There are several strong arguments against the nationalised model for providing commercial services  like phones,water,electricity and gas as we used to suffer.
1. These services never had sufficient priority in public spending to access sufficient capital to modernise and expand.
2. As monopolies not facing daily competitive pressure they put up prices too much and tolerated poor service.
3. As monopolies they often made bad decisions about investment that then  cursed the whole service. BT for example when under state control spent a lot on rolling out outmoded electro mechanical switching when the US was well advanced with superior electronic. The UK’s supply industry was unable to sell the Uk spec products for export as they were out of date. The electricity industry stuck with new coal power stations , only opting for cleaner cheaper more fuel efficient gas after privatisation.
4. These businesses were overmanned with low productivity. This led to getting rid of staff and charging too much.
5. The losses on nationalised industries exposed to international competition like steel and coal were huge. The railways also ran up huge losses.Taxpayers had to pick up the bills.
When making the case against nationalisation I was able to demonstrate nationalised industries were bad for customers, charging too much, bad for taxpayers, costing too much, and bad for employees, getting rid of so many.
March 30, 2024
Now Westminster suffers from the same nationalised sickness because the individuals owe their seats to the ânationalised party machinesâ rather than the free market independent selection committees. Productivity has dropped to an all time low with ALL the real work being done by a very few. Yet the spokesmen for the nationalised government, unable to react to consumer (voter) demand and stuck in group-unthink, profess to be straining every sinew. Evidence that the disease is at Stage 4 and incurable.
Government Ministers sound so like Scargill that I feel that I have heard it all before in a parallel universe. I have suggested that they make a new Blackadder with Baldrick as the Boss, for that is the change we have suffered.
A 180 degree handbrake turn is required for the consumer to consider engaging again, else the fate of the Coal industry awaits Democracy itself.
You see this Government accepted the direct and explicit instruction that âBritain exit the EUâ. Thatâs what âBrexit means Mrs May – BRITAIN EXITS – and itâs the SOLE REASON that many of us, holding our noses, voted for Johnson.
The party has since thumbed its nose at he who pays the piper, and thus the clock is ticking and the shroud awaits – not for our politics for our âpartyâ abandoned those long since, but for the party itself.
March 30, 2024
Excellent Lynne. You missed Cameron who also rigged the referendum, lost and stomped off 8n a tantrum. He is now back because he wants to be part of the EU lock step plan to prevent any divergence. Labour, if elected would continue in exactly the same way. Both halves of the uni party incapable or unwilling to govern but can only implement what they are told. Unelected usurper Sunak was their installed manger of paper clips, unfortunately the public will not have it.
If there was a disncripn the Tory party would be all over Labours front bench with their traitorous behaviour over Brexit, silence says everything.
I note Govt/ establishment got all key leavers from government one way or the other. Donaldson being the latest.
March 30, 2024
+1
March 30, 2024
LA: Very clever analogy!
Government has indeed been rendered sclerotic by lack of competition, lack of ambition, lack of talent… but I am not sure that *privatising* it would supply the necessary reform that is required!
Junk the lot – and start over.
March 30, 2024
Privatising it (selecting by selection committees) worked very well. Of those actually working in Westminster the vast majority were selected by the volunteers on the selection committees – Sir John included.
These below average MPs were chosen by the party establishments precisely because they are below average and easy to control/bull.
March 30, 2024
+1
March 30, 2024
Lynne,
Unfortunately the quota selection procedure is now fixed. Dowden made that clear therefore we can only assume the cabinet is there by quota or merit or ability. This explains why JR and tiny few others will remain for presentations purposes only.
Do not forget S.172 Companies Act provides the ESG rot for private companies as it does for the public sector. JRs half of the Uni Party furthered it instead of scrapping it and usurper Sunak recently implemented EU equality law into domestic legislation instead of scrapping 4,000 EU laws and he also scrapped the bill to scrap EU law!
March 30, 2024
+1
May gave every indication that she understood the instruction and the mandate given by the electorate. LEAVE does indeed mean LEAVE. It doesn’t mean “partly detach ourselves but remain aligned and controlled by the EU in large swathes of policy areas.”
She deliberately set out to betray the 17.4 million who understood perfectly well what LEAVE really meant. Nigel then gave Johnson a free pass so he would get a majority to implement what the people wanted but the Party still didn’t do it.
So, having REFUSED and FAILED to do what the majority voted for, there is no reason whatsoever to vote for the Treacherous Tories again. Did the pro-EU Party Grandees really not understand in May 2019, when the Brexit Party won the last EU elections we participated in and the NaCP got less than 10% of the vote that the Party was drinking in the Last Chance Saloon?
March 30, 2024
May never said âleave means leaveâ – she said âBrexit means brexitâ. âBrexitâ is not a word – so her narcissistic instinct found the word that could mean anything she chose it to mean.
March 30, 2024
Another brilliant observation from Lynn today.
March 30, 2024
True. But the Referendum was to LEAVE or REMAIN a member of the EU. Not to be in a halfway house, where the Government still has a very useful EU (and ECHR) excuse for not implementing the policies the British people wanted and voted for.
March 30, 2024
Sunak chairing the EU political forum in July 2024! I thought he as meant to be intelligent? Judging by his record he asked us to judge him by he failed, judging by mess of the economy he failed, judging him by his promise to implement the 2019 manifesto he failed, he keeps giving NHS billions and it is is still failing, his mass immigration policy is totally against his manifesto promise and what the public want he failed, Sunak refuses to depart the EU and diverge, he betrayed the nation with his EU sell out giving away N.Ireland, putting a border down the Irish Sea, coerced and force DUP to accept his sell out- all of this we were told by his Tory predecessors no British PM would do! We are told to believe that He backstabbed Johnson and back stabbed Braverman. I have no idea what he stands for based on his policies, EU/Labour? Even his wifeâs non dom status and green card give rise to many questions.
Tory MPs chose him after he was rejected by his party members. They knew what he and Hunt were doing, no accident. So the MPs must accept annihilation.
March 30, 2024
“When making the case against nationalisation I was able to demonstrate ..”
There is a difference between theory and the reality of living under privatisation, which we have all now had many years experience of.
Third posting of this without the point by point refutation of the five claims.
Maybe this one will not get deleted?
