Politics

Labour’s ‘crackpot’ free broadband plans spark chaos as £500m is wiped off BT and 100,000 pensions put in peril


LABOUR’S “crackpot” broadband plans sparked market chaos yesterday as £500million was wiped off BT, a major TalkTalk deal stalled and 100,000 pensions were put at risk.

The proposal to nationalise Britain’s broadband network was blasted as a “fantasy” which could eventually cost more than £160billion.

 Jeremy Corbyn was greeted by a baby called Colin, who looked far from impressed

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Jeremy Corbyn was greeted by a baby called Colin, who looked far from impressedCredit: Getty Images – Getty
 Jeremy Corbyn and John McDonnell's plans to give away broadband for free could see 100,000 pensions were put at risk

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Jeremy Corbyn and John McDonnell’s plans to give away broadband for free could see 100,000 pensions were put at riskCredit: AFP or licensors

At the launch yesterday of his ga-ga plans, Jeremy Corbyn was greeted by a baby called Colin, who looked far from impressed.

Labour insisted they will nationalise Openreach — an arm of BT — and give free broadband to every family within a decade at £20billion.

But BT’s boss said the rollout would cost £100billion — and hundreds of thousands of ex-employers’ pensions would be another £60billion.

PM Boris Johnson called the idea a “crackpot scheme that would involve tens of billions of pounds of taxpayers’ money”.

Sources at the telecoms giant also warned it would mean lower staff wages and job losses. Shadow Chancellor John McDonnell issued a chilling warning to rival firms such as Virgin Media, Sky and TalkTalk, which have invested huge sums in broadband provision.

He said if others failed to “come to an agreement” with the nationalised firm they would “come within the ambit of British Broadband”.

He denied “fibbing” earlier this year when he said Labour had no plans to nationalise anything other than rail, water and energy firms.

‘PEOPLE CAN SEE THROUGH THESE FANTASIES’

Ex-Labour MP Chris Leslie, now standing for the Independent Group for Change, said on Twitter: “Why so coy? Why not throw in free SkyTV? Free iPhones? Netflix and Xboxes all round? The more fantastical their ‘promises’, the less credible they become.”

Chancellor Sajid Javid said: “People can see through these fantasies. The truth is there is no private company McDonnell wouldn’t nationalise, no private investment he wouldn’t confiscate.”

BT chief exec Philip Jansen called the plans “very ambitious” as £500million was wiped off its value.

Speaking on BBC Radio 4’s Today show he said it would cost up to £40billion to set up, and another £5billion in yearly revenue which Openreach gets off customers.

 PM Boris Johnson called the idea a 'crackpot scheme that would involve tens of billions of pounds of taxpayers’ money'

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PM Boris Johnson called the idea a ‘crackpot scheme that would involve tens of billions of pounds of taxpayers’ money’Credit: AP:Associated Press
 Labour's 'crackpot' broadband plans sparked market chaos yesterday as £500million was wiped off BT

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Labour’s ‘crackpot’ broadband plans sparked market chaos yesterday as £500million was wiped off BTCredit: Getty – Contributor
 Chancellor Sajid Javid said: 'The truth is there is no private company McDonnell wouldn’t nationalise, no private investment he wouldn’t confiscate'

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Chancellor Sajid Javid said: ‘The truth is there is no private company McDonnell wouldn’t nationalise, no private investment he wouldn’t confiscate’Credit: Getty Images – Getty

Over eight years that would mean a total “not short of £100billion”.

He also said they had to look after “hundreds of thousands of people who used to work for BT who have pensions that they rely on”. He estimated current liabilities to ex-employees at £60billion.

TalkTalk put the sale of its broadband business FibreNation on hold after the announcement. Chief exec Tristia Harrison said: “I think the whole sector is pausing.”

Insiders warned the telecoms industry will suffer. Julian David, of trade association techUK, said: “Renationalisation would immediately halt investment driven not just by BT but the growing number of new and innovative companies that compete with BT.”

‘UNMITIGATED DISASTER’

Mr McDonnell — inset with Corbyn — dismissed the £100billion sum, saying Labour’s numbers came from the Government’s own digital infrastructure review. Unveiling the plan to a whooping crowd at the University of Lancaster, Mr Corbyn said it will be paid for partly by taxing corporations such as Amazon, Facebook and Google.

Mr McDonnell’s claim that Labour will be copying South Korea was later rubbished.

Insiders say South Korea rolled out fibre broadband then deregulated the market for service companies — the opposite of Labour’s plan. Matthew Howett, of the Assembly Research think tank, said Labour’s proposal was similar to Australia’s National Broadband Network, an “unmitigated disaster”.

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It is “fraught with delay, complexity and a failure to deliver fast and affordable broadband”.

Labour’s plans could also let terrorists go unchecked, experts fear.

Its “Charter of Digital Rights” has powers for “individuals and collectives to prevent the use of digital infrastructure for surveillance”.

Sources warn digital surveillance helps nail criminals. Expert Will Geddes said the plan stops security services “from properly doing their job. Whether that is looking into a terror cell or a paedophile ring”.

 BT chief exec Philip Jansen said Labour's plan would cost up to £40billion to set up, and another £5billion in yearly revenue

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BT chief exec Philip Jansen said Labour’s plan would cost up to £40billion to set up, and another £5billion in yearly revenueCredit: Alamy
 John McDonnell issued a chilling warning to the likes of Virgin Media, Sky and TalkTalk hinting they could be absorbed into the nationalised firm within the ambit of British Broadband if they refused to co-operate

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John McDonnell issued a chilling warning to the likes of Virgin Media, Sky and TalkTalk hinting they could be absorbed into the nationalised firm within the ambit of British Broadband if they refused to co-operateCredit: Alamy

VERY EXPENSIVE & VERY, VERY SLOW..

What is Labour planning to do and why?

Labour plans to nationalise BT’s Openreach — the arm that is building the UK’s superfast broadband network — and give every home and business  free full-fibre broadband by 2030. 

It says the rollout would start with communities that have the worst broadband access.

Labour said it would be paid for through the party’s Green Transformation fund and taxing corporations such as Amazon, Facebook and Google.

What is the real cost?

 Labour has costed the scheme at £20billion but BT — which would be partly taken back into public ownership — warned the true figure would be more than £100billion.

The telecoms giant puts the cost of  building the full fibre network alone at between £30billion and £40billion.

What does it mean for broadband rollout?

Legal challenges to the plan could hold up broadband rollout by two to three years, industry insiders reckon. Matthew Fell of the CBI says: “The rollout of full-fibre broadband across the country is under way, and all renationalisation will achieve is to slow down a process that needs speeding up.”

What could go wrong?

Having to compete on price against a nationalised champion could choke off the competition, industry executives warn.

That would put  jobs at risk in an industry that employs 176,000 — only around half at BT.

The innovation that has produced smartphones and superfast networks could also suffer.

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