Nationalised industries are good at losing us money


           It is difficult holding modern nationalised industries to account. The Coalition has accepted much of the protective mumbo jumbo inherited from the previous government  that makes it difficult to get at the losses and excesses of state owned enterprises.

             The first is denial that a state owned enterprise is part of the public sector. Many questions about RBS are parried with “it’s a private sector company”. It just happens to be a company with a dominant taxpayer shareholding, dependent on taxpayer money for its very protected existence. Network Rail is said to be a private company! Some private copmpany, when the shareholder representatives are all chosen by  the state, and the whole thing is in effect  taxpayer owned and taxpayer subsidised. Even the Post Office, still technically a nationalised industry, fends off reasonable questions with a refusal to answer on the grounds of  “Commercial in confidence”.

           I tried to make the Post Office accountable for its decision to make huge increases in stamp prices last year. My questions as to how many first class stamps they sold before the price rise, and how many since, are blocked. Surely, as a representative of the taxpayer owners we are entitled to know how successful or otherwise this business strategy of huge price rises has been? As customer owners, are we not due some analysis of what impact pricing policy has had on our use of this important service? I assume my question was blocked because there has been a large decline in first class mail use, as you would expect with such a price rise. It was probably  big enough to lead many users of first class post to consider switching to second class or to some other way of communicating.

            I am seeking to make Network Rail accountable for its purchase of derivative products. Parliament does not apparently wish to investigate the £1 billion plus of marked to market losses at Network Rail, when MPs can get agitated about much smaller sums. Any discussion of the current rail fare rises is incomplete without exploring the foreign borrowings and the derivative positions of the leading rail company which happens to be in public ownership.

               I want to know more of the total cost of the bridge “improvement” programme which is gobbling up huge sums of money at the behest of the railway. Near  my own area the A4 Woodley bridge has been replaced at considerable cost, and now the Duffield Road bridge nearby is also being completely replaced. Why is this necsssary? What is the alleged return on capital? Why don’t they put in more road capacity at the same time so it would be more useful spending?

               I want to know why RBS is still such a large congolmerate. Why hasn’t the disposal programme continued more rapdily? Why has the bank been so persistently loss making since being in public ownership?

                Ministers should summons executives from these wayward baronies of the public sector, and start to instil value for money and cost control to save the taxpayer the continuing drain on our pockets. There is big money to be saved or earned for taxpayers  in these titans.


  1. Brian Taylor
    January 6, 2013

    If as you say the tax payer is liable for the losses of these companies,either the regulator or the select committees are weak or not fit for purpose?

    1. Wilko
      January 6, 2013

      Perhaps both are both.

  2. Ian Hills
    January 6, 2013

    Yet more examples of crony capitalism!

    1. Timaction
      January 6, 2013

      I know this is not on message Mr Redwood but after listening and seeing the articles attributed to your leader following his appearance on the Marr show is he completely loosing the plot? Further insults to UKIP followers! Claiming to renegotiate with the EU but not wanting to leave it! (This follows on from the Brown theory on how not to sell the nations gold reserves). His claims and rhetoric do not add up. Article 50 Lisbon Treaty (Leave) followed by renegotiation for TRADE only. Not more migration and huge costs. What is he going to do to stop the additional billions in public service costs for the (possibly large numbers) of Bulgarians and Romanians who are coming next year (Jan 2014) at English taxpayers expense subsidising the CBI? This is in top of the net billions already paid to subsidise the 3 million Eastern Europeans (minimum wages, leaving our own on benefits) in international health, housing , education costs at English taxpayers expense. No one out here any longer believes the single market rhetoric. Please tell your leader this as we all know the EU is a political NOT economic union or the USA, Japan, China, India, Brazil, Russia etc would all be asking for membership. Sighs!!!!!!!!

      1. alan jutson
        January 6, 2013


        The plot and the next election already lost.

        Couple that with the complicated child benefit fiasco, and the soon to be announced elderly care non package, and you have three diaster topics in a week.

        I can see further back bench rebellions.

        1. alan jutson
          January 6, 2013

          Disaster, Disaster, Disaster.

          Just repeating the spelling error.

  3. lifelogic
    January 6, 2013

    Indeed, well in the state sector, as these clearly all are, the “its not my money so what do I care” BBC type of attitude kicks in. Politicians should control this but never do.

    RBS is loosing money and worse, by clawing back good loans is turning down profitable business and hugely damaging the real economy, jobs and tax receipts in the process. They seem even to prevent businesses borrowing elsewhere, by restricting second legal charges, in order to put pressure on businesses to repay old facilities early. So we have a government owned business, losing money and damaging the economy hugely in the process. Typical Cameron, lets shoot ourselves in the foot, thinking – rather like Osborne’s 50% income tax and failure to act on his IHT “promise” and the whole quack energy agenda.

    1. Disaffected
      January 6, 2013

      Hw about the west coast railway fiasco, any Tory minister held to account by losing their job? Any civil servant sanctioned? We know the cowardly politicians passed the buck, but what action has been taken? It cost the taxpayer a fortune. Any real action with the BBC or BBC Trust?

      Cameron’s article in the DT and his dismal performance on Marr show what a dead horse he is for the Tory party.

      Child benefit cuts for traditional families not marxist unions, gay marriage no matter what, irrespective that it has no mandate or gone through proper parliamentary procedure, borrowing money to give away on overseas aid when old people cannot afford to heat their homes because of his green agenda (£2 billion given to Africa for wind farms), powers have been given away to the EU over the last two years ie European arrest warrant, how much has the UK contribution for theEU increased already? Interest rates held historically low for Cameron to continue borrowing and waste in public services. How many pensioners, savers and strivers have to suffer to pay for the public sector waste that Cameron has done about? Public sector: bonfire of quangos? No, another six announced in the Queen’s speech. How many people were given honours who failed in the public sector including regulators? The list of Cameron’s failings in the two and half years to date is endless. Yet he thinks people will believe him in the future. No wonder he wants to silence the press through Levison.