Reply Your refutation was inaccurate. You ignore the clear need to introduce competition and refuse to see how much worse nationalisation always is. Post Office treatment of staff and huge losses. HS 2 inability to build a rail line anywhere near budget or timetable.
March 30, 2024
‘Reply Your refutation was inaccurate. ‘
I would have been happy for your readers to be the judge of that.
Reply Run your own website. I do not have time to correct all your errors in a submission.
March 30, 2024
Dr Mansoor Soomro, a lecturer in sustainability and international business at Teesside University, is undertaking UK-based research on how and why appliances are not lasting as long as they used to. He believes that the practice of designing products to break quickly or become obsolete in the short to mid-term has increased in recent years. This is despite laws by UK and EU governments to try to prevent this.
Indeed all sorts of things are designed to fail. Phones with batteries sealed into them, gas boilers, fridges, irons, toasters, vacuums, cookers, garden chair, cars even loo seats fall to pieces with cheap plastics that decay. Plus we now have the government regulating to make things worse in cars, boilersâŠ
Often they even use special screw heads to prevent you even getting in. Or have parts designed to fail that are mad deliberately expensive or unobtainable or sealed in so you have to replace a whole PCB rather than just a ÂŁ5 battery.
Useless and misguided government regulation largely to blame yet again.
March 30, 2024
Plan for league table of migrant crime.
Senior Tories demand detailed analysis to toughen visa and deportation policies. Says the Telegraph today.
Strange I though the clear plan of this appalling fake Conservative government (and the police, civil service and the criminal justice system was to hide these figure as much as they possibly can. Just as they try to hide the vast damage done by the net harm Covid Vaccines, the lockdowns, the insane cost and zero benefits of net zero, the appalling performance of the police in deterring burglaries, thefts, muggings, shop lifting, violent crime⊠In Sweden where rape and other violent crimes have nearly doubled there are laws to legally prevent people telling the truth about this.
March 30, 2024
LL,
Climate scam is against free markets and cheap mass production of goods whether it be food, cars, steel, glass, etc etc. It is clearly a political scam to force extreme left wing authoritarian govt upon everyone under the guise to save the world. What is truly disturbing an alleged intelligent Tory govt is championing such left wing rot ideology!
March 30, 2024
Illegal immigrants still come in their thousands. This will be the end of Rishi Sunak
There have been no promised flights to Rwanda. The Government rattles its sabre at illegal migrants â and then puts them up in lovely hotels.
ROSS CLARK in the Telegraph.
Sunak clearly has zero intention of even trying to âstop the boatsâ or even trying to limit legal immigration or any of his other five pledges (other than the inflation) which he and Andrew Bailey caused in the first place with QE, net harm lockdowns, vast government waste, net harm vaccinesâŠ
March 30, 2024
Johnson told us he would send them straight back, Sunak stated 7th March 2023 his legislation would stop it, introduced last August where illegal criminal,boat people,have no status or right to apply to be here. So how many of these were deported asked Tim Loughton MP to Head of Home Office Rycroft in front of Cleverly, none. Rycroft kept incredulously saying they were being processed. So the legislation is of no use despite what Sunak claimed or Rycroft refuses to deport illegal criminals who have no status or right to be here? Which is it JR?
March 30, 2024
Brava !
The extinction of the Tory party will be the kicking away of one strut of this rotten structure and not an endorsement of the Labour movement. Sadly the political elite will be too arrogant to see this.
My one hope is that the same unseen forces that controlled the Conservative governments against the will of the people will do the same to Labour.
March 30, 2024
L.A., thank you for the excellent comment.
A good time (once more) to recognise to the full the sterling contribution that was made by Sir John in the massive unblocking of the thoroughly clogged system, politically and economically, which preceded the privatisations of the 80s.
Thank you, S.J., for so explicitly stating the differences between the nationalisation sclerosis and the freedom of action, thought, and imagination which accompanies privatisation.
I lived through it and I can hardly believe myself when I recount to my offspring what life was like in the days of Scargill, Scanlon, Jack Jones, Red Robbo, etc., etc., and the cathartic release of mind and energy with the changes that the rejuvenated Tory Party and the tax simplification of Nigel Lawson brought.
I salute you.
March 30, 2024
+1
March 30, 2024
In the case of water distribution and waste treatment, Thames Water presents the perfect counter argument to Sir Johnâs points two and three. It is a private monopoly, poor at serving its customers, poor at proper investment, with increasing prices, with repeated pollution of the waterways, with high level of debt while continuously serving dividends to investors, with practically no efficient monitoring by OfWat and Parliament, and successive CEOs making huge salaries for poor services.
Water distribution and waste treatment is the perfect case to prove Sir Johnâs wilful blindness to whatever is much more successfully done in other countries.
But thatâs what you get from an arrogant politico who will never admit that in the past he might have been wrong.
Reply I think private regukated monopolies are a little better than nationalised monopolies but are a bad idea. I have consistently urged competition which would sort out the water problems.
Nationalising water woukd delay putting in enough 3xtra pipes to take all the sewage. Where do you think the state would get the money from?
March 30, 2024
Reply -reply
John there is no real competition with water, just as there is none with electricity or gas.
All products come through a national grid which is made up of a cocktail of resources, all a customer does is to choose who you get to send you a bill, I guess at least with water you know which company is responsible to repair the mains in your area.
March 30, 2024
Well the failure with the Thames Water for example is very poor regulation. They have allowed the company to asset strip, fail to invest and take out huge dividends. Leaving a company that cannot now even now raise capital it seems. Government regulators so often fail, not only can Governments not run things they cannot even regulate them. Regulators usually go rogue often they in-effect get bought by the regulated company. Witness the banks in Gordon Brownâs absurd banking fiasco where the banks had to be bailed out. Now it seems Thames Water will need to be.
March 30, 2024
You have to ensure they have sufficient skin in the game. If you let them withdraw all the capital you have little or no hold on them and this fails customers, tax payers, employees and misguided shareholders and pension funds too.
Regulators are mainly interested in growing their regulation industry, good wages, pensions and nice offices. Not looking after protecting consumers. The FCA even forced one size only rip off 40%+ personal overdrafts onto UK customer while under the inept dope Andrew Bailey.
March 30, 2024
The people who need to ensure they look after consumers and ensure value for tax payers money is delivered are elected MPs and Ministers but most seem to have zero interest in such things.
