There are pressures today to identify core public services and claim they need toĀ be nationalised again. The list is often strange. Water is onĀ but food is not. Rail travel is on but air or road travel is not. Electricity is on but broadband is not.
As I was pointing out yesterday there are very few monopoly provided services using state employees and equipment and offering a free service. We could not afford many of them given the large tax costs they entail. Prices that people have to pay provide a necessary curb on excessive demand in many cases and send signals about scarcities. Whilst the UK has made clear it has no wish to ration health care by price when people are in need ofĀ care and help, it is generally agreed that for most things in life charging makes sense. To make sure people can afford enough of theĀ basics like water and energy all parties believe in income support, minimum pay and other means to ensure people can afford what they need. Offering free power or waterĀ to the family that can afford the heated swimming pool or the six bedroom mansion would not be a good idea.
So the case for nationalisation is the case to restore public monopolies that have powers to charge people for energy, water or whatever they produce. When we had public monopolies for water, energy, and some transport modes in the 1960s and 1970sĀ there were constant problems. These bodies did not do a good job in keeping prices down. There was no competitive threat to keep them honest or to press them to greater productivity. Rail fares, water and power bills often went up too much and there was little anyone could do about it. There wasĀ no opportunity to switch provider.
Nationalisation was bad for innovation and investment. Our telecoms system fell way behind the USA in terms of technology and efficiency, sticking with electro mechanical systems when the US was going electronic. Our electricity industry stuck with inefficient and dirty coal stations. Our water industry carried on running a pipe system that was creaking from age and inadequacy. They rationed access to a phone making people wait for a line or sharing a line with the neighbours. Water was often rationed in a dry summer with hose pipe bans or worse. The nationalised industries were always at the back of the queue for extra money to invest behind key services like the NHS and education. All their capital had toĀ be approved and formed part of the stateĀ budget.
Service levels were often disappointing. The water industry regularly fouled our beaches . Trains were often late or cancelled. The telephone system limited the devices you could add to the network and could not provide good quality data lines for business in some cases.
Were the UK to want to renationalise it wouldĀ be a monumental waste of taxpayer money. The UK could not confiscate the privatised assets like some communist autocracy, needing to respect international laws of ownership and trade rules. The money spent on buying the existing assets would balloon state debt without adding a penny to the amount the industries could invest. No prudent Chancellor would want to find big sums for additional utility investment on top of the other many budget demands.Ā There would be no guarantee that prices were lower or service better than the current privatised levels. Indeed, history suggest they would likely to worse, as the absence of competition blunts achievement.
We were prisoners of nationalised monopolies when we had them. Taxpayers had to bail them out and pay their losses. Customers were treated badly, faced rationing and poor service
July 26, 2023
Good morning
What a ridiculous first paragraph. The second got it more or less correct: “There was no competitive threat to keep them honest or to press them to greater productivity”. This applies to private monopolies as well as public.
As we all know, there are ‘natural monopolies’ such as water and rail. Getting the management correct is the hard part. Some countries manage it, why can’t we learn from the best?
July 26, 2023
ā When we had public monopolies for water, energy, and some transport modes in the 1960s and 1970s there were constant problems. These bodies did not do a good job in keeping prices down. ā
You could write exactly the same sentence about the current private monopolies that replaced the public ones.
If the government hoped privatisation meant problems would go away then they were mistaken. Now we are held hostage to overseas owners who can price gouge without shame or concern. They are out of our control.
July 26, 2023
ā Were the UK to want to renationalise it would be a monumental waste of taxpayer money. ā
The fait accompli argument.
Though it is true that it would cost a fortune.
Another worry is that the general malaise in this country means it would be very difficult to get back to a properly-run, nationally-owned business model. There are too many politicians like Boris Johnson around, wasters with no attention to detail, but a well developed ability to look after number one. Too much short-termism also.
July 26, 2023
Agreed. Adam Smith commented in his book ‘An Inquiry into the Wealth of Nations’, written in the 1770s, on a similar cartel-like situation back then.
July 26, 2023
Surely not out of control?!
All we need is a leadership with the strength and vision to take bold and decisive action, and to…
OK, maybe out of control then…
July 26, 2023
āNatural monopoliesā?
No such thing.
But we have never gone back to truly private utilities.
A private company does not ration its services.
Nor make supplicants out of it ācustomersā.
July 26, 2023
‘Natural monopolies’ means the supplier could not afford, or physical circumstances do not allow, the infrastructure to provide the desired service. Think, how many water companies could build there own reservoirs, even if our geography allowed. How many private railway companies could build their own track. They can’t even maintain or improve the ones we have. So yes, these are natural monopolies.
Reply Can use networks as common carriers as oil and gas cos do in North Sea
July 26, 2023
The earliest waterworks companies pumped water directly from the Thames and the first railway companies purchased land for their lines.
Three centuries of govt. interference have put paid to enterprise.
July 27, 2023
Reply to reply, yes, and how is that going….
As a businessman I’m sure you know that if a project is failing, cut your losses and think again.
July 26, 2023
Indeed the first paragraph is bonkers. Youāre losing your mojo, Sir John.
July 26, 2023
Good morning.
The problem for the UK was that the economy and its infrastructure were shattered post WWII. This, plus the gradual loss of our colonies on which so much of our wealth depended, only increased our woes. North Sea oil temporarily abated the slide but it proved to be a false hope as it just allowed us to paper over the cracks rather than to face our problems and try to solve them.
Then there were the political and social experiments such as nationalization which, at the time, seemed to way forward. This was not an unreasonable assumption as Soviet Russia, both before and after WWII had utilized the power of the State to take a backward and largely agrarian society and modernise it into an industrial one. So you can see why this was attractive to some at the time.
The problems with State monopolies is just that – They are monopolies. And like all monopolies, whether they are in a Socialist system or a Capitalist system they end up becoming self serving and political points of contention.
We are in a rut and simply do not have the people in charge capable of getting us out. Their expected replacements will be no better but will not waste their time, unlike the Tories, to shape things to their advantage.
July 26, 2023
Competition spurs efficiency.
July 26, 2023
Buyers need their own money left with them (tax taken off them in excessive taxes) and then real freedom to choose how and with whom they spend it. Be this on heating, lighting, transport, healthcare, schools, universities, housing…not rigged markets and state of other monopolies.
July 26, 2023
“Not” tax taken of them in excessive taxes.