      How many cast iron guarantees does any body want to listen to before they stop believing him, especially on Europe? Remember the Lisbon Treaty promise in opposition? He did not even make changes when he had the opportunity in Nov 2010. He makes it clear there is no turning back with his modernisation agenda even if it is against grass root supporters. So who does he and his advisors think they Tory Party will appeal to? Certainly not people who are Christians, married, savers, pensioners, workers, strivers, believe in UK democracy and sovereignty and former Tory supporters like me. He can call me odd but I will vote UKIP.

      I am not sure that Labour would have taken any different stance on the economy to Cameron and Osborne. Not even they would have made the stupid mistakes in the budget as Osborne did- he was too busy having a jolly in the President’s plane to be interested in the budget. Does he spend a full week working in the Treasury yet?

    2. lifelogic
      January 6, 2013

      Cameron’s interview with Andrew Marr BBC1, this morning was absolutely pathetic. If that is a foretaste of his Europe speech he might as well forget it. He said nothing and failed to give any sensible answers. The usual 50% of our trade guff. Perhaps even more pathetic was the interview. Of the, is there anything you would like to impart to the nation Prime Minister type. As you know Prime Minister, you I and the BBC agree fully on the take over of the UK by the lefty undemocratic EU – so I won’t push hard on anything.

      UKIP will perhaps beat the Tories to second place in the MEP elections at this rate.

    3. zorro
      January 6, 2013

      Indeed, Cameron fantasising about having a majority at the next election too……along with Gideon ‘down with the masses’ Osborne pontificating in the Daily Mail about his huge sacrifice in no longer having child benefit. I guess he might have to draw a few pounds off the family inheritance to tide him and his family over……

      However, on the subject of ‘debt’ and ‘deficit’, there were a few more classic obfuscations……

      A brighter future means a future with less debt. I am determined that our children should not be saddled with paying off the bills our generation has racked up.
      And although it’s a hard road, we are making progress. The deficit is down by 25 per cent since David Cameron became Prime Minister.

      ‘A brighter future means a future with less debt. I am determined that our children should not be saddled with paying off the bills our generation has racked up……And although it’s a hard road, we are making progress. The deficit is down by 25 per cent since David Cameron became Prime Minister’

      Right, so there’s still not less debt, we are adding 100 + billion pounds a year to the debt. Deficit is not debt, it is in annual terms, what you spend in excess of your income.

      ‘But anyone who says that the richest alone can pay off the deficit isn’t telling you the truth. The deficit is too big for that.’………aaaarrrrggghhhhh!………You mean like you are not telling the truth Gideon. We are not going to cover the annual increases in our debt never mind the supposed capital sum!

      zorro (John, do us a favour and please hold an elementary economics class for these two!)

      1. Iain Gill
        January 6, 2013

        yes new statements from cameron show an emporer very much without any clothes on

        mediocre nonsense

        i think the country needs rescuing from the out of touch public school boys running the political system

        i always think “what would mrs T at her prime have said” and come to the obvious conclusion nothing at all like the conservative leadership at the moment, sketching down what she would probably say on most issues would result in a much better framework for a manifesto, and remarkably spot on about many current issues

    4. lifelogic
      January 6, 2013

      Cameron also today said he wanted to encourage pension savings – I assume that is why they have just reduced the tax reliefs available again. But do not worry it will not affect MPs or the state sector ones.

  4. lifelogic
    January 6, 2013

    As you say “Ministers should summons executives from these wayward baronies of the public sector, and start to instil value for money and cost control to save the taxpayer the continuing drain on our pockets. There is big money to be saved or earned for taxpayers in these titans.”

    The trouble is ministers seem to be just to be PR spokes people fire fighting for their departments reputation, have little knowledge of business, little interest is sorting the problem and weak controls over this money haemorrhage from state sector “businesses”.

    Despite Cameron saying “I want to lead the country until at least 2020” he is clearly planning for the inevitable defeat in two years time and mere damage limitation and perhaps an EU position for himself. Sorting out the likes of RBS is not high on his priorities. Gay marriage, royal gender neutral succession, green tosh, absurdly berating Google and Starbucks and the nonsense gender neutral insurance nonsense is far more sexy, modern and “right on” than doing anything sensible.

  5. lifelogic
    January 6, 2013

    I see with the Stafford Hospital scandal that the, free at the point of rationing and death, NHS is working well. Not only can they not treat people well, even feeding them and stopping them breaking limbs seems to be beyond them.

    1. Alte Fritz
      January 6, 2013

      No, no. Did you not watch the Olympic opening ceremony? Mr Danny Boyle demonstrated that it is staffed exclusively by saints.

    2. uanime5
      January 6, 2013

      Well given that any doctor/nurse who complained could be fired and prevented from working in the NHS by their manager they had no way to change anything. Let’s not forget that the Government watchdogs also failed to notice these failing and they didn’t punish any of the directors involved.

      The problems with the NHS go far beyond doctors and nurses.

      1. lifelogic
        January 6, 2013

        Indeed but do not worry they are having a “route and branch reform” – who knows perhaps they will even start feeding and giving water to the patients.

      2. Richard1
        January 7, 2013

        The problem with the NHS is very simple: its a state-owned monopoly. Its consumers have no choice but to put up with whatever service they get, which is sometime good and sometimes bad. Its employees are not in competition for their livelihoods with any competing providers. No amount of reform or extra money will remedy the problems in the NHS until the principle of choice and competition is established. Its the same in every other service and industry in every country & always has been.

  6. Dan M
    January 6, 2013

    Last time I looked the French state owned energy company EDF seemed to be doing fairly well. Any thoughts on the UK adopting the same approach? Not nationalised as such but just retaining the state ie the taxpayer as the largest shareholder…

    1. lifelogic
      January 6, 2013

      Indeed, if the state must hold businesses it needs to learn how to run them well and hopefully dispose of them well soon.

