cent of us unhappy with our broadband by delivering free full fibre broadband to every household in the UK by 2030 while nationalising sections of BT.

Labour have stated the policy will cost £20 billion initially, with a £230 million annual running cost once the infrastructure was completed and the nationalisation completed. The response to the policy has been characterised by economic short termism that contrasts sharply with the ambition of Labour’s wider plans to revitalise Britain.

Labour’s broadband plans are not simply a way of tackling the cost of living crisis or ensuring universal access to what has become a basic infrastructure of life in the 21st century, it is part of a strategy that aims to tackle the chronic lack of investment that has undermined the British economy in recent decades.

Despite the BBC dubbing the proposals “broadband communism,” it has in fact been business that has been calling for radical change in broadband provision for some time. The Institute of Directors, The Foundation for Information Society Policy and even the Conservative government have called for a new broadband strategy that would boost the economy. Think tank IPPR has also produced research showing how a digital divide holds back businesses in communities, especially in the North of England. 

Greater internet coverage and speed can be part of driving up productivity and boosting growth. In fact, according to the Centre for Economics and Business Research, universal fibre broadband would boost productivity by £59 billion by 2025. According to the IPPR, for every £1 spent on digital infrastructure such as broadband there is a £5 return.

This is something that Labour are aware of, with Rebecca Long Bailey arguing that the scheme could add 1% a year to GDP. It is little surprise that the most vocal opposition to the policy came from the private broadband providers themselves. BT claim the £20 billion price tag is far too low, saying it would be closer to £40 billion – though their insistence that nationalisation needs to happen at market rates is wide of the mark.

Of course, BT are more than happy for large sums of public money to be spent on broadband provision when they themselves are the beneficiaries. The company had voiced support for a Conservative plan to roll out fibre broadband to all households with the price set at £30 billion. 

Labour sourced their costing for the nationalisation from report called Frontier Economics, originally produced for the Department of Digital, Culture Media and Sport. So, despite criticisms from business and the right-wing press, their estimate can’t be that far off the mark.  

In fact, Labour plans to fund part of the initial investment using £5 billion already set aside for broadband by the Tory government, along with £15 billion from their Green Transformation Fund. The money for its £230 million running cost would come from a new tech tax that will be spelled out in full in the upcoming manifesto. 

The project might be a serious investment, but so are the savings for the consumer. The average person would save £30.30 a month. It is also likely to save the nation money on its phone bills. We pay £2.2 billion a year on additional mobile data to compensate for poor home Wi-Fi. It’s easy to see why the policy has met with widespread public approval.

However, it’s not just in our pockets that we would benefit. Full broadband coverage would give an extra 5 million people access to the internet. Over two thirds of these people are over 65 and nearly one quarter are disabled. Giving these people access to communication with family and friends, as well as easier access to services they rely on, could dramatically improve the lives of some of our most vulnerable members of society.

Research suggests that the policy could also boost the earnings of those previously without internet. The Centre for Economics and Business Research has found basic IT skills can boost an individual’s earnings by as much as 10 per cent and such skill can help improve upward mobility in the workplace.

The policy should give a significant boost those with the lowest earnings who are locked out of opportunities due to their lack of access to the internet. In fact, a serious problem with the rollout of Universal Credit was its online nature, meaning those who needed to submit information to retain their income couldn’t do so from home.

Similar advantages can be found in its benefits for our environment. The increased virtual connection could save 300 million commuter trips a year helping reduce our carbon emissions.

In government, Labour aims to show that state investment can trigger benefits across the economy: improving infrastructure and business conditions at the same time as helping those suffering from a decade of Tory austerity and tackling the climate crisis. The party is no longer sitting around for the divine hand of the market to intervene.

The UK has fallen behind in rolling out a full fibre network, with only 8% of the country having today. The Tories pledged to rectify that – but only after overseeing the shambolic failure of the past decade. In its attachment to free market ideology it has, in fact, allowed Britain’s businesses fall behind the rest of the developed world.