July 26, 2023
It’s not rocket science. Corporation tax in the Irish Republic is 12.5% In the UK corporation tax has been raised to 25%. Guess where lots of companies are going to choose to set up their businesses. I believe the average UK citizen would have cause to be profoundly grateful if our over large, over expensive and over intrusive government simply let the market work properly.
July 26, 2023
@Bloke +1
Replace it with a private owned monopoly, and you still get an overpriced inefficient service that the taxpayer is still on the hook for . A fudge is still a fudge.
July 26, 2023
Yes but natural monopolies could be run as a co-operative, owned by the workers, then any profits would stay in house, in country, and staff should be better motivated to cut costs and provide the best service. Price gouging would attract local opprobrium.
July 26, 2023
Correct ā however I feel that thereās a need for nationalisation of UK natural resources ie water ā¦the tricky bit is how to manage a nationalised industry and keep it cost effective & efficient
July 26, 2023
Competition CAN spur efficiency it can also spur greed / corruption and so inefficiency (and so competition itself has to be regulated from one degree to another).
However, WORK ETHIC ALWAYS spurs efficiency (at least relative to the natural abilities of the person to be efficient – and doesn’t have to be regulated or at least not in the same way as competition).
So, yes, of course, we must have an element – a strong does – of competition and free market (and a certain amount of regulation). But the really important thing to emphasise is WORK ETHIC. And that can only be generated through the churches, Educators, the Arts and Media (and to a degree by politicians – more from the example they set). Sadly, work ethic is a value that seems to be in decline all over Western Civilisation. And one of the reasons for The Decline (and Fall?) of Western Civilisation.
July 26, 2023
All quite true of course but a bit of nationalization will surely be done by a Starmer-led government as it will please the Left, the unions, and probably the E.U. and we are unlikley to have a prudent chancellor (when was the last?). And after all, it will likely result in not much greater waste than HS2.
July 26, 2023
Not just the moronic, basket case HS2 but the lockdowns, the net harm vaccines, the test and trace racket, net zero, the dire NHS, the road blocking, the many “loans” for worthless degrees, the bloated and inept state sector… government waste in the UK is vast and still increasing by the day. All supported by Con Socialists and the real Socialists alike.
July 26, 2023
HS2 is a waste of money. Money would be far better spent helping to create Cambridge as Europe’s Silicon Valley – not for government to create it. But to help create the infrastructure for entrepreneurs to then take over and do most of the hard work of achieving this.
Cambridge is perfect. Not just because of its existing academic and business scientific research and existing IT companies there, but also because it’s a cultural city (this is a really important reason why entrepreneurs love to set up in cultural Berlin but not boring Frankfurt), fairly close to London, and remote enough to have th capacity to be developed in a new and interesting way.
July 26, 2023
Your view is rather one sided. I went to school using British Rail and then the tube. I donāt recall being late for school on more than a handful of occasions – apart from strikes – and we still have them. And I donāt recall that prices were as insane as they are now.
Electricity was fine – apart from strikes. Gas was fine. Donāt recall the government having to subsidise everyoneās bill to avoid people dying.
The phone service was, admittedly, poor – but so was the technology.
The thing I do agree with is the fundamental point that once a service is run by the government, it is intrinsically inefficient. Some things are a natural monopoly – like water – but no matter how many regulators and watchdogs there are, the whole thing becomes a unaccountable gravy train.
July 26, 2023
Yes. I also used the train to get to school and it was fine. A train journey in this country was never more expensive than air travel.
Before privatisation there were more trains on my current line than now and the last train was scheduled at a later hour than nowadays.
Electricity, gas and water were more affordable than in present times.
July 26, 2023
A London to Manchester return ticked for one can cost more than renting and driving a people carrier with 7 people in and the latter goes door to door directly. Planes often cheaper than trains as they do not need a track just two strips of concrete and an aircraft for an hour. Also they can change routes as demand changes without building new tracks. Furthermore they can make say three trips this taking three payloads in the time it perhaps take a train to do just one. Does not even use much more energy when stations, track maint., overhead rails, electricity generation, tree removal close to the track and staffing is fully considered too.
July 26, 2023
But what if I am the only one who need going from London to Manchester. Do I have to embark six hitch-hikers at the entrance of the M1 to make it cost-effective? Do I have to make them pay?
July 26, 2023
You want us to run a train for you alone instead? šš¤£
July 26, 2023
+++
Maybe the nationalised utilities were still running on the āorganisational creditā of basically the Victorian era?
Gradually, post nationalisation, those skills were lost, overcome by socialist rhetoric/practices.
And then the tories in privatising dished out our national assets ā¦again claiming the need for efficiency etc.
But you canāt have efficiency without education and a class system.
Our āutilitiesā now are a very nasty mishmash of ineptitude and stupidity and disdain.
And of course the same old blood chilling trick has been played, only they didnāt actually send the U.K. off to war this time.
.
July 26, 2023
Regulators usually end up conspiring (with the regulated) against the interests of bill payers, tax payers and the public. Regulators need to be on the side of the public but usually are on the side of the personal interests of the regulators. Often/usually a cosy racket between regulators and regulated. People often even moving jobs between the two sides.
Look for example at the FSA when under Bailey when they pushed up all personal overdraft rates to 40% or higher (mine was base plus circa 2% before this FCA agreed Cartel arrangement). When MPs call the banks in for cancelling people for political reasons they need also to address this and the reasons from the huge spreads between deposit interest rates and lending interest rates. 1% on deposits and often even 40% on lending it used to be more like base on deposits and base plus 1% to 5% on lending. Where is all this vast extra margin going? In salaries of Ā£5 million+ for incompetent bank managers and duff lending decisions and similar I assume. Meanwile branches close, branch queues get every longer & even phoning them can take up to hour to get anywhere. Opening a basic business bank account can take months.
July 26, 2023
LL,
Regulators were set up by politicians so that these politicians could be seen to be doing something. Various quangos were brought into being for the same reason.
Unfortunately regulators have been staffed by second-raters and dossers who are happy just to pick up the salary cheque. They can been leaned upon by vested interests and senior politicians.
So regulators just go missing on occasions when the public would reasonably expect them to take decisive actions.
July 26, 2023
There are some things in this country (and exact same for other countries) that we just have to accept will ALWAYS be a burden in some ways – water, trains etc – like looking after an old relative. And accept there is no silver bullet to solving the problem. But rather just accept that the government will always have to be involved to a degree along with private industry.