      The UK establishment and ministers are hopeless at running/contolling anything from the NHS, the BBC, the tax system to RBS and the post – indeed hopeless at most things – but quite good at Pageantry I suppose.

    2. A different Simon
      January 7, 2013

      Statoil does well on the same model Dan M .

      The recent rise in postage costs was an obvious sop ahead of the forthcoming privatisation .

      It’s rather telling that the taxpayer is expected to hold on to pensions liabilities .

      What is even more irksome is that we will go through that whole charade where the Conservatives will tell us the Post Office is being privatised for business reasons , Labour will say it is selling of the family silver .

      The worst bit is that the press will let them get away with it and not point out that the Govt has no choice except to privatise it because it falls foul of EU competition laws .

  7. David in Kent
    January 6, 2013

    It sounds like you would really be doing the nation a favour by forcing the executives of these state owned entities to answer to answer to a committee of the HoC.

  8. Tedgo
    January 6, 2013

    Apparently the railway bridge “improvements” around Andover and Romsey, 17 in total, are to provide a second route out of Southampton Docks for larger containers. That might also impact on the Wokingham area. So perhaps money well spent.

    1. A different Simon
      January 7, 2013

      Tedgo ,

      There appear to be plenty of 40′ containers on the rail and nobody uses 45’s anymore .

      I’m left wondering what these larger containers could be .

      In the US and elswhere they run DST’s (double stacked trains) with one container on top of the other . I would have thought our railway would have been too narrow gauge for that .

  9. Pete the Bike
    January 6, 2013

    Commercial enterprises run their business effectively by means of profit and loss accounts. If they do not provide a good enough service at a competitive price their profit goes down and they improve or go bust. As soon as the government sticks it’s nose in the process, be it ownership, regulation or whatever, the system is upset and inefficiency grows. Any enterprise that is wholly owned by government cannot ever respond properly to it’s customers needs and will either charge too much or too little for it’s services. Government should never own any commercial enterprise period. It never works. The amazing thing is that seemingly sensible people still believe it should despite decades of proof that it doesn’t work.

    1. P O Taxpayer
      January 6, 2013

      The lefties would say that nationalised industries are not run for profit to exploit the people but run by the people for the people with democratic accountability, or something along those lines! From what JR has experienced that is clearly not true!

      The Post office is a state monopoly run for the benefit of its management and employees. The management can’t sort it out because they are afraid of the unions and the government won’t pump in more money to subsidise the stamp price so the PO management just push up the prices. They are currently a monopoly protected by the fact they are “The Royal Mail”.

      Those of us who are long enough in the tooth know from our life experience that nationalised industries generally gobble up taxpayers money and steel making and coal mining were two particular examples. Those two industries were competing in World markets and were not able to compete without massive state subsidies

      However, the rush to privatise electricity, water and nuclear power has lead to a big chunk of those industries being bought by companies controlled by the governments of France and Russia which means that our utilities are state controlled again but not by the UK state. Now we get ripped off by foreign controlled nationalised industries who are protected by EU laws.

  10. alan jutson
    January 6, 2013

    When you have MPs who have no experience of business, the power to hire, fire and put placemen in top positions within any industry or department you will get failure.
    Couple this with interference on how they should be run and financed, and you have a ready made disaster.

    The simple answer to your question is:

    There is no reason why any nationalised industry should lose money if it is allowed to be run on a completely commercial basis.

    The fact is they never are allowed to be run on a commercial basis, because of political influence, and that is the simple truth.

    We either accept that we have politically run organisations which are supposed to provide services for the general benefit of the population, or we do not.

    The argument is surely, how much if any should the subsidy be, and should this be rather more transparent and straight forward.

  11. Alan Wheatley
    January 6, 2013


    To which you could add: if the railways are privative why is government buying trains.

  12. Denis Cooper
    January 6, 2013

    There are a couple of good reasons why nationalised industries tend to be loss making.

    The first is that some of them were unprofitable in the private sector, but were seen as essential and so were taken into public ownership to keep them going.

    The second is that a nationalised industry which is profitable tends to get sold off.

    In that respect nationalised industries are subject to the opposite of the “survival bias” that operates to enhance the performance of the FTSE-100 share index above the long term performance of the companies included in the index at any time.

    FTSE-100 companies which go bust or go into decline are simply removed from the index and replaced by better companies; some of the private sector duffers which are weeded out of the index actually find their way into the public sector, while some of the more successful public sector companies make the opposite journey.

  13. Alte Fritz
    January 6, 2013

    I am becoming a middle aged anarchist. This is because almost every encounter with the state involves an abuse by the state of its powers whether it is self serving secrecy or peddling untruths or half truths or sheer incompetence. One can see the fabric of civil society damaged before our eyes as the state becomes worse and worse.

    We need a smaller state which rediscovers the idea of public service rather than very private self service.

  14. DiscoveredJoys
    January 6, 2013

    I have never seen a credible explanation of why British rail fares are so expensive. If continental rail fares are subsidised (as we are told) can we not find out the pre-subsidy cost per passenger per kilometre? How does this compare with British fares? Is there a large difference? If so, why?

  15. DrJohnGalan
    January 6, 2013

    How can any member of the general public feel that the system of government has any relevance to them when a senior MP such as yourself can be fobbed off as you describe?

  16. Brian Tomkinson
    January 6, 2013

    How about this for a saving? In today’s Daily Mail I read:
    “The Minister for rail fares is being chauffeured to and from work each day – so he can avoid the overcrowded trains he is responsible for.
    Simon Burns is ferried the 35 miles between his Essex home and his Whitehall office in the comfort of a Government car which costs the taxpayer £80,000 a year.” Ministers don’t “summons executives from these wayward baronies of the public sector, and start to instil value for money and cost control to save the taxpayer the continuing drain on our pockets” as you suggest, because they are oblivious to waste. They are not fit for office .
    Reading your comments, as I do regularly, I often wonder why you continue as a Conservative MP. You have good ideas , you ask good questions, you make sensible recommendations and yet you seem to be ignored and rebuffed. You and we now know that Cameron wants to carry on until 2020 and today, on Marr, he sent again the clearest message that, far from being the eurosceptic he has been described, he is as committed to our imprisonment within the EU as Clegg and Clarke.