Senior Tory MPs warn that voting reform will wreck Brexit! In the Express Today. But nearly all Tory MP voted for Sunakâs dire Windsor Accord so it is being wrecked by this and many other Sunak moves anyway is it not? I can not vote for a liar or a fool who says the Covid Vaccines were un-equivocally safe, lies about the Windsor Accord and even thinks he has cut taxes when he has not!
March 30, 2024
Perhaps the worse structure of all is a state run virtual monopoly. Take the NHS, the legal system, state schools, much of public transport. HS2 as examples.
March 30, 2024
LL, +++++++
March 30, 2024
Government could perhaps have retained some kind of ‘golden share’ or at the least prevent asset strippers like Macquarie (aka the Vampire Kangaroo) getting involved. They are in business to make a fast buck and typically do so by loading up a business up with debt, selling off the family jewels (to fund the interest payments) before running away from what little remains.
March 30, 2024
LL,
“Regulators usually go rogue often they in-effect get bought by the regulated company. ”
Regulators are often there just for show so they don’t need to be bought out. Staff are not up to the job. Nothing much happens to interfere with the running of the business.
March 30, 2024
The ‘Care Quality Commission’ constitutes an enormous extra burden of work, costs, and stress for the staff and clinicians it ‘regulates’, such as the NHS (if in doubt just ask any member of staff, nurse, carer, doctor, dentist). Its function is as a foil for the politicians who can easily hide behind the screen of the CQC when any issues arise.
March 30, 2024
The Regulators have been captured. Thatâs the problem with monopolies and monopsonies. If there is no competition itâs not really a privatisation. EU law stopped us properly privatising in a lot of cases.
March 30, 2024
How many of the so-called regulators are former CEOs of companies they are supposed to regulate? Has anybody realised that the so-called remuneration committees that define the salary of top executives of private companies are themselves top executives of similar sized companies, and if the British participants in such committees want to up the remuneration they invite a few US top executives to help increase it to âinternational levelsâ.
March 30, 2024
+1
March 30, 2024
Just like the MHRA is no longer (if ever) a regulator but an ‘enabler’ in its own words. He who pays the piper calls the tune….
zorro
March 30, 2024
‘Where do you think the State would get the money from?’
Same place the privateers will get it – the public with rip off prices and little or no investment as we have been subject to for the last 20 or more years. Not only will we have to pay, but also have to pay for the dividends of the shareholders. Your whole piece says what I said yesterday – underfunding, that’s the cause and always choosing the cheapest, not the best option. The Victorians were much more enlightened than today’s politicians. If it wasn’t for them we would still have dirty water and no sewers, because ‘we can’t afford it’. If you were a successful government instead of always being in crisis you would be able to afford it. You have the highest taxes ever, so why can’t you afford it? That’s what I would like to know.
March 30, 2024
Indeed – if I am going to be ripped off, I would rather it go into critical infrastructure improvement rather than greedy speculators pay packets or undeserved dividends.
zorro
Reply Thames Water has paid no shareholder dividends since 2017
March 30, 2024
H,
Thames Water indeed.
Telecoms privatisation happened at the same time as massive technology changes within the industry. The privatisation brigade then claimed those technology benefits for privatisation itself.
Reply We would not have got widespread and fast adoption of the new technology with the nationalised business. That was the main point of privatising after the Strowger debacle.
March 30, 2024
âWhere would the state get the money from?â. Taxpayers indeed. Now prove that the present system is so much better for the customerâs pocket in term of invoices, more efficient in its improvements to the water distribution, better at solving the leaks and dealing with pollution.
Iâm afraid that like so many of your age your head is stuck within a model of a wonderfully efficient private system, and are unable to see there are other ways of dealing with utilities than what the UK has had for more than thirty years.
March 30, 2024
Indeed, where is the living practice of this ‘wonderfully efficient private system’? …. Probably hiding under the sofa
zorro
March 30, 2024
The regulators are the new nationalised industry. They dictate what companies must do or not do. They pay no heed to consumer interest and have no care about the financial and economic implications of their orders. They answer only to civil servants who have even less understanding of the consequences of their demands.
OFGEM, OFWAT, OFCOM, NSTA, ONR, ORR, Highways Agency, etc. All of the same mould, and very mouldy it is too.
March 30, 2024
Generally, I would agree whole heartedly about nationalisation, but a situation exists where it is vital. Ă am referring to our ability to produce 1st grade steel, it is vital we retain the ability to manufactory everything we need for the future. The downward drift of our ability to build for our future must be stopped.
Our ability to survive is being degraded, and we are going back to before the industrial revolution we gave the world.
Reply I agree we need to keep steel making. That needs cheaper energy, not nationalisation. Steel is being taxed to destruction by carbon taxes
March 30, 2024
JR, do not be specious. Your govt is destroying/destroyed steel making. Javid allegedly came back from Australia jaunt to save steel when of course the EU plan for environment or state aid was not going to allow it. Be truthful to what your govt has failed to do on each and every occasion. Stop blaming others.
You might recall Thatcher caught the steel unions in the 80âs to keep it going, you current outfit wants to destroy our manufacturing and send jobs east.
Reply I did blame government taxes!
March 30, 2024
@Ray Veysey
“Our ability to survive is being degraded, and we are going back to before the industrial revolution we gave the world.”
Isn’t that the intention of the fourth industrial revolution; to undo the previous Industrial Revolution?
I struggle to understand if ministers agree with the idea, or cannot ‘see’ what’s happening!
March 30, 2024
Steel may need cheaper energy but the owners in Britain are foreign and can produce the required steel elsewhere in the world cheaper. They are not interested in our strategic capability only profit. Some may say they want to actually undermine our capability to produce things.
We are the only country un the G20 unable to make primary steel
All on a Conservative watch.
Disgraceful.
March 30, 2024
Reply to Reply, Sir John the EU destroyed much of our steel making capacity by issuing quotas. I remember Llanwerne being fined ÂŁ60 million for âoverproductionâ. We asked the EU to take the closure of Ravenscraig into account when allocating the quotas – of course they refused.
You cant put a rolling mill onto half-time or run it half pace. Itâs either rolling or not.
So many of our problems have EU roots.
Reply Yes, quite right
March 31, 2024
Germany sticks up for its industry, why not Tory UK?