Instead of getting over-burdened by focusing on stuff like this, rather be more proactive in focusing on how to develop our IT / Digital Sector and the huge revenues this could bring to our country as well as high skills / high quality exports etc ..
Water, trains etc is a pain. But it’s a waste of time to over-focus on. Just be philosophical about it. And focus on where we can make a real difference: like helping to turn Cambridge into Europe’s Silicon Valley.
July 26, 2023
Cambridge has been called Silicon Fen since at least 2018.
Around Oxford are the IT-related HQs of Nielsen, IBM, Sophos, Tata Consulting, McAfee, Intel, ā¦
On 23/01/2023 there was an announcement of government support for the Oxford to Cambridge Pan Regional Partnership for āchampioning the region as a world leader of innovation and businessā and for ācompeting for investment on the global scaleā.
oxford-cambridge-partnership.info 13/07/2023.
July 26, 2023
“We were prisoners of nationalised monopolies when we had them. Taxpayers had to bail them out and pay their losses. Customers were treated badly, faced rationing and poor service”
We still are. Evidence:
The NHS
State Education
Which are basically State monopolies. Although it is still possible to get private provision, you are forced to pay for a service you aren’t using with no tax relief allowed if you choose to “go private.”
July 26, 2023
No reason at all for education or healthcare to be state monopolies, but they kill nearly all competition by taxing people in advance for these then providing them āfreeā at the point of use. So no choice as to how you spend you own money, you get what you are given or not given at times of their choosing and just have to put up with it.
You could easily keep you own money, pay as needed or have education vouchers to use as you chose. With just a safety net for those few people really unable to pay anything. But the government does not want you to spend you own money as you choose to. The State wants to kill and freedom of choice be they Con-Socialist or real-socialists both are the same in reality. So we have fairly dire schools and a dire NHS if you want anything more you have to pay several times over and very few can afford this.
July 26, 2023
Donna,
Railways- govt ie taxpayer picked up the bill when Villers used Ā£40 million of our taxes. Taxpayer still owns large stakes in private banks! Bankers still getting multi million bonuses. What happened to Sir Fred, Brown govt. advisor? He still gets his hundred of thousands pension when the taxpayer owns 39% of Nat West and our taxes went up as a consequence!
Thames water company in trouble. What water company improved services? Compare with Scotland where their water and waste still part of their community charge. We have huge expensive. Ills to private companies that have a Mano ply in providing a service. Most are owned by foreigners! JR must explain how privatising water and waste at huge cost to the consumer/taxpayer is better than Scotland?
Same for uni fees and health prescriptions. Are Universities private or public sector? If public sector why do students pay? Why did the Tory party and govt give EU citizens free tuition when giving English students a life time of debt? Westminster was responsible for all EU matters not a devolved issue.
July 26, 2023
A lifetime of debt (often preventing them getting a mortgage) and this for what is circa 75% of the time a fairly worthless degree, in a fairly useless subject and from a duff university. Also a loss of three years income and of learning work skills & how to work and often delusions of grandeur which does not help either.
July 26, 2023
But your government wants to interfere with everything, the uninformed interventions on food and petrol being the latest.
So private sector but over regulated, arms length āmanagedā ad hoc policy announcements. I read the car industryās targets of 2030 being blown away has caused severe problems as as anyone with a scintilla of business nous would understand.
Panic short term politics over medium/long term planning. No wonder we are in such a mess.
July 26, 2023
Yes. Mr Gove clearly enjoys wielding power, yesterday confirming the effective destruction of the U.K. car industry of nearly 800 thousand people, turning it into a rump activity after 2030 with his ban on the purchase of the type of new cars most people want. He looks as though heās fully able to sleep at night too.
July 26, 2023
Because he has no sense of conscience. That’s why he behaves as he has with his colleagues. It’s self front and centre always with Mr Gove.
July 26, 2023
Why didn’t past British governments help British car manufacturers like the Germans did with their car industry which produces great brands that are sold all over the world for lots of money!
And it’s not just great German car brands but all the related industry that feeds off this too.
This is an important point as it shows that government DOES have a role to play in safeguarding a country’s high quality brands (in terms of high quality skills, revenues and just general sense of being happy to be associated with such a brand – Germans love working for and buying their car brands).
July 26, 2023
āBut your government wants to interfere with everything, the uninformed interventions on food and petrol being the latest.ā
Indeed and the bogus war on CO2 the perfect ruse for more taxation and more control. This in energy, home heating, control of landlords, education, universities, building controls, planning, healthcare, employment, wage controls, flights, road blocking, housing, transport, even making the the country into 15 minute public prisons areas is being pushed.
July 26, 2023
Indeed. We need to devise systems that keep politicians out of important decision making so that independent, sensible people decide strategy and policy. I was watching the 10pm News last night and up pops Mr Gove who thinks he’s an expert in……..everything. He’s clearly not, but he thinks he knows best, despite the professionals or entrepreneurs in those areas having spent a life time doing the jobs/roles or risks.
Education/health/defence should be taken away from political control. The NHS/Dentistry are dire and need radical reform. There are models from around the world we could follow but our politicos just get in the way. The same in education. Grammar schools abandoned so that talented poor children in society have no means to catch up to the wealthy in private schools. Public teaching standards are dire as teachers are poor and focus is now more on wokism’s/pc attitudes than the three R’s. They are taught what to think not “how” to think.
Councils are another example who provide dire service and performance from under achieving pc managers. Salaries are far to high for non risk, non shift roles. And on and on.
After 13 years, nothing is changing accept higher taxes and poor services.
Reply So how well has the independent management of the Bank of England done with its main aim of keeping inflation to 2%? How well has the independent Board and CEO of NHS England in getting waiting lists down?
July 26, 2023
By most measures The Bank of England is not independent! The NHS is dire and in need of substantial reform. Just need a Party with the bravery to acknowledge this and then take action.
July 26, 2023
Spot on NIGL
July 26, 2023
Nationalisation will always appeal to socialists and could be seductive to those who aren’t old enough to remember it. Anyone contemplating it should ask themselves how good a job they think the government is doing and whether they really expect a big improvement if the government changed and then, based on what I suspect is a fairly low opinion of government competence, whether they really want the government to run more services.
