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After the election: what next for centre-left politics?
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Tax the phone companies not the people argues Gavin Hayes
On my way in to work today on the tube I was astounded to read a fellow traveller's Daily Express: ‘Now a tax on every phone' rang out the headline from the front page, which I immediately dismissed as the usual tabloid hysteria.
But when I got into the office I read similar though slightly less histrionic reports in The Guardian: Lord Carter has proposed levying a broadband tax on every phone line in the country to pay for new super-fast broadband services. Don't get me wrong I'm all for people paying their fair share in tax, but I immediately started to question why on earth we should be made to pay for this.
Surely it should be the phone companies themselves that stump up the money for such investment? Why it beggars belief have BT and other phone companies, all of which have made tidy profits in recent years, neglected their duty to adequately invest in the broadband technology of the future that our country needs and why now are consumers and businesses alike being punished to make up the shortfall for this lack of investment? What's equally perverse in all of this is that Lord Carter in his report Digital Britain also proposes robbing funds from the BBC, a non-profit making public service broadcaster, in order to pay for something that should arguably have been paid for by profit-making BT. This takes robbing Peter to pay Paul to a whole new dimension.
Let's also not forget that the British public were sold the idea of privatisation of phone companies, along with other utilities such as water and energy providers, on the basis that private (profit making) companies (so we were told) were best to provide, modernise and invest in such services.
If all the huge profits that BT and other companies made in the consecutive years since privatisation had been wholly reinvested in their businesses, instead of being siphoned off into huge executive fat cat bonuses and in wasted dividends to shareholders; if in the 1980's British Telecom had been modernised not privatised; we may not now be in the silly situation of having to levy what the Daily Express has today dubbed another Labour stealth tax - at the very least the government should be looking to tax the phone companies not the people for their negligence in failing to invest.
But let's face it the fundamental problem here is this: whether it's phone companies you call only to be put on hold for what feels like an eternity, energy companies making greedy windfalls, or water companies who seem to lose as much water through leaking pipes as they provide to households - the privatised utilities are failing us as customers and failing to invest in Britain's future.
Given this fact why on earth the government want to now keep pushing the privatisation of Royal Mail makes no common sense whatsoever.
Gordon Brown this week claimed that faster internet access is 'an essential service as indispensable as electricity, gas and water', it seems to me any services deemed as so indispensable to life should not in my mind be there to make a profit from.
It really should therefore take us back to a discussion around the need for public utilities that are run for people not profit - such a national debate is now urgently required and after all in the words of Bob Hoskins we should never forget "It's good to talk!" - oh and don't forget to tell Sid!
Gavin Hayes, General Secretary, Compass
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Comments
on 19 June 2009, 4:00:27 PM
Essentially, we're asking private/privatised companies (like BT) to meet a social, public policy goal (of providing universal broadband access at increasing rates of speed to match the modern demands being placed on the service). There's a direct tension in that which few people have spotted and the principles of such a debate (who should provide what a public service, and in what direction and on what terms) are clearly well-founded ones.
Further difficulties have been caused in this respect by a regulatory model which has been based solely on increasing competition in the sector from the singular perspective of driving prices down. This has clearly been achieved, and it has been good for consumers who have been getting ever-higher speeds at ever-lower prices - but it's only been so in the short-term. From a more long-term perspective, such a policy has left private telecoms companies of scale with insufficient investment funds (most of all in this economic environment) to make the necessary investment, not least of all without a clear picture of when, and how much, the return from that investment would be. We are also left with the situation that, with investment falling so far behind demand, the speeds which are actually being delivered fall well below the headline ones. So, it is a failure of regulation which has also led to this situation (though you are correct to point out that, in a social ownership model, without city shareholders to satisfy, such investment funds would have been more readily forthcoming).