March 30, 2024
Carbon taxes that benefit no one (but crooks, crony capitalists and some MPs acting as paid âConsultantsâ) as CO2 plant & tree food is not a problem but a net good and anyway the CO2 and steel is just produced overseas anyway and the jobs and money exported. Economic and industrial vandalism from May, Miliband, Sunak and soon Starmer.
There is no climate emergency and one will certainly not caused by man made CO2 plant food. CO2 is not some world thermostat as is very clear indeed just looking at climate history and the science.
March 30, 2024
Agreed Lifelogic there is no climate emergency and I’m sick of the propaganda being pushed onto a gullible public. Now many TV programs repeat the lies as if they are fact. I can no longer watch Countryfile, Gogglebox, the news and Planet Earth.
Sir John – have you watched Climate – The Movie yet? A must-see for anyone who wants to know the truth about the climate emergency scam.
Reply No. I have made clear I am not going to get into a fight about the science. I am concentrating on the products, economics and behavioural issues as the arguments are strongly against the prevailing bans, taxes and heat pumps.
March 30, 2024
You should watch it. It is good and surely correct.
But the NET Zero is lunacy even if you accept the CO2 devil gas climate emergency as:-
1. The âsolutionsâ do not work even in CO2 terms they just export it at best.
2. Many other countries will not cooperate anyway (rather sensibly).
3. The cost is far more than any benefit – indeed the âbenefitâ is negative.
4. The solutions unaffordable are totally impractical anyway.
5. It is economic and scientific lunacy.
March 30, 2024
Yes your analysis of nationalisation is quite correct, but government who control the playing field are equally culpable. Nobody within government knows sufficient about an industry or market to be able to sensibly advise on anything. Then there is the Treasury, who knowing even less, apply their wet hand to the purse strings. Equally nationalisation is a breeding grounds for very backward thinking trade unionism whose leadership is driven by a desire for political control way beyond the industry.
Privatisation has many pitfalls. Largely because, the quangos set up by government to avoid responsibility, have a totally divorced agenda from customer benefit. Often following legacy EU criteria. I maintain that the structure of our business plan in the field of energy is just such an example, resulting in the grotesque prices we pay for it, 66% more than the very same energy in the USA.
Privatisation’s other god is the shareholder who in effective geographical areas have a monopoly and take precedence over the customer and investment in infrastructure. Anyone suffering the rain of current times would think we had enough for our needs, but only if we had the means of capturing, holding, and distributing it. We do not. Government in its wisdom increases the population via both forms of immigration to such an extent that the under investment in sewage treatment ensures it pollutes our rivers and seas. Just do the maths, having researched how much detritus a human being poduces in a year.
Then of course, praying at the altar of rampant capitalism, most of the shareholders are foreign. Only a UK government would think this acceptable. The French would not tolerate such a strategic failure.
No one system is wholly good or bad, it is all down to the way government controls and manages it. Even a myopic observer would see that UK government of existing colours is genetically incapable of managing anything. Those keen on solutions should read, Reform UK , a contract with the people.
Reply The answer to tgese problems is choice for customers, competitors for producers.
March 30, 2024
Agricola quote correct.
JR, who will invest in any industry when your govt places windfall taxes on them to ensure they are taxed out of existence! Your govt is to blame period.
March 30, 2024
We call the Government joining on on the âexcessive windfall profitsâ âtaxpolitationâ. They demand their share, they do not demand a refund for the customer.
March 30, 2024
Reply to reply.
In theory yes, but in practise as structured in the UK, no. My home would need a pipe and cable to New York to get a competetive solution to energy. You say Steel needs cheap energy, I agree, but would add that we all need cheap energy, and it is only government incompetence and a desire to appease the EU, that stands in the way. I have had an explanation from a long retired very senior member of HMRC, but not a bleep from politicians. So I know of no politician better qualified than yourself to lay bare the details of the UK energy plan relating to our own sources from concept to current day.
Choice yes, but that choice must be real, not a government via quango, screwed up veneer.
March 30, 2024
“Most of the Shareholders are foreign” – actually AG, this is normally a very good sign, the problem being that we don’t have enough UK funds (such as the big pension providers) investing in the UK. I think part of this is down to Gordon Brown and his disasterous tax changes (that effectively killed off Final Salary Pensions) but also a clear switch by these institutions to US growth stocks (rather than UK value) where the NASDAQ has been a big winner. Our big pension funds only have about 4% of money invested in the UK these days, down from over 20% not too long ago. This is a little strange because by many measures, the FTSE 100 is clearly undervalued compared to the S&P (and dare I say it, pays much better dividends). So overseas investors should be welcomed but not if they can just buy our businesses on the cheap. We need UK money invested here too, something that Government should be able to encourage with the right tax regime (well, I suppose I can always live in hope)
Reply Pension fund investment regs have meant many pension funds bought UK bonds not shares
March 30, 2024
Which is why we ended up with the LDI crisis SJ.
March 30, 2024
I think you are right to draw attention to the pipers calling the tune among shareholders and bondholders. Sid and his pension has been elbowed out in favour of Blackrock and Sir Christopher Hohn and Mark Carney approved senior banking appointments, foreign governments (e.g. Chinese financing of Hinkley Point, CNOOC subsidiary Nexen in the North Sea etc.) and the narrow clique of billionaires. ESG and DIE are imposed by regulation and fiat over normal shareholders’ heads. Markets are rigged accordingly. It’s corporate fascism.
March 30, 2024
It’s a fallacious argument to compare phones to water. No capitalist on earth is going to defend nationalisation of phones! But lots of capitalists question the privatisation of water. There are lazy and greedy people in the private sector and happy to fleece consumers where they enjoy a monopoly (fleecing consumers, because governments allow them to, is also objectionable – fleecing them when they have no or little choice to use that product because it’s a monopoly)
Tories need to move on about being obsessed about whether to nationalise water or not (that’s ideological capitalism from the 80’s which was fine in the 80’s but not beyond) and instead obsess about how to grow our high tech sector – even more, creating the world’s second Silicon Valley in Cambridge, for example.
Reply Labour has rightly ruled out nationalising water as too expensive for taxpayers.The water industry needs competition. I had to argue endlessly against a nationalised phone system and fight to introduce competition into the privatised monopoly. Many said competition was impossible in such a complex network.
March 30, 2024
So Tories need to obsess about helping the creative entrepreneurs to CREATE the great tech brands of the future – not obsess about helping or protecting the rights of lazy, fat cats enjoying MONOPOLIES and fleecing companies in the private sector.