July 26, 2023
Problem now is that our society has become so over-individualistic and selfish that CAPITALISM is in danger of collapse (and capitalism – the wrong kind of capitalism – is partly responsible for this as well).
Capitalism can’t rely on just pure greed. It also needs to rely on work ethic. And you can be a capitalist and have work ethic – like how you can have competition on a football pitch without resorting to fowl play!
There is too much fowl play in our capitalism and society overall now for us to get too comfortable with relying on capitalism as we once could (to a certain degree).
(Socialism isn’t the answer too – we know that – so the only answer is to try and install more work ethic back into the system again via the churches, Educators, Arts and Media – not easy, I know. But what else can we do?).
July 26, 2023
I am not sure looking at bad past management by public sector employees should always be seen as something that will always happen in the future. If rail or water was nationalised, and a management team with private sector experience, with a similar remit was installed, there is no reason why they couldnt be managed as well or better than if it was a purely private business. The model of private schools, ran by effective teams under a charity model where all profits (or cost surpluses as they may be called), are reinvested into the business they are managing, could be a truly good thing, as the profits would not be stripped out to pay shareholders. There is also a clear political risk of letting overseas investors become shareholders in strategic assets of the company, especially if they are sovereign wealth funds of regimes that are not potentially aligned with our values.
July 26, 2023
In my experience the model whereby profits don’t go to shareholders but are “reinvested in the business” ends up with extremely well-paid managers running an inefficient business. Waitrose comes to mind (I worked there for a while).
July 26, 2023
Waitrose charge a bomb for food but can be really hit-and-miss compared to Marks and Spencer that is always excellent in food (but so mediocre in clothes – why don’t they sell off their clothes division?! Or rebrand their clothes division – separate from their food)
July 26, 2023
I agree, but the main problem with nationalised industries is that politicians have them as playthings to either try to use them make a name for themselves or Chancellors cut their proper funding when things get tough (which always seems to be an eternal problem).
July 27, 2023
Why install a management team from industry in civil service positions? Why not just privatise it? It has been done successfully with individuals at senior levels but I am not aware of ae entire management team being installed without privatising the operation.
July 26, 2023
It is simply incredible that after all the decades of socialism we had in the U.K. and elsewhere in the C20th and the disaster of socialist/communist regimes wherever they existed, that itās necessary to ex-lain these basic, obvious, facts.
July 26, 2023
Indeed & yet it seems after the Con-socialists we are to get even worse real socialists.
So, lots of criticisms of Natwest for leaking personal information about Farrageās bank details, but nearly all the banks do this to various credit reference agencies in great detail. This is another anti-competitive racket. It lets other banks see all or your balances, the interest rates you are likely paying, how many applications you have madeā¦ often with errors on the file too. Also misleading as it shows all you debts but not you assets. Borrow Ā£1m and buy something worth Ā£2m and you rating goes down not up. This deterrers shopping round for best lending rates as addition applications damage your ratings (this even if you do not take the loan out or it was refused) perhaps as the rate actually offered was too high. It is surely another rip off cartel racket?
July 26, 2023
“Jeremy Hunt has urged Britainās biggest businesses to divert more of their profits from soaring inflation to helping customers during the cost-of-living crisis. ”
How about Sunak and Hunt practice what Hunt is preaching and remove the so-called “Green” levies on fuel and energy bills; cut the size of the State (starting with scrapping Quangos) and cut our taxes?
That would help during the cost-of-living crisis they are largely responsible for creating in the first place.
July 26, 2023
Hunt could scrap fuel duty and vat off petrol and diesel! He could reduce it rather than asking for a windfall tax when the His govt is the net beneficiary from high prices!!
Remainer Sunak and chairman Hunt must go. Brexit requires Brexiteers in charge. Windsor sell out must be scrapped. We want and voted for Brexit. Remainers think we do not notice what they are up to.
Govt must Scrap ESG, it is harming all businesses and our way of life.
July 26, 2023
Indeed. Vastly cut the civil service, Councils, quangos etc etc. None of us would notice and they could move to the private sector cutting the need for mass immigration. Perhaps someone could take look at the welfare/housing benefit budget and time limit those payments so it isn’t a life style choice for the 46% to keep them …….forever.
July 26, 2023
As important as this commentary is, today there is an over-riding factor which must not be avoided. Public and private business is now intimidating their users via their leaders. They have believers in sinister social control.
These people, large numbers of them must be removed from their positions. Changes to the wording of documentation will not be enough as if the people remain with their beliefs and practises will not change much. Supporting documents must be removed entirely too.
Another problem is there are governmement leaders who are part of the problem and a few fine apologetic words and promises of change from them won’t be enough as they won’t be honoured. They have encouraged what we are suffering from by their MP supported introductions. If we have a problem with our PM and cabinet members there must be determined action for change by common sense members.
The future of our personal freedoms and nation is at stake.
July 26, 2023
Sir John , I can’t help feeling that perhaps your views on Nationalisation are a bit biased by a political view than a Natiional intrest view.
I do not see any evidance of improvement since your goodself and Mrs T privatised our stratigic infrasture. In fact things have got much worse in all respects. We end up paying for them if things go wrong and the money does not go back into this country.
Water, Gas , Elecricty and Trains are Networks requiring overall management and control from a single source. More to do with Network control theory rather than efficiency , politics, and economics. But efficiency does tend to reduce costs. You can have competition within a large organistion and run it as if were in the private sector and profits returned to the tax payer. If you pay more for a service but your tax burden is reduced you get an overall cost reduction. We would have had more storage facilities for Gas and Water if the utilities not run for shareholder profit by non-UK companies.
Air travel, Telecomunications and Road Travel are networks but the item to be delivered guides itself to the intended destination. Water, Gas, Electricity and trian passengers do not.
A bit deep as all the above are networks as such but if you think about it you can see the subtle difference in how they operate and deliver a service to the end user.
Reply After privatisation electricity prices fell and the industry replaced coal power stations with cleaner and fuel efficient CCGT s. the gas industry financed a huge N Sea expansion creating self sufficiency in gas. BT introduced mobiles and went digital, greatly expanding and enhancing services. This century successive governments have put these industries under new regulatory coshes, seeking control without ownership.