    1. Bob
      January 6, 2013

      “The Minister for rail fares is being chauffeured to and from work each day”

      Until ministers are forced to use the services they foist upon the rest of us there will be no progress.

      1. A different Simon
        January 7, 2013

        Same with pensions .

        Not just the legislators but the regulators too and everyone in the public sector .

        Close down all those schemes which are only open to the state workers or open them up to everyone .

        Everyone in the same boat .

    2. Wilko
      January 6, 2013

      Shortly after the coalition was formed, there was a claim that chauffeured cars would be heavily restricted. The suggestion was that the Govt was cutting waste & leading by example, using public transport. TV showed a minister waiting patiently in London’s Victoria Street for a bus to arrive to take him to his next meeting.

      The notion of relying on public transport seemed wasteful in view of the value of key decision takers’ time, and as daft as the temporary use of the stunt. If chauffeuring is useful & cost-efficient, fine. Expenditure per se is no bad thing; deceptive waste & incompetence are.

      Reply: They did cut back substantially on Ministerial cars, and still have far fewer than the previous government. I agree that the Ministerial car can be a most useful work assistance, allowing Ministers to prepare fully on the way to a meeting and to use more of the time of the working day productively. I would say that organising and providing travel was the most useful assistance the civil service provided me with to do my job when I was a Minister.

  17. MajorFrustration
    January 6, 2013

    Speaking earlier this year with the postman who looks after our mail, first class letters have gone off a cliff – and Christmas cards were reduced by about 60%. The only thing that apears to make money for Royal Mail is parcel post

  18. English Pensioner
    January 6, 2013

    If they were genuine public, not state owned, companies, I would be able to buy a few shares and go along to the AGM. As it is owned by the taxpayers, why, as a taxpayer can’t I go to the AGM and ask a few questions?

  19. sjb
    January 6, 2013

    JR wrote: My questions as to how many first class stamps they sold before the price rise, and how many since, are blocked.

    If you submit a formal Freedom of Information request[1] and still get no joy then, after exhausting their internal complaints process, you can get the Information Commissioner involved.


  20. matthu
    January 6, 2013

    It is not mainly the nationalised industries are losing us money: how about the new Energy Bill which by 2020 will have tripled the subsidies paid by taxpayers and consumers to ‘renewable’ energy suppliers to £7.6 billion a year?

    Howe should one distinguish between any of these blood-suckers and a nationalised industry? Without state legislative protection, without massive state and consumer subsidy these green industries would wither and die.

    The Kyoto Treaty is dead. CO2 emissions have risen unaffected by Kyoto, global temperatures have stagnated but our ConLibDem government seems hell-bent on exporting British industry to foreign countries under the guise of “setting an example to the rest of the world” (while the evidence suggests otherwsie as the rest of the world are simply taking advantage of our stupidity e.g. Brazil, Russia, India, China, USA, Canada).

    Fix the energy policy first: then worry about what remains of our nationalised industries.

    1. Vanessa
      January 6, 2013

      I agree. And would add that the sea around China has frozen for the first time in about 30 years! Some global warming, or is it only affecting Britain !!!

    2. David John Wilson
      January 6, 2013

      We can solve problems in the short term by varying the tax take and revenue allocation, however in the medium term we can only control the deficit and resulting debt by balancing imports and exports.
      Every company that is sold to a foriegn owner and every product that is bought abroad rather made at home makes this situation worse.
      The government must urgently do something to reduce our imports and stop profits made in the UK leaking abroad. We need tax rules etc. that encourage UK ownership and mitigate against foriegn ownership and in particular hiding profits off shore.

      A simple start would be to ensure that contracts that have to be competitive according to EU rules are costed
      on a comparable basis both by UK and foriegn suppliers.

      1. A different Simon
        January 7, 2013

        Yep , this is the problem which is hardly ever mentioned ; flight of capital in all it’s forms , money , human capital and intellectual .

        5 million people came into the UK during Labour’s tenure and the Coalition is determined to beat that . More worrying is the 2 million who left , many of whom must have felt driven out ….

        Most countries over the World have restrictions on foreign ownership of companies and especially utilities . I’m sure the reason Britain doesn’t is some sort of sop to the financiers like almost all Govt policy .

        For pensions to actually work , broadly speaking the older generation has to invest in things which will provide a double return ; ie a financial return to the investors and a return on the form of a service to forthcoming generations IN THE SAME COUNTRY ; eg infrastructure , social housing .

        Given that the amount paid out in private pension benefits is almost exactly equal to the amount of tax relief being claimed on contributions , I fear we may be having the wool pulled over our eyes .

        Perhaps pensions benefits which are due to investment in UK infrastructure such as reservoirs , social housing should attract tax relief on the way out as well as way in ?

    3. Robert Christopher
      January 6, 2013

      That requires sovereignty, does it not?

  21. Bazman
    January 6, 2013

    More communism for the rich.

  22. Gary
    January 6, 2013

    National Rail dabbled in the derivatives market ?! Oh Lord.

    Maybe it would be worth investigating which bank sold these products to them, and if there was any misselling ? Misselling has been a feature of business in these products.

    1. A different Simon
      January 7, 2013

      Look at the high charges on NEST pensions .

      Do you think that in 20 years time if the returns are dismal the State may find itself prosecuted for misselling ?

  23. Martin Ryder
    January 6, 2013

    For me the most appalling aspect of your blog is that you, a senior MP, cannot get the information that you want from a state owned industry. If you and your colleagues cannot get this information then what chance does anyone else have?

