Labour’s pledge for nationalisation is honourable – but they must not shun private enterprise

“Crazed communist scheme” (Boris Johnson) or symbol of “the most radical and exciting plan for real change the British public has ever seen” (Jeremy Corbyn)?

Labour’s plan to provide free high-speed fibre broadband across the UK is certainly eye-catching, and has given the party a much-needed (presumably) popular policy to counter the Conservatives’ unrelentingly negative campaigning.

The pledge also gives the shadow chancellor, John McDonnell (68), and Mr Corbyn (70) the air of high-tech whizz-kids, forging Labour and the New Britain anew in the white heat of the technological revolution.

In fact, Mr McDonnell and Mr Corbyn are indeed doing their bit to counter casual ageism, assembling quite a dramatic and rightly ambitious policy to correct Britain’s woeful digital connectivity.

We cannot repeat the experience whereby the British were two decades behind the Germans in building a national motorway network; or lagged the Japanese in the introduction of industrial robots. We have to get this right.

Whether Brexit happens or not, but especially if it does, the UK will need to do everything it possibly can to improve its competitiveness and productivity. Full-fibre broadband seems an obvious step towards that more prosperous future.

Moreover, Labour has a better answer to the question than has so far been suggested by the Conservatives. In Labour’s plan, the huge public subsidy required to overcome market failure will not simply disappear into the balance sheet of a listed company, BT. Instead, the investment the taxpayer makes will be balanced with the acquisition of an equity stake in BT’s Openreach division. It is analogous to what was done when the struggling banks were nationalised during the financial crisis – the bailouts were in return for equity stakes and majority ownership of the institutions concerned.

By contrast, Mr Johnson (55) has a nice line in high-tech rhetoric, but has said little about the financial arrangements he would like to see. Simply handing some £25bn to BT or other firms in return for some guarantees about broadband coverage (especially in rural areas) seems unsatisfactory. What, for example, would the useful sanction against BT Openreach be if they failed to live up to their promises? What would the scale and pattern of charges be? What influence or control would the taxpayer have in return for paying up front? Would city dwellers have to subsidise those who live in the countryside, or vice versa?

Still, there are concerns about the Labour plan. The price to be paid for BT shares in the partial renationalisation, for example, may bear no relation to their current or future market value. Labour says the price paid will be determined by parliament, but that does not necessarily mean it will be full and fair value for shareholders undergoing a compulsory purchase. They have rights too.

The alternative offered, of government bonds, will not suit everyone, so a cash alternative might also be usefully offered, especially to the still substantial number of small private shareholders who subscribed to the privatisations in 1984 and after.

A wider concern is how British Broadband, as it is to be known, will fare in the future. As a nationalised concern, with national objectives set for it, it may not be able to operate in a fully competitive way in the global marketplace, and be made to resemble an old-fashioned municipal utility. That does not reflect the global nature of the digital revolution, nor the tremendous power for good and productive partnership that the tech giants can bring to bear. So often, and rightly, accused of abuse of their position and worse, they have not grown as large as they have by being inefficient and careless of their customers.

British Broadband, in other words, is unlikely to be able to do everything that the larger global players can do – the likes of Huawei for example – and will have to at least cooperate with them on a commercial basis. No matter how determined Labour may be to put this vital national asset in the hands of the people – an honourable enough objective – they will not and should not be able to shun private enterprise. The tech giants, after all, have successfully commercialised the original (state-created) internet. British Broadband could learn much from them.