March 30, 2024
Government (of whichever flavour) need to get out of the way of entrepreneurs (in fact business generally) as much as possible – and not be constantly be coming up with new ways to bury them in paper and unwanted legislation, most especially employment and other ‘rights’. I used to have quite enough problems keeping up with Tax, VAT and other demands on my time without having to worry about all the other potential HR disasters that must haunt the small business owner these days. Why would anyone want to employ people now? I can understand why everything is outsourced these days but it does add to the costs..
April 5, 2024
Agreed. Every Tory should have a sticker on their computer at work reminding them: ‘how can I help entrepreneurs today and in general in politics?’
April 5, 2024
And entrepreneurs are the ones who create the real wealth of this country – as well as exciting brands that people want to work for.
Lastly, as much as entrepreneurs like money, from one degree to another, their real passion in general in being entrepreneurs is not the money but the GAME. The CHALLENGE. The ADVENTURE. The STORY they are creating behind the brand, including their own role in that.
Money just flows from this. But ironically, these are the ones who make the most money. Tonnes of it. And then generally give so much of it away! (to charities / to support the arts / patronage in general etc).
March 30, 2024
â There are lazy and greedy people in the private sector and happy to fleece consumers where they enjoy a monopolyâ
Indeed. Isle of Wight ferries is one small example. Unless you have a boat or plane you cannot get off the island without them.
The company that owns them sets out its aims as seeking areas where there is no competition and opportunities to price gouge. They use different words to describe this.
March 30, 2024
Isle of Wight ferries ownership:-
“It targets investments with historically stable and predictable cash flows and significant barriers to entry…”
March 30, 2024
reply to reply ‘the water industry needs competition’.
What form would that take? I’d like to be served by Portsmouth (currently Thames Water) – will they be allowed to put in pipes to me? Will they deliver bottled water to my house? Will they offer a septic tank and remove contents at intervals? Alternative supply is not remotely realistic.
Reply Use current pipes as a common carrier
March 30, 2024
Reply to reply.
Yes to that, but for it to be effective we need a national grid for water.
Reply It would be easy to put in extra pipe links between regional monopoly systems. Remember the bigger part of water industry cost is handling waste water which is what is causing the stress
March 30, 2024
The amount of wastewater has increased with the huge rise in the population but the water companies can’t charge for the number of people it has to service only the number of homes it can bill. In London, people are living in outbuildings and there are many homes of multiple occupation yet their water bill remains the same as a two-parent two-child family unless they install a water meter. Can you imagine if electricity was run using this model? This is set to worsen with the increasing level of immigration this government allows.
March 30, 2024
reply to reply …. there are regular disputes over where a domestic pipe leak is! On the property – owner liable – or under the pavement/road – supplier liable. So in the later (most are) who will pay? the original owner (Thames Water) or Portsmouth?
March 30, 2024
latter not later ..I blame the keyboard.
March 30, 2024
How would that work? If you got polluted water out of your tap, who could be blamed? Who would account for losses on the network? Itâs a fantasy and Iâm surprised you stick to what seems to me a pretence that you can have competition in water, gas, electricity and telecoms.
March 30, 2024
All problems that are dealt with in electricity supply. Quite easy to adapt to the water case.
March 30, 2024
It won’t be expensive if Thames Water goes bust. Let them lose their money same as we would investing in a dud company. Most of the losses will be in the Middle East anyway, so why should we care about that.
March 30, 2024
I think OFWAT has done a very bad job in its regulation of the water industry. Some months ago we had to deal with a partially collapsed drain with tree root invasion at a relative’s property. We were able to secure site visits and competing quotes and awarded the job to a local firm (ahead of nationally known franchises) who were not only cheaper, but did a superb job quickly and neatly restoring the path over the drain so you would think it had been laid by specialists, with video of the repair. Competition at work. Had the problem been out in the street there would have been no competition, and probably no date for repair unless it constituted an emergency.
You can break down the operations of water companies into functions most of which could see at least some forms of competition introduced. Leak detection, sewage works operation, drain cleaning, repairs, operation of supply facilities, even consumer billing (just as with e.g. gas). Splitting in this way would see technical innovation introduced much more quickly. Major new investment (e.g. the new London sewer ring, a new reservoir or supply pipeline) could be on a consortium basis with local partner oversight.
The Thames Water problems arose because OFWAT had a poor understanding of long term debt financing, gearing and the risk that ZIRP would end. Just as OFGEM was completely caught out by the energy crisis.
April 5, 2024
Who cares about Labour. Labour are now an irrelevancy (back in the 1945, they had a place to play in British life as our working men came home from WW2 but not any more. Blair definitely marks the end of Labour having any relevancy at all – and he blew that by the Iraq / Afghan wars).
And all the arguments about privatisation versus nationalisation are largely irrelevant too. Those arguments were won back in the 1980’s under Thatcher. We need to move on to the bigger, more relevant battles, which offer greater rewards (instead of nit-picking over water). There are essentially two:
1) How do we support / strengthen / grow the UK high tech economy (HUGE to our economy with great jobs, high skills, quality export brands etc).
2) How do we respond to a collapse of traditional Conservative values in our country overall such as work ethic, personal responsibility, the institution of marriage, men being properly masculine and women properly feminine, patriotism, relying on family instead of state. Because we can have a perfect political / economic policy but if we have lots of dysfunctionality in our people, then that the huge problems remain, affecting our economy, our tax payers paying way more than they have to. And we can only begin to resolve that by working closer to the churches, media, educators and people in the arts to promote more healthy Conservative values.
Thatcher would agree with me. She would have moved on from the politics of the 1980’s that served us great back then but not any more. Best.
(So have the argument over water – but it’s not nearly important as the points I make here – and happy to be challenged).
March 30, 2024
Very well put, and to confirm the disconnected, entitled, sedentary nature of this PCP under head boy Sunak, look no further than the honours list.
March 30, 2024
O/T but in the news. Scott Benton has resigned as MP after The Times carried out an undercover sting operation on him. I reckoned Scott Benton strongly supported Brexit. I was right.
How did I guess?
March 30, 2024
R.Grange
Yes, the defenestration of Brexiteers continues apace. Allegations of awful crimes, never followed up with evidence, court cases and sentences. Only the electorate can stop this with Reform.