    Why do we have a Parliament of 650 people costing a fortune if you cannot tell a publicly paid employee to give you the information that you need? You and your likeminded colleagues should march en masse into the offices of the Post Office and demand to see the CEO. If she refuses then propose in the Chamber that she be dismissed for failing to understand what democracy means.

    1. David John Wilson
      January 6, 2013

      It is not surprising when government departments and agencies spend so much of their time and effort ensuring that only the specific information requested goes outside the office door. Most of the critical information does not reach the CEO and information departments and what does will be filtered to the level where it is of little use.

    2. forthurst
      January 6, 2013

      Having examined their website I cannot see that there is a non-exec specifically charged with responsibility for the taxpayers’ investment.

      Indeed, Network Rail appears to operate on the basis of pretend shareholders called Members, including the DfT, who have a “Genuine interest in our role as a private sector company providing a public service”. The Members have been selected by the “independent membership selection panel (MSP)” which consists in essence of three women with extensive public service experience. Members do not appear to have privileges beyond those of ordinary shareholders; however, as anyone knows, in the real world, shareholders with a significant holding have a crucial influence.

      1. forthurst
        January 6, 2013
  24. Richard1
    January 6, 2013

    Excellent points. It is intolerable that these organisations in which so much taxpayers’ capital is tied up & for whose liabilities taxpayers are responsible should refuse to answer questions from an MP on behalf of voters and taxpayers. Hopefully you will be able to identify some legal device to force it out of them (perhaps it could be a ‘human right’ to know what’s happening to one’s money?)

    A wider question is that of monopolies. Things can go wrong and customers get a bad service and owners and creditors poor returns in competitive industries. But there is an iron law – from gum boot factories in the Soviet Union to the car & coal industries of 1970s Britain to the NHS today – that where there is no customer choice and no competition, the quality of service will be inferior. Monopolies can exist in the private sector also, but a key objective should be to ensure that where taxpayers pay for a service (education, healthcare, defence procurement etc) potential providers are obliged to compete and can lose their positions as suppliers if they dont perform.

    1. JimF
      January 6, 2013

      Yes it does beg the question as to who exactly these people are answerable to, if not to an MP? I guess the next step is to get a group of MPs with like mind, but I can see that at some stage you will hit the group of vested interests amongst the cabinet, would-be ministers and their hangers-on. Labour and Libdems wouldn’t know or care about this sort of waste anyway; they’d see it as investment – i.e. a price rise in the cost of a first class stamp must mean more income and more investment/wages for a hard-pressed service.
      In sum, good luck.

    2. David John Wilson
      January 6, 2013

      What is intolerable is that these organisations is that these organisations have to maintain huge departments to answer the continuous stream of different questions from MPs, minsters, local government, councillors, the general public etc. etc. They are given a particular job to do, they should only be questioned if they fail to do that job. If there are problems they usually derive from the people who set the basic criteria failing to do that properly.

      There is nothing more frustrating when trying to manage within a government agency than trying to handle the continuous (and I mean continuous not continual) sets of questions arriving in ones intray. All levels from the government down need to realize that delegation means letting someone get on with their job without questioning every move that they make.

      We could reduce the costs of running the civil service and external agencies by probably 15% if all external questions were banned.

      How can you expect the PO to be accountable for its increase in stamp prices? You can only make it justify them before thay are allowed in the first place. If they hadn’t examined the projected effect on first class mail levels then increase should not have been allowed in the first place. If no-one asked that question in the negotiating process then those responsible should be brought to book, not the COE and their staff who should be managing the organisation not answering questions.

      Reply Such a large decison on pricing with a big impact on the future of the busienss should be open to scrutiny before and after it is made. The management are presumably collecting data on volumes and so providing it to the rest of us is no great extra hassle or cost. We own this business so we should be treated like the shareholders we are.

      1. David John Wilson
        January 7, 2013

        The problem is that it is not the matter of a single request for information. Middle management in these organisations deal with dozens of these requests every day.

        There is someone in a ministry who is responsible for monitoring the GPO. All questions about how the GPO is being run from MPs local government etc.should be directed through them and filtered to the correct interface.

        We cannot expect government agencies and organisations like the GPO to work efficiently when they are being subjected to an avalanche of questions from all directions. Nor can anyone expect all their questions to be answered particularly when they ask them from a position of priviledge and aim their questions at the CEO rather than using established channels.

        1. Richard1
          January 7, 2013

          It would be much better if these various organisations had to stand on their own feet in the market and if they failed to provide an adequate service for their customers they would go out of business. But with the state behind them that doesnt happen, so it is essential they are properly scrutinised to ensure they dont waste taxpayers money with foolish decisions (or at least to put some contraints on them). Its the same throughout the civil service. They arn’t in competition for their jobs with other providers so they need close scutiny. Maybe they should just work a bit harder to answer questions instead of bleating about the need for extra departments to answer questions.

      2. A different Simon
        January 7, 2013

        Is there any precedent in recent times for the cost of postage to go down ?

        As a monopoly it can charge what it wants or more specifically what it’s impending new owners want since they are too lily livered to hike up the price themselves .

  25. Gary
    January 6, 2013

    Crony capitalism indeed. Why was Hester knighted for this shambles ?

  26. Colin
    January 6, 2013

    “Ministers should summons executives from these wayward baronies of the public sector, and start to instil value for money and cost control”

    John, while I agree with the thrust of your article, I must say that the suggestion that the Government are the people to teach businesses about value for money and cost control has certainly given me a laugh!

  27. oldtimer
    January 6, 2013

    It is extraordinary that even MPs can be fobbed off in the way you describe. The solution is for them to be exposed to the full rigours of the market place and the public accountability expected of private companies. There is no good reason why there should be any difference in the information disclosed or the accountability expected and required of any business (whether privately or state owned).

  28. John B
    January 6, 2013

    But you leave out the biggest money losing, inefficient, uncontrollable, unaccountable, Nationalised industry, the NHS.