July 26, 2023
Dear Sir John, It is likely that these changes would have happened anyway. Are energy costs lower today than before Nationalisation that is the question. Good in short term bad in the long run. Who is supplying our GAS now. Burning woodchips which are imported at a great cost. Not to mention made from trees. BT introduced things which came about from the global development in technology. The phones are not made here likewise much of the telecoms equipment. But I did not say Telecoms should be Nationalised. Only Water, Gas, Electricity and Trains. These are strategic infrastructure.
Was the computer invented by private or state capital ? Even Sir John you are highlighting the poor state of our privatised utilities. I agree it is a difficult balance between private and public capital investment. But the infrastructure of the country should not be in private hands especially when they are not British hands. The real problem is keeping the Politicians away from influencing the running Engineering based services. In theory a Company owned by and invested in by the Tax payer can be run in just the same way as a privately owned company.
July 27, 2023
I was involved in some privatisations. A common problem was that civil servants were not very good at writing contracts because they don’t have much of an understanding of private industry. The incentives of the private sector were quite alien to them. I worked on both sides of the divide – on different occasions. I needed to explain industry to civil servants and when working with a company I needed to explain the civil service. Being in the EU meant UK had to be open to EU competitors on the same terms as British businesses and Public Procurement Rules were EU rules. The French culture was very different. There was and I suspect still is, a revolving door between industry and government, so they understood each other much better.
July 26, 2023
@Reply – Ofgem the energy regulator defines a max price all companies can charge, then they all charge āthatā regardless of source and costs. That is not a competing Market Place, that is more like collusion( I didnāt say āisā but like). Then the Government loads on so-called levies i.e. additional taxes onto the user.. That is why the UK is one of the dearest suppliers of energy. I have experience of the US electricity which is less than 50% of that charged in the UK ā likewise natural gas. Fair comparison? The UK Consumer and more importantly UK Industry has a burden artificially created ā by the Government exporting UK Wealth instead of creating it. The UK Industry has to compete with the US on the World stage.
July 26, 2023
Now that Alison Rose has been very reluctantly been forced to resign, attention will inevitably turn to Howard Davies, the chairman, and his board, and Peter Flavel, head of Coutts Bank.
Despite her breaching the most fundamental rule of banking, client confidentiality, Davies and the board announced that they had full confidence in Rose only yesterday.
For six years, Davies was the first head of the FSA, where he always made it clear that client confidentiality was fundamental to the financial services industry. Yet he and his Natwest board seem to be prepared to ignore this, simply to allow their pal Rose to stay in post. His misjudgement in defending Rose is at least as bad as hers and he needs to go as well.
At the root of the problem for Nigel Farage was Peter Flavel, head of Coutts. He must bear responsibilty for the decision to cancel Mr Farage’s accounts for his legally-held political beliefs. He has so far escaped blame but his position is equally untenable.
July 26, 2023
Agree +++
July 26, 2023
Agreed. Any NatWest Board Member who supported the “full confidence” announcement should be relieved of their jobs this morning, starting with Davis. So should Flavel, CEO at Coutts, plus the individual who heads the Stasi-Team who oversaw production of the Report into his political and social opinions.
I hope he sues the bejesus out of NatWest.
July 26, 2023
Even if you got rid of all of those you mention, there would still be a culture of bullying and intolerance in that place, intimidating the sensible people into silence. The Equality Act needs to be repealed to start with but it will take years to root out this Stasi mentality which pervades so many companies and institutions, including Parliament. Poland is still grappling with it years after the Berlin Wall fell.
July 26, 2023
+1
How anyone, even this Government, can retain confidence in the NatWest board is beyond belief.
July 26, 2023
@formula57 – It is starting to look that the Conservative Government that is the custodian of the money we (taxpayers) have tied up in NatWest would be making itself complicit if it as the largest Shareholder doesnāt demand a complete clear out of the Board. There is no halfway house it would be the Conservative Government or the NatWest/Coutts Board
This is the credibility of Business (All Business, all Banks) not Political Games and fudges
July 26, 2023
I think you’ll find the left wing Environment, Social and Governance (ESG) rules imposed by the Consocialists have made Corporate Britain where we are. Witness Nat West/Coutts. Pure Wokeness/PC left wing political views imposed on us all stealthily or we’ll debank you. Communist China couldn’t have done it better. These rules are coming home to roost. Net stupid and the Climate Change legislation is having big impacts on our energy bills, food bills, loss of industry and manufacturing. We can’t push paper around, like the public sector, to compete in the modern world.
Meritocracy has gone, numbers of minorities on boards more important. Everything has to be done to reduce the bogey gas.
Can someone please advise where anyone can find the proof that CO2 is anything other than a trace gas in our atmosphere that every plant and therefore species on Earth needs to survive?
July 27, 2023
Also it was a breach of confidentiality for details of a Coutts’s customer’s accounts to be given to the NatWest board.
July 26, 2023
Much has been made of Subject Access Requests in the Natwest debacle. Mr Farage obtained one which ran to 40 pages and makes it clear that the reason his accounts were closed were for his political views.
One of our small family businesses had its bank accounts wirh Natwest closed in 2021 with only 30 days notice. No explanation was forthcoming, despite complaints to the bank. This week, hearing for the first time about Subject Access Requests, I submitted one in repect of our business. A very rapid reply from Natwest made it clear that SARs are only avaiable in respect of personal accounts, so we are still none the wiser.
It would be very helpful for every small business if the SAR system was made available to business account holders as well. Could I please ask our host to make this point to the Treasury ?
July 26, 2023
Were privately run utilities ( not to mention healthcare) nationalised in 1947 because they had really been chaotic and poorly run? ( Easy to claim that after a devastating war!)
Or was it all a socialist governmentās fantasy come true?
Aftermath of warā¦seize the day.
A Great Reset.
Iāve heard that before somewhereā¦..
July 26, 2023
Meanwhile – Over 350,000 smart meters switched remotely to more expensive tariffs
Campaigners call on Government to outlaw practice amid cost of living crisis ātelegraph.co.ukā
July 26, 2023
+++
Good grief!
Exactly as predicted I think?
( All those conspiracy theoristsā¦were RIGHT ā¦as usual)
July 26, 2023
They ration healthcare by just not providing it!
Undercover MP work needed.
July 26, 2023
Indeed by not delivering, delays, booking systems and other scams they have you cash already so from their perspective why bother with there ānon payingā ācustomersā they are just an expense and inconvenience to be fobbed off and deterred.