March 30, 2024
I give up – how did you guess?
March 30, 2024
Sir John,
In general terms, I agree that privatisation is a good thing and the telecommunications industry is a cheerleader for it.
I honestly believe that, water is a completely different case. It is essential to life and vital to our nation. There is only one network and so competition becomes almost impossible.
We are paying more and more for a progressively worse service.
A group of foreign hedge funds are now attempting to hold us to ransom by saying that they will not invest more money to improve their network, unless bills increase by forty percent. I say call their bluff.
We waste so much water in this country. We don’t need drinking quality water to flush our loo or wash our car with. Why can’t new homes be built with a rainwater collection system and storage tank?
In my opinion, privatisation is a good thing, but not for water. How something is privatised is also important and I think the model the railways had forced on them by government is also daft.
Reply Competition for business water in Scotland shows tge way forward. It addressed the spec of water needed by customers
March 30, 2024
This is a effectively a bankrupt business that should be allowed to go bust. If you beleive oin privatisatiion, this is the logical end result. The stakeholders would take a 100% haircut, which would be brutal but effective. The Government should then appoint an Adminstrator, who could run the business whilst its needs are assessed. This would not be cheap but much better in the long run than propping up a failed business – and it would send a clear signal to the others too.
March 30, 2024
My water supplier is United Utilities and they provide an excellent service at a great price. They are the only company I deal with that answers their phones quickly and I can speak with an English call centre. The water bills for my home in Spain are much dearer. The biggest bill I currently pay in the UK is Council Tax and I fail to see any value for money with the services they supply. A month’s CT here equates to a year in Spain and the services there are much better.
March 30, 2024
Yes Sir John you did make a case and look where we are some 30 years on.
Am I paying more for my utilities now, in real terms, than I did 30 years ago ?
Should be easy for you to prove this point with a few figures not , with respect, just words.
Your favourite example to prove the point is being able to get a choice of phones after the GPO was privatised.
You sold off all the Utilities at knock down prices, selling the country’s silver for political thinking.
What you say in principle is perfectly correct about providing services. But is it true for the strategic services which support all other business and social activity and in some cases survival?
The senior personal in the old utilities did not earn that much more than the lower ranks as it were.
Look at them now. How’s your drinking water? who owns the utilities now ? where do the profits go ?
Was it all to stop strikes in the Utilities- Mrs T’s war ? Not done a lot of good further down the line. No joke intended.
Reply Privatising and opening telecoms to competition transformed it and brought in huge amounts of investment the state would not have managed. Rlectricity privatisation led to tge dash for gas which cut electricity prices and cut emissions
March 30, 2024
John McDonald,
Correct.
March 30, 2024
It comes down to the regulator and the watchdogs.
All systems in a right wing systems need to be kept in check by Government. So itâs a myth there is such a thing as a âpureâ right wing system.
A good right wing system needs to have much more focus placed on regulators and watchdogs. A good right wing system is needs a good theory of regulators and watchdogs. What do I mean by that ?
Right wing societies are made up of 5 major âself calibratingâ sub systems, where small calibrations adjust each of these systems. These sub systems and calibrations are as follows
Markets – money
Information – facts
Justice – judgement
Government – votes
Life – DNA
Now these systems have evolved throughout history. Originally they bootstrapped in the Life subsystem, where small family units gradually evolved into tribes with other simplistic sub systems. These then evolved into feudal sub systems and finally into liberal democracies.
So each of these sub systems is divided into suppliers and consumers. For example politicians and voters, or judges and citizens. It is the job of regulators to manage the suppliers and the job of watchdogs to protect the consumers.
Utility companies are an interesting case. Originally utilities were provided in the Life sub system by people getting water from a communal well or burning wood to get their own fire. Due to the size of the population these organisations have had to become large.
The set up these companies could be provided by a Government or Market subsystem. But what is important in both cases is the function of the regulator and watchdog.
March 30, 2024
So the question is how to Market and Government regulators and watchdogs of utility companies differ?
March 30, 2024
Many people would like to see a referendum on the net zero nonsense. The outcome would ensure the repeal of the absurd climate legislation and with it the removal of the patronising virtue signalling hypocrites and eco loons. Including the people who jet around the world to tell people not to use jets.
March 30, 2024
Only if the outcome of the referendum was to scrap it. Unfortunately, the propaganda machine has been bombarding people with climate lies and data manipulation for decades and many people believe what governments and the media tell them. Watch Climate – The Movie on YouTube to see how the biggest scam ever on the human race has been perpetrated. It’s a real eye-opener.
March 30, 2024
And the point of that would be? The vast majority have bought the madness hook, line and sinker.
March 30, 2024
I don’t know which is better, nationalisation or privatisation…. presumably privatisation, because of more competition; except there isn’t much, if any!
Either way seems to have been a disaster… just look at Thames Water and the NHS.
Trying to change the NHS by stealth to private has practically caused its collapse! Too much bureaucracy and management in that case!
Perhaps the problem is how the nationalisation or privatisation was set up by the government, the blob and the CS? Privatisation must have more than one to be competitive! Thames water has none!! But how can a water supplier have competition?
Perhaps they need to be private, competitive but non profit organisations? Don’t know.
Reply No attempt to privatise NHS. Complete monopoly of healthcare free at point of use
March 30, 2024
It’s a privilege to pay my water bill. To have the most important commodity delivered to my home for all human purposes at a cost of less than ÂŁ3 a day is a god send. Anyone who complains about that should have their water supply cut off for a week. They’ll soon stop moaning
The free-lunch mantra pumped out by tedious politicians are killing personal responsibility and blinding people to the truth.
March 30, 2024
‘Anyone who complains about that should have their water supply cut off for a week. Theyâll soon stop moaning’
You are Kim Jong Un in disguise and I claim my five pounds.
March 30, 2024
You could say that about anything. How about ÂŁ100 a day?. Silly argument. It should be clean, affordable, available and non polluting to the environment, that’s all. How do we take personal responsibility for getting water? Go down to the polluted river? What about petrol for the car, or food stuffs? Our society is built on communal good by profiting in the supply and providing for everyone. Reds under the bed (your usual mantra) was never a plausible argument, as McCarthy found out – accusing people without evidence basically broke him.
March 30, 2024
I agree Dom. My water bill is only ÂŁ1 a day and is the best value for money of all my utilities. I never waste water and have several water butts to catch and utilise rainwater for the garden.