    1. Iain Gill
      January 6, 2013

      yep the NHS is a national disgrace

      fixing it by “improving training” and “improved monitoring by regulators” will not work

      the only dynamic which can fix it is GIVING EACH INDIVIDUAL END CONSUMER proper buying power to take their health spend anywhere they want

      let the GPs and hospitals feel the pain of customers going elsewhere when the service is rubbish

      turn the NHS into a state backed insurance scheme which covers all UK permanent residents according to need, who pay in according to ability, but get the state out of owning and running the providers of care

      stop imagining top down control can ever result in a good enough system, only the dynamics of customers leaving of their own free will taking their money with them forcing the worst units to shut and giving the best units more money will iteratively improve things over time

  29. Bert Young
    January 6, 2013

    It has all been said . I cannot think of any solution other than changing the leadership . If any public company (or institution for that matter) loses its sense of direction and fails to create the results , a change in leadership is required . Please set the wheels in motion .

  30. David John Wilson
    January 6, 2013

    You also need to take into account middle management responsibility for budget control. Having worked at the same level in both a private company and a government agency the differences in my accountability were frightening. In both employments I worked under an annual objectives and appraisal system.

    In private companies my salary and annual bonus was tightly linked to the financial performance of my own department, that my manager’s department and of the company. Coming to year end within budget and delivery within required timescales were sacrosanct.

    In the government agency the biggest sins were failing to spend all of my budget and failing to complete all the reports ,paperwork and other red tape. At one of my annual appraisals my performance was marked as satisfactory (i.e in appraisal terms a failure) When I queried how that could be when I had delivered everything well within budget and required timescales, I was told that this has caused my management problems and in future I should take care to stay much closer to required levels so as not to embarrass them.

  31. margaret brandreth-j
    January 6, 2013

    Who owns who and what? Nationalised industries are not all bad and you are actually highlighting the position as you complain about the private dabblings in and we all seem to agree, publically. i.e state owned concerns.

    I have always had a leaning toward the State ( probably because I qualified as a State Registered Nurse , when it was about National interests ,post 2nd world war) as it was the cement under and in between the foundations which would provide for all,along with the welfare state , yet it has been dishonoured , by private interests. Don’t get me wrong we would be nothing without private companies ,if nothing else they are themselves the foundations of PLC ‘s ,when sold off . Over the years these companies have been treated badly by the buyer opportunist who appear to be somewhere on the scene when the companies are going under)
    I need freedom though and I certainly hope that Cameron’s £5,000 pound scheme brings some entrapeneurs onto the scene. I will certainly take advantage of it in the years to follow: if still available.
    Public, private and state owned concerns should all read buisness ethics and play at creating wealth for the benefit of all and not look for loopholes for the sake of themselves alone, for none could make it without the other.

  32. Barbara
    January 6, 2013

    I thought the railways were in private hands therefore an costs should be met by the owners. To my understanding they were sold off in the 80s along with the buses. Why the taxpayer has to contribute anything I just don’t understand. The MD of these so called private companies give themselves large salaries each year, and rising while services have got almost nil; and the rolling stock is do dilapilated I’m ashamed to ride on some of them.
    Its gone down and down since politicians interfered with the running of them, British Rail wasn’t perfect but the trains ran on time, and were clean. I rode on them a lot and never had much to complain about, and the tickets were affordable. Now I can’t as they are to expensive. The bus service is the same since deregulation, splintered, routes split, or demolished altogether. Privatisation is not so perfect as we are led to believe. We now have the buses driven by foreigners who can’t speak English, drive eracticlly and are rude. Its all gone to pot.

    Reply: The rail track and signals are owned by a taxpayer owned company, Network Rail, and heavily subsidised.

  33. Conrad Jones (Cheam)
    January 6, 2013

    Mr Redwood,

    Interesting article as usual. I think alarm bells should be ringing everywhere concerning Network Rails involvement in Interest Rate and Currency Derivatives.

    Do we know who the Counter party to these Hedging investments is or are they “Synthetic” Derivatives (with no Counterparty)?

    If they were designed to protect Network Rail from Interest Rate rises, has LIBOR affected the profit or loss of these products? Warren Buffet described Derivatives as “Weapons of Mass Financial Destruction”. PostiveMoney has placed extracts of an Article on Deriviatives on their website “Weapons of mass financial inequality”.

  34. Conrad Jones (Cheam)
    January 6, 2013

    You make good points about RBS and the Post Office, although I am biased towards the Post Office as they at least provide a reliable Service (only the other day a Parcel was left outside our House which had a different address on it – a private Delivery Firm had delivered it and got it wrong as usual – and the private Delivery Firm is almost impossible to contact, the Post Office, on the other hand; does provide a good customer service both in terms of delivery and contactability). I hope the Post Office isn’t being fattened up for a sell off – like our Analogue Airwaves were last year, for pennies on the pound.

    You have a perfect right to ask questions about Post Office decisions and I feel surprised that they were not more willing to answer them.

    RBS Bank is a leech on the back of the Tax Payer. It has so many avenues of deceit through it’s various offshore subsidiaries and Nominee Companys, spread amongst a web of Tax Havens that it is far too dangerous and opaque an Investment for the Tax Payer.

    Please keep up the good work of badgering these Companies for information, because without facts and figures we cannot make proper and rational decisions. We’ll never get the truth from RBS because they’ve invested far too much time and money hiding things under the rug of international offshore accounts.

    Northern Rock’s Mortgage backed securities got dumped on the Tax Payer while Richard Branson got to cherry pick the best Triple AAA Assets. The Opaqueness has already started with New Northern Rock as Consolidated Balance Sheets and Financial Reports for Norhtern Rock are no longer available prior to 2008. How convenient!

    As you say:

    “I want to know why RBS is still such a large congolmerate. Why hasn’t the disposal programme continued more rapdily? Why has the bank been so persistently loss making since being in public ownership?”

    In this “Me too” World… me too.
    I also want to know why RBS is still a drain on public funds. But I’d like everyone else to know too. I think that if they won’t tell us then we should cut the umbilical cord. That might be the only way to find out where RBSs “profits” are coming from.

