Is the UK’s broadband infrastructure a vital national asset that must not be allowed to fall into the arms of, say, a Swiss-based French telecoms tycoon with a taste for financing his ventures with oodles of debt?
Come back another day – possibly – to discover the government’s view. Tuesday’s ruling on Patrick Drahi’s 18% stake in BT was a fudge. No action will be taken on the billionaire’s current holding under the new, and theoretically muscular, National Security and Investment Act. But we’re none the wiser as to what would happen if Drahi ups his stake to, say, 20% or 25%, or mounts a full-blown takeover bid.
“Any future transaction could be subject to a separate assessment,” said business secretary Kwasi Kwarteng’s department. Was that a warning along the lines of “18% but no more”, or has the next chancellor (probably) just kicked the can down the road? Impossible to tell. It is easier to say what the government should do if Drahi has designs on full ownership or creeping control: it should intervene to block either attempt.
First, because BT finally appears serious about upgrading the nation’s broadband. Having infuriated politicians and regulator Ofcom alike for years with its pedestrian approach to rolling out a fast-fibre network, the company now has its “fair bet” guarantees on future pricing and the game is on.
A £15bn investment programme to pass 25m premises by 2025 is under way, which usefully puts a rocket under Virgin Media and smaller rivals. BT really doesn’t need to take an excursion into high-leverage financial engineering, which would be one possible (perhaps likely) effect of ownership by Drahi’s Altice group.
The second reason is listed-company status, complete with conventional governance set-up and transparency on reporting, suits BT.
A chunk of the problems with the privatised water companies in England and Wales, one can speculate, are related to the fact that two-thirds of the industry has disappeared into the twilight world of offshore ownership, complete with layers of entities inserted between the ultimate controlling party and the operating business. Boardroom accountability works better in a quoted form. The security services may agree in BT’s case, which would be an important consideration given the work that the company does on that front.
So one hopes Kwarteng’s ambiguous stance means that Drahi is at, or close to, his ownership limit. Clarity would be welcome, though.
OBR’s service not required. Really?
Liz Truss’s campaign has been on a “holiday from reality”, said Michael Gove last week, and it rather looks as if the Tory leadership front-runner wants to take a holiday from scrutiny from the Office for Budget Responsibility in her likely first big fiscal announcement next month.
Thus Mel Stride, the Tory chair of the Treasury select committee, sent a pointed letter to the OBR and the chancellor on Tuesday asking if the watchdog is preparing for an emergency budget or “significant fiscal event”. In other words, the OBR ought to be involved in assessing the impact of any version of a mini-budget.
The view from the Truss campaign, it seems, is that the OBR’s services are not required for anything less than a full budget; and, anyway, there wouldn’t be time for a proper analysis.
Neither argument is convincing. If you’re planning major permanent tax changes, such as a reversal of April’s increase in national insurance contributions, the OBR’s analysis of the effect on the government’s finances would seem to be essential. The label on the announcement doesn’t matter.
As for the idea that OBR can’t move at speed, that’s nonsense: the body exists to provide scrutiny and is always updating its numbers. Its analysis of how much of the fabled £30bn of fiscal “headroom” from March has been eroded by inflation and higher debt-interest payment is sorely needed.
Stride, a Rishi Sunak supporter, will face accusations of making mischief. But he’s right: the OBR ought to be involved.
Almost business as usual
“We are now very much operating business as usual,” declared Stewart Wingate, chief executive of Gatwick, on Tuesday morning, with terrible timing. Within hours, the airport was having to apologise for cancelling 26 easyJet flights because of staff absences in the air traffic control tower.
Still, the gist of his boast seems correct. Gatwick won’t be extending its cap on capacity, unlike Heathrow, which is likely to keep its in place until the end of October. It is not obvious why Gatwick has managed a quicker recovery, but maybe there’s something in Wingate’s touchy-feely lines about seeking co-operation with airlines. Heathrow’s management does seem to have a unique ability to annoy people.