March 30, 2024
My water supply comes from a well about 60 yards from the house. It relies on electricity for pumping and water treatment. All maintained by private companies, with salt supply for the treatment. Private sewage too, pumped out every few years. In some places such arrangements are the norm: Pennsylvania has over a million private water wells for example.
March 30, 2024
Nationalised industries did under-perform; they were expensive, inefficient, badly run and unresponsive to customer demands.
Following privatisation, most of them still under-perform. They are expensive, inefficient, badly run and unresponsive to customer demands.
The difference now is that they all have a Quango (Ofwat, Ofcom, Ofgen etc) supposedly overseeing them and looking after the interests of the consumer. Except they don’t. They too are expensive, inefficient, badly run and are NEVER held to account for their failings. They “work closely” with the industry they’re supposedly overseeing and prioritise the so-called needs of the privatised industry over the interests of the public.
As an example, Ofgen recently gave permission for the privatised energy companies to increase the standing charges for electricity and gas … a stealth charge to cover the cost of the useless windmills and the energy companies which went bust because they were companies effectively gambling on the energy futures market and lost.
Increasing the standing charge, which can’t be avoided or reduced by lowering consumption, means that poorer consumers will be clobbered far more than wealthier consumers. But Ofgem, looking out for the interests of the energy companies and the Government NOT consumers, waved it through.
I supported privatisation in the ’80s. But the fact is that, like everything else under the Not-a-Conservative Government, it isn’t working because the Regulators aren’t doing what they were supposed to do.
March 30, 2024
The government recently promoted its new Energy Act with the broad support of Parliament which makes the primary responsibility of OFGEM the delivery of Net Zero. Consumers have no champion any more.
March 30, 2024
Yes, nationalisation is a bad, a very bad idea. The blog omitted to mention the underlying problems with nationalisation that facilitates most of the problems that the blog did list.
The biggest underlying problem is that as nobody personally owns nationalised industries in general nobody directly involved, no manager or owner benefits substantially if the activity is well enough run to make a good profit or personally loses if it is badly enough run to make a loss. So as there is little or generally no personal incentive nationalised industries are badly run and more difficult decisions that could be unpopular with the workforce are usually avoided.
The second underlying problem is that while there is at least some financial discipline in the private sector as private sector businesses cannot survive without at least the good and credible prospect of eventual profitability, nationalised industries can forever make big losses and still survive, most especially because at nationalisation they become monopolies and therefore too indispensable (unlike most private enterprises) to the country to go out of business and accordingly just pass on their losses and excessive costs, however big to the general public as their customers or taxpayers.
On all this logic (mine and John Redwood’s), not only is nationalisation a bad idea but denationalisation of publicly run activities or even operational privatisation (in activities such as basic education and health which are almost necessarily publicly funded) is wherever feasible a good idea!
March 30, 2024
Competition in the water industry is impossible because it would require a complete new water/sewage system with new pipes, treatment works, reservoirs etc costing ÂŁbillions
There were benefits to the nation of the privatised industries; most key nationalised industries were natural monopolies. Many of them were highly profitable and contributed to the exchequer. Jobs in the nationalised industries contributed to the full employment we had back then – one in ten British workers were in a nationalised industry. After nationalisation output increased in several industries, for example coal and steel. Centralised control of energy (the old CEGB) built new nuclear power stations – the highly successfull British designed Magnox and AGR systems – some of which are still in operation today.
Labour’s 1947/1948 nationalisation program cost a mere ÂŁ2700 million in compensation to the previous industries’ owners. That looks like an absolute bargain today!
Now, forty years on from privatisation, the disadvantages and the advantages can be seen more clearly. The worst mistake was to sell them off to Sid on the cheap. Thatcher was desperate to make privatisation a success.
Reply We needmore sewage handling capacity which requires more investment. The state does not have tge money. You can use the existing water pipes as a common carrier but above all you need extra new systems like the Thanes tidewat
March 30, 2024
The solution to the water industry is still privatisation, but not like it’s been done. The owners should not be foreign pension funds but the customers themselves. Make share ownership of a monopoly utility the customer by law.
Competition would then be amongst the various suppliers. If one had higher prices the customer would be asking of their executives why they are making their supply more expensive.
Extra capacity such as reservoirs paid for by contributions from developers increasing the demand.
Some will want investment in new pipes to stop leaks, others for lower bills and stop investment. Put it to a vote.
March 30, 2024
You would probably need to make the systems relatively local, otherwise those who do not benefit from local improvements elsewhere will always vote them down for cheaper bills, which is really what happened under nationalisation with chronic underinvestment.
A similar factor arises because these are long lived assets, so there is always a temptation not to put money aside for replacement and repair, so you need a funding arrangement perhaps with a dividend of lower bills if it appears to get overfunded. Assets in need of urgent attention may mean some locales are disadvantaged and may decay into failure: some way of handling that is needed.
Finally, the need to expand provision is costly at the margin. It should be accounted for as a cost of immigration, perhaps at a 50% premium to average per capita assets.
March 30, 2024
“These services never had sufficient priority in public spending to access sufficient capital to modernise and expand.”
Look at the NHS and despair. All the money thrown at it, and it still can’t function anything near as well as most continental health services.
March 30, 2024
Widely agreed.
March 30, 2024
I agree that privatisation led to better and/or cheaper services but only in those areas where genuine competition was possible as a result such as telecoms and airlines and postal delivery services. However, in areas where we swapped a state monopoly for a private monopoly it has brought no benefits at all – look at Thames Water which is effectively bankrupt and provides a poor service. Rail is another area where privatisation has brought dubious benefits – there is no country in the world that runs an entirely privatised rail system. There are other areas where no private company in their right mind would take on a project without heavy government subsidy and guarantees – building a nuclear power plant for example – left to the private sector that wouldn’t happen.
Reply The main assets of rail including track, signals and stations are all nationalised. The Post Office nationalised has behaved far worse than the unsatisfactory privatised monopolies
March 30, 2024
and yet the supposedly “Conservative” West Midlands Mayor has taken West Midlands trains into his own public ownership, i.e. nationalised the regional trains in his area. services are no better, first class abolished so that there is more space for the plebs, but nowhere for a business person to get quiet to work on a long journey, all very communist.
so as ever John you say one thing and the Conservative party does the opposite.
