The City is wise to wince at McDonnell’s statism
This newspaper has, in the past, given credit to John McDonnell for his honesty and for his openness with the City.
We may not have welcomed his ideas, but we’ve often acknowledged that he has at least been upfront about his plans for government and has ventured into City boardrooms to explain his thinking more than anyone else from the Labour frontbench.
His favourite line was “there’s nothing up my sleeve.” He also said, not very long ago, that his bid to nationalise the water companies was the limit of his ambition when it comes to Labour’s public ownership programme.
People with a drink problem try to set limits on how many glasses of wine they’ll have, and in the same way that some can’t help reaching for another bottle, McDonnell has decided that — in fact — his desire doesn’t stop at owning the rail companies, the postal service, the energy network and the utility companies.
He wants broadband, too. Specifically, he wants large parts of BT and its offshoot Openreach operation. He says that Labour’s plan to provide free full-fibre broadband to every home and business by 2030 will set the Treasury back about £20bn, but already that figure looks laughably insufficient.
Analysts have pointed out flaws in Labour’s sums, including the absence of any provision for BT’s whopping pension liabilities, while BT’s current boss has said £100bn would be a more realistic figure once all elements of broadband provision are taken into account.
Then there’s the cost to BT’s shareholders — so many of whom are small investors who rode the original privatisation wave. McDonnell says nobody will lose out but he would say that, wouldn’t he?
The current broadband sector — the one Labour wants to do away with — would be left in a highly precarious (and uninvestable) position as a result of these plans. Competition would be killed off and any provider that remains in the game risks being appropriated by McDonnell.
The final cost to consider is more intangible but is, perhaps, the most significant. Who in their right mind would invest a penny in Britain if it’s run by such an avaricious and capricious government?
McDonnell may say that broadband nationalisation really is the limit of his ambition, that this time he means it, but who can be sure that he doesn’t have another industry in his sights? The City is right to wonder if his ambition has no limits at all.
Main image: Getty