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Government's Darling Chancellor confirms broadband tax
10 Dec 2009 | 22.04 Europe/London
The pre-Budget report is out and the "broadband tax" is in - meaning the Chancellor has given the green light to a measure that'll cost British households with fixed lines a minimum of 50 pence each month. This comes as another Commonwealth country is talking about putting a levy on its telecommunications firms instead of its consumers. And it wasn't the only announcement that concerns Digital Britain in what's being seen as Alistair Darling's first real Budget.
"Mr Speaker, we are modernising the UK's digital infrastructure and, in the process, creating thousands more skilled jobs," Chancellor Darling said in a speech (in fact, he generally finds it hard to say things without speech). "We have provided funding to help extend the opportunities of the broadband network to more remote communities. We now want to go further, so we can provide the next generation of super-fast broadband to ninety per cent of the population by the end of 2017."
The means to this end, which he underscored will be part of the upcoming Finance Bill, will be "a duty of 50-pence-a-month on landlines." Our Darling's duty is of course what's become known as the "broadband tax" - partly due to the wiles of the traditional headline writer and partly to do with the media's increasing awareness of how Google aggregates its News - sneaked in to June's Digital Britain white paper. From the pre-Budget report itself:-
The wording is worth highlighting in that it states the aim is to "encourage private sector investment in digital infrastructure," whereas the purpose of the Next Generation Fund always seemed essentially to fund super-fast broadband in the "remote communities" the market will not provide for.
The Government's hoping the 50-pence-a-month, potentially plus VAT, will rake in £175 million's worth of encouragement each year; its Conservative opponents - who could pull the broadband tax if they take over next year - think the market will take care of itself. (And there's also controversy around plans to add Value Added Tax (VAT) on top of the broadband tax.) And the Tories aren't the only ones the tax isn't proving popular with. Steve Weller, marketing director at uSwitch.com, has said it's like "robbing Peter to pay Paul”. "Vulnerable groups rely heavily on their home phone but have absolutely no use for broadband," he argues.
The UK's vision of broadband tax is in stark contrast to what's currently being discussed in New Zealand: placing a levy on the telecommunications firms. There a £136 million scheme is being designed to fund rural broadband expansion, with the goal being to outfit half a million New Zealanders with 5Mbit/s connections, along with almost a thousand similarly-isolated schools. The country's Communications Minister, Steven Joyce, claims a "strong and positive" response for the plan - though that's not from domestic telecoms firms like Vodafone, Telcoms and TelstraClear.
Martha Lane Fox and her "digital inclusion taskforce" get not only an honourable mention in the UK pre-Budget report but also a slice of "a further £30 million" in the way of the investment that will be pumped into UK Online, which MLF officially champions. While the cliché goes "you have to spend money to make money," here the Government is hoping to save money (in the long run) by spending now. By getting more people online it hopes it can get away with putting more services - including benefits claims - online too, and thereby cutting costs. It's through this and other measures being billed as "smarter government" that Darling and company ultimately hope could save £1.3 billion and half the public deficit within the next four years. As for Martha and her minions, they're merely tasked with drawing up a "National Plan for Digital Participation" that'll get "one million people online in the next three years."
The pre-Budget report also reiterates the Government's willingness to spend money obtained through other forms taxation on increasing broadband penetration. Out of the £750 million set aside in the last Budget for a Strategic Investment Fund - intended "to support advanced, innovative industrial projects of strategic importance" - will come:-
The problem with all the plans related to Digital Britain slated for the next Budget is that there's no guarantee any will succeed: particularly in terms of whether £175 million may not be enough to fund super-fast broadband access for ninety per cent of the UK by 2017 and whether 2Mbit/s is a worthwhile goal for 2012. You have to wonder how many Britons would settle for 5Mbit/s - and no new broadband tax for them to have to pay. New Zealand, anyone?
"Mr Speaker, we are modernising the UK's digital infrastructure and, in the process, creating thousands more skilled jobs," Chancellor Darling said in a speech (in fact, he generally finds it hard to say things without speech). "We have provided funding to help extend the opportunities of the broadband network to more remote communities. We now want to go further, so we can provide the next generation of super-fast broadband to ninety per cent of the population by the end of 2017."
The means to this end, which he underscored will be part of the upcoming Finance Bill, will be "a duty of 50-pence-a-month on landlines." Our Darling's duty is of course what's become known as the "broadband tax" - partly due to the wiles of the traditional headline writer and partly to do with the media's increasing awareness of how Google aggregates its News - sneaked in to June's Digital Britain white paper. From the pre-Budget report itself:-
4.46 Digital Britain also announced a duty on fixed telephone lines to be used to help encourage private sector investment in digital infrastructure. A consultation on the practical aspects of the new Landline Duty will be launched shortly and will be followed by a consultation on the procurement approach to investing in Next Generation Access.
The wording is worth highlighting in that it states the aim is to "encourage private sector investment in digital infrastructure," whereas the purpose of the Next Generation Fund always seemed essentially to fund super-fast broadband in the "remote communities" the market will not provide for.
The Government's hoping the 50-pence-a-month, potentially plus VAT, will rake in £175 million's worth of encouragement each year; its Conservative opponents - who could pull the broadband tax if they take over next year - think the market will take care of itself. (And there's also controversy around plans to add Value Added Tax (VAT) on top of the broadband tax.) And the Tories aren't the only ones the tax isn't proving popular with. Steve Weller, marketing director at uSwitch.com, has said it's like "robbing Peter to pay Paul”. "Vulnerable groups rely heavily on their home phone but have absolutely no use for broadband," he argues.
The UK's vision of broadband tax is in stark contrast to what's currently being discussed in New Zealand: placing a levy on the telecommunications firms. There a £136 million scheme is being designed to fund rural broadband expansion, with the goal being to outfit half a million New Zealanders with 5Mbit/s connections, along with almost a thousand similarly-isolated schools. The country's Communications Minister, Steven Joyce, claims a "strong and positive" response for the plan - though that's not from domestic telecoms firms like Vodafone, Telcoms and TelstraClear.
Martha Lane Fox and her "digital inclusion taskforce" get not only an honourable mention in the UK pre-Budget report but also a slice of "a further £30 million" in the way of the investment that will be pumped into UK Online, which MLF officially champions. While the cliché goes "you have to spend money to make money," here the Government is hoping to save money (in the long run) by spending now. By getting more people online it hopes it can get away with putting more services - including benefits claims - online too, and thereby cutting costs. It's through this and other measures being billed as "smarter government" that Darling and company ultimately hope could save £1.3 billion and half the public deficit within the next four years. As for Martha and her minions, they're merely tasked with drawing up a "National Plan for Digital Participation" that'll get "one million people online in the next three years."
The pre-Budget report also reiterates the Government's willingness to spend money obtained through other forms taxation on increasing broadband penetration. Out of the £750 million set aside in the last Budget for a Strategic Investment Fund - intended "to support advanced, innovative industrial projects of strategic importance" - will come:-
[A] contribution to the total Government investment of £200 million for the roll-out of universal broadband under the Digital Britain programme.
The problem with all the plans related to Digital Britain slated for the next Budget is that there's no guarantee any will succeed: particularly in terms of whether £175 million may not be enough to fund super-fast broadband access for ninety per cent of the UK by 2017 and whether 2Mbit/s is a worthwhile goal for 2012. You have to wonder how many Britons would settle for 5Mbit/s - and no new broadband tax for them to have to pay. New Zealand, anyone?