    1. Conrad Jones (Cheam)
      January 6, 2013

      Just in case someone who works in a Branch of RBS says that RBS does provide a useful service by carrying out Financial Transactions, cashing checks, Hole in the Wall Cash Machines, etc – yes – of course these are useful but the stuff happening in the back rooms and offshore locations is the stuff that the Tax Payer ends up paying for, not the useful work done at the Branch Counter by the Hardworking Bank Staff.

    2. Iain Gill
      January 6, 2013

      the post office provides rubbish service to my family in many different parts of the country. they regularly post cards saying they could not deliver as the resident was out when the resident is standing watching them etc.

      1. Conrad Jones (Cheam)
        January 9, 2013

        Yes – it’s true they post cards to say they could not deliver but at least it is fairly easy to arrange a pickup or alternate delivery, where as some other Delivery Companies are almost impossible to contact.

        Try and imagine yourself as a Postman, and you arrive at the address and ring the Door Bell – and there’s no answer – what do you do – leave the parcel outside hoping no one will steal it or post a card? It must be frustrating for Postman too you know.

        My experience of our Postman at other people’s addresses – as I also work in the local area to where I live; is that the Postman Rings the Door Bell and does wait for several minutes, and then leaves a card.

  35. Antisthenes
    January 6, 2013

    Vested interests and large corporations would have us go back to the Monopoly and guild era and with the help of the left that is by and large what we are engaged in doing. No doubt the consequences of which is that we will also go back to the prosperity levels of that time and for those who know the period will know it was not very high for the majority. The larger the public sector, which includes any entity owned or controlled by the state and the greater the number and breadth of regulations the closer we come to achieving the economic model of that time. History teaches us many lessons which we seldom learn and so we continually repeat the mistakes of the past. Socialism is another lesson we have not learnt from history and that has told us it does not work yet we continue to follows it’s path.

  36. forthurst
    January 6, 2013

    The GPO is a very strange organisation. I have spoken to someone who was a postmaster of a branch in which firstly a private landlord (apparently the GPO does not own freeholds or hold leases) (etc) purchased the lease, then doubled the rent, making the business non-profitable, and then the branch was burgled and the safe was stolen with a large loss of cash and stamps; apparently, that wasn’t the GPO’s responsibility either, nor could insurance have been purchased. The upshot was that the large investment in security and the goodwill of the business was lost, with the ex-postmaster going to live with a parent who took out a lifetime mortgage to pay off the debts of the business and the ex-postmaster can now look forward to living in the future in modest rental accomodation, working as a PO clerk until retirement having successfully run a business before extraneous factors associated with our wonderful vibrant multicultural society intervened.

  37. Electro-Kevin
    January 6, 2013

    It seems that the organisations that don’t work well are wound up or taken over by the government and that those that do are sold off to foreign ownership for a fast buck.

    A curious mix of Champagne socialism and spiv capitalism going on here.

  38. John Threlfall
    January 6, 2013

    Sorry, this is off topic, but it’s a post from Facebook on Thursday which already has 315 likes, from youngish achievers who have worked very hard to get where they are. I think it’s very worrying for the coalition – what do you think?
    Jamie Hills to 10 Downing Street.

    “I have just had to call HMRC and cancel my child benefit. We should be doing more to help young families not less. My wife had three miscarriages before we had our gorgeous two children and after that sorrow we decided to have one parent at home raising the children as we didnt want to miss a thing. If I took a pay cut and we both worked I would still receive child benefit, how is that fair? How is that promoting family? Half the issues we have in this country are as a result of children who arent loved and cared for and encouraged to thrive. I’m lucky to earn what I earn but I’ve worked hard to get here and started from humble beginnings, exactly what the Tories are trying to encourage. This is going to be a big mistake when there are so many other areas you could have targeted, you’re attacking your core voters, middle class families and you just lost my vote. ”

    To this, you could add, if we’re all in it together, why hasn’t the coalition done anything about stopping the child benefit that is payed to non UK citizens who claim for children inn their country of origin, not to mention to those who have children with more than one wife?

    1. David Price
      January 7, 2013

      Someone earning over £60k pa is complaining about the loss of £132 pm funded by many people earning a lot less than him who have worked just as hard? Sounds more like some mischief from a LibDem or Labour apparatchik.

      I don’t believe this person is representative of strivers or even the middle classes who existed long before Labour decided to try and bribe them. Wouldn’t those who strive be more concerned how their taxes were wasted than whether they got a bung of up to £33 per week?

  39. Adam5x5
    January 6, 2013

    The problem stems from the fact the business/industry is nationalised and backed by government.

    This means that it effectively can’t fail as the government will just prop it up/bail it out. The knock on effect is that the employees don’t care about what they’re doing as the money they are wasting isn’t theirs and their jobs are secured. If the company makes repeated losses, the government just subsidises them. It also leads to the unions making a pain out of themselves – look at the mess of the rail networks and striking by train drivers, the people on the public payroll who just deal with union business, etc

    In the private sector, if a company makes losses repeatedly, it won’t last very long unless it has a cash stockpile – look at Sony & Panasonic who Fitch recently downgraded to ‘Junk’. Once a private company goes under, everyone loses their jobs, so the unions and workers are more inclined to reduce costs and be more efficient.

    One way to cut the costs would be to ensure that poor staff can be sacked. As it is, the unions have too much power to prevent this. This obviously leads to poor efficiency as there’s no incentive to work hard.

  40. davidb
    January 6, 2013

    On the stamps issue, my local Asda is still selling books of gold stamps, the new 60p ones should be platinum. Ask how much of a killing Asda made while you are asking. Was this perhaps another bit of Broon genius – selling off the gold too cheap and telling everyone they were going to be doing it.

    A number of my suppliers have switched to email billing and more customers have switched to BACS payment. I now rarely get anything other than takeaway fliers and literature from Sky or Virgin though my domestic mail box nowadays.