July 26, 2023
An odd post on the very day that an awfully run, purportedly private sector bank’s highly paid CEO is defenestrated for her fit of spite. In any normal world, shareholders’ cash would leave such institutions and they’d be outrun by competitors. Our companies, private and public sector, work in such a moral vacuum under hopeless leadership now that their ownership seems to matter little.
July 26, 2023
As an object lesson in getting things done from outside their party as opposed to trying to get things done from inside, Farage seems to be an example who could be replicated by others.
July 26, 2023
āOur telecoms system fell way behind the USA in terms of technology and efficiency, sticking with electro mechanical systems when the US was going electronic.ā
True, but now is declining and fallen mainly, and on what the market is saying will be soon completely in foreign hands. That isnāt so much an issue where there is reciprocity, Country to Country. In practice it is a tax situation, a removal of tax take from the UK through heavy āadministrative costā to the new owners home nation ā the tax previously paid in the UK is being paid to other Nations. Tax is there to fund the core of the UK, every time it is removed it adds to the burden of those that stay in the UK.
July 26, 2023
Sir John,
The problems you describe exist now with former state-run industry in private ownership. Privatisations have largely failed the public in England. They are a litany of greed, lax government and supine regulators.
July 26, 2023
First of all competition as it was envisionaged does not work – it is a con – prices are being fixed in the corridors of power and on the golf courses. I say this because on a smaller scale and for a while now I have watched petrol and diesel prices go up and down near where I live and always after informal meetings between certain individuals – as I suspect.
Secondly there is nothing to say that the nationalisation of certain essential services like water and transportation cannot succeed except in cases of corruption and mass incompetence. All that needs to be done then is to set up new arrangements with the proper checks and balances in place and of course with a minister in charge who at the end of the day will face the axe if he does not perform. As somebody else said national rail and public owned water for example works perfectly well in other countries not too far from us – so somebody should go over to have a look.
Reply There is no evidence of price collusion in petrol prices. If you do have actual evidence you should send it to the Competition authorities. There are a number of competing suppliers, charging different prices.
July 26, 2023
There is no need for the old style collusion to fix prices – they are there for all to see, which is why supermarkets now price some of their items to match the discounters. You can find the price of virtually anything these days with a few clicks of the keyboard. To my mind this can work both ways, in either keeping prices low, or price matching to what the maximum the market will bear, once one puts up prices and it sticks it becomes the new lowest price. It seems the old style idea of cost plus profit equals price no longer exists, some are put as loss leaders, others are jacked up to cover that.
July 26, 2023
Electricity, another unfair burden on the UK taxpayer. Levies/subsidies etc. are compulsory, that means they are an additional tax. As it stands UK wind-farms are created by UK taxpayer funding, the taxpayer has no shared ownership of the structure, UK wealth is just transferred. The structures them selves are foreign produced with UK taxpayer money. They are then run by in many cases by Foreign States, for which the UK taxpayer then pays a UK taxpayer subsidy to the foreign taxpayer for the privileged.
The UKās mainstream electricity is not UK owned(company or state) but foreign state/taxpayer(Protected State Monopolies) owned, again the UK taxpayer is paying those that donāt contribute to the UK tax pool but just remove UK wealth from the UK.
Joe Biden has it right, there is taxpayer subsidies/funding, but it is restricted to US taxpaying enterprise. While in the UK Government is focused on exporting UK wealth.
The UK Government doesnāt even request āreciprocityā when exporting UK wealth.
All the time the system increasingly creaks is put under stress and the taxpayers burden grows.
July 26, 2023
@Ian B
We need a Government that is prepared to support UK Private Industry and Enterprise first and foremost. Supporting foreign State Monopolies, their tax structures not the UKās is not what you could call Privatisation.
July 26, 2023
What about the argument “Nationalisation v Privatisation v Mutualisation”?
Under mutualisation essential monopolies like water, sewage, gas and electricity would be owned by the customers and employees. The services wouldn’t need to be starved of funds, as in nationalisation, by governments trying to balance the budgets elsewhere. Neither would profits go to shareholders, as they do in privatisation. Customers would get the service they are prepared to pay for and profits could be divided between investment and lower bills.
July 26, 2023
The simple fact is that any monopoly, Public or Private has no real incentive to operate well, or within a tight budget, its customers cannot go anywhere else, and the managers and workers do not have the challenge or drive to improve matters, thus the business starts to stagnate, and be run for the benefit of those whom it employs, or its shareholders.
The so called regulators have no skin in the game, and appear to not want to rock the boat, thus as long as there are no major problems or accidents, things are just allowed to carry on as they were.
July 27, 2023
I used to think that there was only one thing worse than a public monopoly: a private monopoly.
It is actually quite difficult to create competition in established infrastructure that needs long term planning of investment. Companies won’t invest unless sure of tenure to cover a payback period that is necessarily long – 5-10 years with a long and expensive implementation period of several years. Hard to generalise but pay-back in 3 years or less is what the private sector prefers in manufacturing (pharmaceuticals being a notable exception).
July 26, 2023
āThese bodies did not do a good job in keeping prices downā Even now there is no change on that count. SE Water, SW Water are unable to full fill their commitments to their consumers. Thames Water has been paying their investors ahead of providing best service. They have all taken their payments from the consumer, but have then exported them to shareholders before contemplating consumer service. As there is no āMarket Placeā the consumer gets stuffed, ultimately so will the taxpayer when they have to pay to update the infrastructure. Its a merry-go-round almost dishonest.
The subtle difference Sir John is State owned(read taxpayer owned) then State (read Government) run is was a disaster of an idea. With no actual Market Place that allows consumer choice, were we are now is just a fudge a misplaced slight of hand by Government. As often said Governments are rubbish at running things and should not be allowed to. However, all these entities were created and owned by the taxpayer, they have been sold at a loss to the taxpayer when all that was wrong was the State/Government doesnāt/cant manage. The sensible realistic option is that the work the day-to-day management is contracted out. That way the taxpayer will not be forced āgun-to-the-headā pass twice.
When there is no āMarket Placeā a different model of delivery is needed.
Reply There can be a marketplace. Your idea of contracting out management is the current rail model.It fails because they can just bill taxpayers for losses without solving the underlying problem, the shortage of passengers for the timetables they are required to run.
July 26, 2023
Reply to reply. And the same goes for contracting out the management of the economy to the BOE. They just run up the debts and bill the taxpayer for same.