Concerning regulatory failure, one of the lesser-noticed actions being taken under Digital Britain is that Ofcom, the communications regulatory authority, is to be charged with a new remit to look at the impact on investment of its decisions. This overturns a 20-year commitment to looking solely at competition in regulatory decision-making. This is a welcome step forwards in starting to correct the regulatory failures that have left us where we are - albeit in the context of a continuation of the same basic neo-liberal economic model which has delivered the tensions you identify.
The sorts of sums likely to be raised by the levy are also small and are unlikely by themselves to provide the necessary finance to deliver expensive investment to outlying communities. Further funds will be necessary - and these are likely to have to come from private companies. That aside, however, the extent to which ordinary people have contributed collectively, and universally, to such a development does raise interesting questions about ownership of the assets that are being built with their money and how they may be compensated for what they have put in.
on 18 June 2009, 4:26:23 PM
Of COURSE telecom companies have their own specific tax. It is called a Spectrum Auction. The basic idea is that people like Orange work out how much profit they can make over the next period (a decade or so), and give most of that profit - up front - to HM Treasury in the form of a bid to use the spectrum for that period. The 'profits' from the future years then are nothing more than the telco's attempt to pay back the people who put up the monet to pay the Gov't.
So you see the telecom industry is already configured to siphone all proceeds to the Government. So no news here...nothing to see..but you knew that already - didn't you?
on 18 June 2009, 11:37:51 AM
I agree with much of what Martyn says, but the Left cannot go on ducking the issue of profit. The socialist and democratic case against profit is not that it lacks that vogueish concern expressed in the social liberal appraisal of capitalism, ‘accountability.’
on 18 June 2009, 10:46:54 AM
Furthermore, although Ofcom and the government could in theory impose the costs on the companies and prevent it being passed through to consumers, there is a question whether the vulnerable and less well-off would benefit more from home broadband, or just from a direct reduction in their bills.
on 17 June 2009, 9:05:24 PM
"Given this fact why on earth the government want to now keep pushing the privatisation of Royal Mail makes no common sense whatsoever."
For the same reason New Labour chose to privatise the maintenance of London Underground leaving the taxpayer to carry the can, not to mention its decision to recapitalise the banks when they had failed - and continue to fail - in their most basic utilitarian functions of enabling ordinary people to save, borrow and transfer money cheaply, reliably and efficiently. It's the Supreme Chancer's Mandylite doctrine of boom, bust and bailout, and it has been the one constant theme of New Labour's twelve wasted years.
One illustrative quote in from the Independent - picked up and passed around the world's press if google is to be believed - sadly doesn't beggar belief the way it should:
"One serving senior officer who was deployed to Iraq and Afghanistan said: "It was a political decision to go to war and we followed orders, although a lot of us had private reservations.
"One thing I do remember is how urgent procurement orders were delayed and delayed because the Government wanted to pretend it was still following diplomatic channels. This was one of the main reason for the shortages we faced and this resulted in lives being lost. We won't mind details of that coming out to the public.""
on 17 June 2009, 8:15:19 PM
"Profit" is not the real problem here. The important issue, in my view, is where the control lies.
Private industry is unaccountable. It used to be said that they were accountable to their shareholders, but we now know that even this is untrue. Fat cat salaries and mind-numbing bonuesses have been awarded by private industry executives to themselves, very often in the face of opposition from their shareholders ... especially when the major shareholders are themselves institutions whose noses are in the same trough.
The banks allegedly perform a vital function to the country, and the moment they got into serious trouble they were nationalised. Of course this idiot government wants to return them to private hands once the executives have restored their own financial well-being, and doubtless the Tories will do just that when they become the next government.
As it happens, I think Gordon Brown's characterisation of the importance of broadband is naively off the mark. Energy, water, housing and food are all far more important. But fi Brown is even close to the truth then you're quite right, Gavin, in saying that telecommunications should be nationalised. The very idea that we, the taxpayers, should fund a private company to enable it to strengthen its monopoly, increase its profits, and turn the screw on its customers, is anathema to me; the fact that a Labour government can even consider such a proposal merely confirms what we already know about New Labour.
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