  41. Wilko
    January 6, 2013

    Yes, John: Post Office sales of stamps are likely to be way down since the price increase.

    So much of the stock was purchased by speculators bulk-buying to reap a near-instant 39% return on their investment, that demand at the Post Office since has been quenched. Even some speculators will not yet have disposed of all their old-priced stock at its favourable rate. Also, many others who bought only moderately ahead for their own use may not need recourse to the Post Office’s overpriced supply for years.

    Much is written about people receiving state benefit being stuck within a poverty trap. Making sensible decisions about money is available to all. Even so, millions of individuals would have left large sums in bank savings accounts during the same 39%-return-opportunity period, in the hope of receiving just 2% over a whole year from a bankster.

  42. Peter Martin
    January 6, 2013

    “Nationalised industries are good at losing us money”

    “In the private sector, if a company makes losses repeatedly, it won’t last very long unless it has a cash stockpile”

    Choosing the example of the RBS isn’t helpful to these kind of arguments. The RBS was, pre GFC, a private company and they certainly were pretty good at losing their shareholders’ money. They’d have lost all their depositors’ money too if they hadn’t been nationalised.
    So, whereas we nearly all would have liked to see the operation of the free market in operation and see those responsible for the demise of the RBS and other financial organisations suffer the economic consequences of their actions, we do have to bear in mind that, if this had been allowed to happen, it would have also led to the financial ruin of countless numbers of honest savers.

    Reply RBS should have been put into controlled administration, protecting the savers and depositors but charging the shareholders and bondholders for the losses.

  43. Matt
    January 6, 2013

    “Near my own area the A4 Woodley bridge has been replaced at considerable cost”. Has it? Which bridge are you referring to? I ‘m not familiar with any rail bridge referred to as “Woodlet bridge” nor any rail bridge on the A4 in the area being replaced recently. Have you got our facts mixed up?

    Reply: The bridge on the A4 to the north of Woodley and the south of Sonning.

  44. David Price
    January 7, 2013

    So you haul the execs up in front of a select commitee, what would be done to hold those responsible for incompetence and waste to account though?

    Unless meaningful action is taken then attitudes will not change. Meaningful action means significant punishment such as being sacked without a golden handshake, redundancy without excessive gratuitous packages beyond the statutory amount, demotion and even loss of pension. It does not mean promotion, giving a knighthood for failure and vast pay-offs which penalise the taxpayer not those who failed.

    Time for more stick, we sure can’t afford more carrots which clearly don’t work anyway.

  45. Martin
    January 7, 2013

    Another excellent blog from John Redwood. I wish he was in the government at senior level.

  46. uanime5
    January 7, 2013

    John as most companies use franking or have online business accounts with the Royal Mail stamp sales aren’t a good measure of how many things are sent first class. A better measure would be to compare the proportion of mail sent first class and the number sent second class 1 year before and 1 year after the rise in the price of stamps.

  47. Rebecca Hanson
    January 7, 2013

    If you’re going to flog of a public sector organisation you have to turn it into a plc first.

    1. Rebecca Hanson
      January 7, 2013

      We could always keep it instead. Then we could run it properly as a state asset to generate income.

      In the same way the French own and run EDF (and hence big chunks of our energy production).

      Nationalised industries can be huge national assets. It’s much easier for that to be the case since internet technology came along as it’s so much easier to modernise.

  48. Jon
    January 7, 2013

    Watford rail Junction has had a makeover with expensive paving. The previous platforms were smooth and flat but apparently they need months of construction work and paving stones that are as refined smooth and slippery as you would find in your bathroom. Only I guess a bit more expensive.
    Its like on the underground where there were tiles that had lasted for decades and not cracked but get replaced. I get make over’s in peoples homes especially when its replacing the B&Q kitchen cabinets that are best when new and deteriorate there after and can’t be mended. This is just makeover for fashion sake on our public spaces. Someone has money.

  49. Conrad Jones (Cheam)
    January 11, 2013

    Another way of looking at this is that Nationalised Industries are good at Creating Money as the Government creates new Treasury Bonds adding to the Money Supply.

    This – afterall; is what the Bank of England is attemptng to do with it’s Low Interest Rate and QE Policies, but in a less efficient Manner than Government Spending.

    I guess you could argue that Private Companies or Corporations should take over and borrow the Money themselves, but whatever way you look at it, someone is going to have to borrow Money to reduce the reduction (Deflation) in our Money Stock.

  50. John Beswick
    January 20, 2013

    Always relevant thinking John, now the However. The Post Office doesn’t set mail prices or provide mail deliveries, that is the responsibility of Royal Mail. The reason for these destructively huge price increases lies within the Government. Royal Mail is now required to operate the Universal Service Provision ( the Rowland Hill principle) intially at break-even and from a specified date generate a return of X percent. Any internal cross-subsidy from other RM services such as Special Delivery is specifically not allowed. That decision has built into it huge price increases and what we have seen is only the first. The policy actually results in the Universal Service cross subsiding profits for Special Delivery et al. as the level of profitability of these additional services is dependent on RM’s Universal Service provision. You wouldn’t get a Special Delivery to the Scilly Isles for £5-90 if RM weren’t already required to provide the Universal Service, yet no part of that £5-90 can now be allocated to support the provision of the Universal Service that allows it to be delivered at the required service level.
    You are quite correct as anyone, such as yourself, with a business brain would have forecast a significant switch from 1st Class to 2nd Class.The evidence from individual Post Office Counters is that is indeed what has happened. Subpostmaster incomes from postage sales are, I believe, generally down from pre-increase levels. This also has consequences for taxpayers.
    The figures I have seen from individual subpost office counters also show a loss of mails in total in addition to a move from 1st to 2nd class. That is the volume of Mails lost to 1st class is greater than the volume of mail now transacted as 2nd class.
    Yet more problems being transferred to the future as if Debt wasn’t sufficient in itself.

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