July 26, 2023
@Reply – that would suggest the Contract negotiated has no criteria or responsibility, accountability attached to the service provider. It is not as if it was permitted for GWR to challenge SWR into Waterloo. Where is the consumer choice? as it is the consumer that drives competition therefore price.
July 26, 2023
“We were prisoners of nationalised monopolies when we had them”
We are prisoners to the alternatives, no ‘market Place’ options, means service is overpriced.
Ofgem the energy regulator defines a max price all companies can charge, then they all charge that regardless of source and costs. That is not a working market place with competition.
July 26, 2023
Sir John ā a privatised taxpayer funded operations such as HS2, value for money? Who owns it after all the taxpayer money is sunk into it, who will get to bail it out again and again.
July 26, 2023
I do not think the arguement should be Nationalise or Privatise. Both concepts have advantages. Defense ie. Army, Navy, Air Force works as a national service. I could not conceive of every country or county having its own set up within the UK.
Currently within the UK we have an example from each camp that serve their customers very badly. The camp being those services that the left argue should be nationalised and the services they havn’t got around to as yet. From the former we have water. From time to time the country drowns in it, but the water companies fail to collect, distribute, or deal properly with its byproduct, sewage. From the latter we have banks who until they abused Nigel Farage were an anti customer law unto themselves.
The fault/ weakness is the framework that Parliament allows them to work within that effectively allows them to treat you and I their customers like dirt beneath their finger nails. Parliament has been inert during EU membership. They now need to wake up and legislate to ensure the right balance of responsibilities on both sides of any perceived problem. It has nothing to do with whether any of these mega companies are nationalised or not, it is the rules and framework within which they are allowed to operate.
The litmus will be the banks and the rules within which they are allowed to operate. It will not be acceptable for them to be dragged into the Business Secretaries office for chastisement and then left to behave, they will not. Their practices that are anti customer and outside their remit as bankers need curbing with well thought out legislation, so over to Parliament.
July 26, 2023
Addendum.
I also want a serious crimes squad investigation into any and every solicitor and legal professional who has dealt with an assylum claim or appeal during the last ten years. Thanks to investigative journalism we now know that many lawyers are corrupt. It must be dealt with speedily and the results of their corruption reversed.
July 26, 2023
Don’t allow any illegal immigrant any access to our legal system or contact with solicitors
July 26, 2023
+++++
Add charities to that too because I don’t think they are above nudging asylum applicants in the right direction to get a positive outcome.
Certainly no more tax payers money to charities involved in this whole debacle.
July 26, 2023
Iām more concerned that our private companies are being nationalised by stealth and over regulation by quango and government alike and the underhand policies of net-zero and wokeness
I see no evidence of any bomb-fire of paperwork, regulation nor bureaucracy, I see no evidence of any repeal of any EU derived laws effecting our business & economy. In fact Iāve witnessed, over the past decade, more control & centralisation by this government
ā¦note the recent soft policies filtered down by government, to treasury, to the BoE, to our commercial banks, than imposed upon private business & individual account holders
July 26, 2023
This blog omits to mention the factor at the root of success of private enterprises which is private, individual profit. It is that which motivates ‘competition’ which the blog rightly cites as very advantageous for customers. The left hates the concept of private wealth (for others) and the centre of politics ‘virtue-signal’ about it even though most people, however wealthy they may be, want more money for themselves even if not for others.(That is why the very well and unequally paid hospital consultants are now taking ‘industrial action’ and helping further undermine the NHS as a service for the nation.) To really win this argument one must campaign about the advantageous effects of private wealth and profits, most especially in making Capitalism so effective and so successful and against the hypocrisy of most of those who campaign against it , not least those standing for election for the job of M.P at a very inegalitarian salary of about Ā£90,000 per year!
July 26, 2023
āThe UK could not confiscate the privatised assets like some communist autocracy, needing to respect international laws of ownership and trade rules.ā
Confiscation is unnecessary. All the communists at the quangos, regulators and our institutions need to do is fix the regulations to drive the privatised assets into bankruptcy.
As they are already doing with their unilateral Net Zero project.
July 26, 2023
“…all parties believe in income support, minimum pay and other means to ensure people can afford what they need”.
These policies from the uniparty sap self-reliance and lead to 5.3m people unemployed and on benefits. I was planning not to vote at the next GE but new boundary changes mean that my ward has been subsumed into Surrey SW. The prospect of voting to oust Jeremy Hunt has made me change my mind.
July 26, 2023
It is sad that the universities are not teaching their students this stuff in a balanced way.
July 26, 2023
@iain gill – Indoctrination is placed ahead of education with a bias to learning
July 26, 2023
Does the plot to bring down Farage extend to other Remain political and financial ‘players’?
July 26, 2023
@DOM Yes, this is not a Democracy
July 26, 2023
Coast Guard and emergency services were alerted around midnight Jul 26 about major fire on board of car carrier FREMANTLE HIGHWAY in North Sea, off Dutch coast. The ship with 2857 cars on board, including 25 EVs, left Bremerhaven, bound for Egypt ….updates continue in news outlets
Reply The cause of the fire has not yet been reported.
July 26, 2023
”the fire is suspected to have started in one of the 25 electric cars on board, the news service added, citing a spokesperson for the coast guard” Sky News reporting
Reply We need a more definitive report. There is also the issue of how the batteries of the 25 cars behaved in the fire whatever the cause.
July 26, 2023
The BBC reporting the same
July 26, 2023
What I remember, is that your council tax came with the water bill in the 60s and 70s and hardly ever went up by more than few pence where as today it goes up by hundreds of pounds a year just for the council tax let alone the water bill.
A household had 2 bills back then, council tax with water and eletric bill and maybe a phone bill, that was it.
I don’t think you can compare the 60s and 70s with today, sometimes it look to me that managament never changed, they have just milk it for there own benefit and the government love all the extra taxes it bring in.
It does not matter who runs what you get rip off anyway either by the old way of employing more people on good wages or by just pumping more money into the boardrooms and dividends.
Thats the sorry story of this world, no oversight of what is going on just MPs agreeing to what best for the boardroom.
July 26, 2023
I have never been a fan of nationalised organisations . Removing any degree of competitiveness reduces efficiency . The pressure of shareholders in an open market condition is considerable and although the resulting bottom line benefits are limited to its investors there is an ever going challenge to its day to day operations . The public should not be exposed to funding any activity in which they do not and need not use – train services are a typical example . In health care regional bodies should be able. compete in professional standards and efficiency. In the case of water , users ought to be able to select their provider – after all the rainfall that occurs is a national occurence .
July 26, 2023
Re your first paragraph, there is no great mystery about the call to nationalise certain industries. The list you give is about success and failure. The railways, water, electricity etc. are the failures, whereas air travel, food and broadband are successes and people don’t mind paying for them. You seem to think that people are calling for everything to be nationalised that used to be – not so. As regards subsidy, we subsidise the so called private railways far more than ever was given to B.R. even with sky high fares and we have just had the huge bail out for power because the industry is not capable of keeping prices low when world prices are high. The water companies make huge profits and yet they still want the public to pay to renew their own infrastructure with even higher bills. We have the highest prices for power etc as the loss of our major industries show and these companies continue to make high profits, which if properly managed could go to the Treasury rather than foreign owners. Keeping on harping back to the seventies fools no-one, things are very different now with technology and knowledge. No reason why a nationally owned entity could not be run properly if only politicians would keep out of it. We don’t need to spend tons of money re-nationalising them, just wait for them to go bust as we have done with the railways. The threat itself may be enough to bring these failing privatised industries to sensiblilty.
Reply Network Rail is nationalised and the train cos heavily regulated and controlled from the centre. They lose a fortune, back a huge uneconomic HS 2 project and have failed to rebuild their fare income post lockdown. Not much of an advert for nationalisation.
July 26, 2023
Reply to reply
Whose fault is that? You started the privatisations, Network Rail was formed because private owners could not run it safely and went bust. Good advert for privatisation? You have been in power for 13 years, though it seems your MP’s prefer to think it was only since 2019. If its wrong you could put it right, so why not? HS2 as you know, hardly anyone supports it but your government does and is a white elephant no-one has the courage to cancel, even if it bankrupts the country. Cost seems to be no object.
July 26, 2023
Graham1946,
Correct. Network Rail was the result of catastrophic failure within the privatised railway.
The train companies are another privatisation failure. They only remain because this government will not admit the whole exercise has been a complete flop.
They are indeed ā heavily regulated and controlled from the centreā. As money-making enterprises they aim to make as much as possible. Huge subsidies have to be paid to persuade them to keep running the franchises. Fare income is often a subsidiary consideration. The companies have no incentive to invest in the business or make improvements. Itās not that attractive a proposition nowadays, which is why government struggles to find replacements for badly performing franchises.
Theory sometimes does not hold up when tested in the real world. Constantly tweaking the theory to get it to work can then be a triumph of hope over experience.
July 26, 2023
Nationalisation should be banned forever.
Any industry that is controlled by Government departments and civil servants cannot ever be efficient. Just look at the mess they have already made with our debt levels, NHS and the MoD. It does not bear thinking about that they should take over even more. Unless we wish to emulate the defunct USSR or today’s North Korea.
July 26, 2023
I’ve often thought that what would work best is a market where a public body exists and also private sector bodies, in competition.
There is no reason it must be one or the other. The existence of the private sector would keep the public body competitive (or no-one would use their services) and their Board should be remunerated on profit levels – which the taxpayer gets of course – and on performance relative to the private sector entities.
The reverse is also true – the existence of a public sector body prevents the near-cartel operation of many supposedly privatised functions. Of course, there needs to be a regulator to prevent collusion, however it’s long past time regulator staff were prohibited from being employed in the equivalent market sector (a lot of the regulators end up in plum jobs in the firms they were supposed to be regulating… no prizes for guessing what’s wrong with that).
July 26, 2023
Off topic:
Have you seen Sunak’s performance at the Infected Blood Inquiry?
He’s being laughed at by the audience for his wooden, evasive non-replies. This guy is TOAST on the campaign trail of a GE.
The Conservative Party really has to avoid fighting an election with him as leader – unless the idea is to purge the parliamentary party by not getting any of them re-elected. Evidence suggests such a plan would work in spades.
July 26, 2023
Agree that re-nationalisation would be a retrograde and, in present circumstances, unaffordable step. But efficient and effective regulation is vital for these services especially as they tend to be monopolistic by nature.
Please be prepared to learn from other countries. I believe Hong Kong had very effective regulation that provided services that were competitive with the price of similar services in Asia together with efficiency and reliability. The utilities were limited in the return on capital they could earn and were limited in the financial gearing they could use . Excess earnings had to be transferred to a reserve account that could only be utilised in making capital investment.
Why couldnāt the British civil service learn from Hong Kong ?
July 26, 2023
On a day of bad news all round, with winter weather across the UK, I noticed that my petrol station has put up again today the price of unleaded by 2p to Ā£1.44p ….what was that about inflation
July 26, 2023
Before nationalisation, many of these services were even less centralised. They still are in some European countries. In Stockholm, the city council runs the district heating, the water and the sewerage.
Also why is the debate confined to supporters of top-down state ownership and top-down private ownership? Top-down private ownership is where electricity will logically end up if the endless mergers continue. National Grid (owns the HV lines) recently bought Western Power Distribution (owns the MV and LV lines in Wales, the Midlands and S W England).
Experience shows the problems which can arise when large top-down organisations control anything and there are no external checks in place to prevent empire-building, profiteering, etc, etc. See e.g. GPO and BT, i.e. the public and then private UK telecoms providers in my lifetime. The former was useless and inefficient but so is the latter. Talk off the record to a telephone engineer. Openreach is a private monopoly which ‘sells’ to so-called multiple retail providers.
There is no apparent incentive to make broadband more efficient, including the newer FTTP, so price-gouging continues. 40 yrs since privatisation, telecoms now costs me more (Ā£ per year) than my (modest) car’s entire running costs (fuel, depreciation, tyres, servicing, insurance, MOT etc). Nearly all the costs of running a car (except I suppose its MOT) are subject to competition.
July 27, 2023
“Whilst the UK has made clear it has no wish to ration health care by price ..”
Except that the NHS does precisely that through NICE.
July 27, 2023
The Gas Man Cometh – Flanders & Swan and Bernard Levin in The Times
The state monopolies were so comically bad one could make a good living satirising them
July 28, 2023
To make the system work we have today, you need strict laws to bring those who own our industries into line. We cannot have foreign countries buying into our much needed areas for giving us life to not be accountable for the way they perform and keep the systems working well and updated. This is the job of Government obviously as the companies are running wild and doing just what they like.