March 30, 2024
And where were HMG and their regulator when debt-free newly privatised water companies were allowed to load up on debt, not to improving our water system but to boost pay and distribute dividends? For years and years. What magic transformation upon privatisation led to the boss of my water company becoming worth so much more than when he did the job in a nationalised business? (Answer, nothing.)
Who allowed MacQuarrie to asset strip Thames Water?
Why did HMG and Ofwat allow Thames Water to establish such a complex structure?
Etc.
Too many failures to excuse.
March 30, 2024
Walt,
True. What bright spark thought it was OK for overseas investors to own strategic industries in the UK?
Many countries don’t allow foreigners to own any of their industry – or property either.
March 30, 2024
The big sell-off of utilities to foreign interests was in 2002, as a consequence of Labour’s Utilities Act and the withdrawal of golden shares.
March 30, 2024
So, nationalisation is bad. And privatisation is bad – worse in some cases. Whatâs the answer? Surely the simple fact is that any private company is going to maximise profit and use some of its profits for dividends to shareholders before investment. Who is going to buy shares in a utility company that doesnât pay dividends? If people donât invest in a company, how can it upgrade its infrastructure? The answer is from its charges to customers. Whatâs the difference between a company that has no shareholders providing a utility and a nationalised body providing that utility? Answer: nothing.
Strikes me the answer is nationalisation but with no strike deals with the workforce and, ha-ha, effective supervision by the government.
The provision of infrastructure for water, sewage, electricity and gas is too important to be left to private companies. The idea of competition is nonsensical. Look at broadband – it all runs on Openreachâs network. Look at electricity- it all runs through the pylons and cables owned by National Grid. When I tell So Energy that I want renewable energy delivered to my house, it is a nonsense. If it wasnât a nonsense there would be actual, significant differences in the price of units of electricity from different power sources.
Reply What nonsense. My home broadband is a new fibre optic system installed by a BT competitor. We could do with additional grid and that could be financed privately.
March 30, 2024
A complete system in fibre requires digging up streets to put the optic cable down. If not we can have fibre to the house from the ‘BT’ green box in the street somewhere.
Reply Yes you need to do that anyway to put in much greater capacity. That is what has happened in my area. The service quality is so much better than the BT.
March 30, 2024
While digging it up they had betting increase the electricity capacity by about x 15 to cope with winter heat-pump and EV vehicle demand. It they are really going down this moronic âNet Zeroâ (net actually in reality anyway) route heating and transport. Where is the low carbon electricity going to come from?
March 30, 2024
Reply to Reply: “We could do with additional grid and that could be financed privately.”
BP is doing this where I live. We are set for 8 years of mass disruption which no doubt will overrun and destroy a 20-mile-long half-mile strip of prime farmland. All part of the net zero religion and not good for the environment. The locals don’t want it but we have no say in destroying our beautiful area as we are told it’s for the greater good.
March 30, 2024
Sorry, but you are talking nonsense. The only competitor to OpenReach is Virgin Media and their restricted cable network. Do you seriously think that other companies are digging up the pavements to install fibre cables, installing fibre cabinets, building exchanges to hold the switches etc. Where are they? Iâve never seen a fibre cabinet that doesnât belong to OpenReach. How many companies will you allow to dig up the pavements and install fibre cables / junction manholes / spurs available into each property? And, presuming you arenât actually suggesting
they can create an entire network over the whole country, who do you think owns and leases the internet backbone?
Reply I have great fibre optic cable to my home not provided by BT
March 31, 2024
It happens widely near me. My own FTTP is from one of at least 5 different companies that have been cabling particular local areas nearby, including a local DIY effort that is modelled on the B4RN network that showed how rural gigabit fibre could be provided cheaply in rural areas (by getting landowners to agree wayleaves and to assist with ploughing cable trenches).
March 31, 2024
I did not believe Boris when he promised gigabit broadband at the last election. But we live in one of the country’s remotest villages, and the installation occurred last year. The government achieved this by providing a subsidy. More importantly, they allowed a niche company to compete in the market and run its cables over Openreach’s telegraph poles. If they had tasked a monopoly supplier, it would never have happened,
March 30, 2024
The nationalisation we remember ran on the discipline and the proper educations of those who were employed in the industries. How ON EARTH could a DEI-captured country manage to nationalise? Especially under Labour! Weâd have not a drop of water/wind/sunshine/greencr*pâŠor whatever the newly nationalised entities sought to provide.
The US is sinking under the incompetency spread by DEI.
Let us not be fooled into believing that any provision ever is in the interests of the people.
It is simply to suit the âeliteâ.
They wanted us in townsâŠso water, food and heating were provided for profit and so on.
The beasts of burden had to be kept fed and warm to some extent âŠor no labourâŠno profit!
Roman Emperors provided public water, sewers and public latrines in towns because they didnât want to be knee deep in sewage!
Very much like the Sunlight Village concept!!
March 30, 2024
Communism really!
March 30, 2024
Sir John
I agree with you up to a point â Thames Water. They own the infrastructure so no one can compete, so they have turned privatization on its head they get to blackmail their customers, OFWAT and this Government. Thames Water are saying give us more money, then more money and no one has the right to demand a service. What ever the out come of this it will cost significantly more than being State owned.
The Water Companies infrastructure should have remained in public hands, or even better local authority hands, then private companies by competitive tender should have bid for running sections of it.
A company inheriting a Taxpayer Funded infrastructure without being held to account with full and complete competition was always going to blackmail the user, the very people that funded its existence â this has to stop.
March 30, 2024
It was incumbent on the owners of Thames Waterâs to carry out due diligence when they were given such a monopoly by the government (they didnât pay the real value, the government basically stole from the taxpayer). They either didnât or as they knew that as they were to be a monopoly they didnât care as they could keep coming back, keep blackmailing also knowing they would never have to fund any improvements â that would always come from the taxpayer.
They get to pay dividends but not invest in customers. Sir John, without real competition there is NO and CANNOT be proper Privatization
Reply The sale of nationalised industries was a competitive and market based process. The return on water utilities are largely controlled by the Regulator who sets the prices
March 30, 2024
@Reply – its just a State owned entity that has been sold to become a private monopoly. Even your regulator, who controls them – no one they seem to work with those demanding ever more money.
We have seen even with energy the regulator puts the suppliers first. The regulator defines a top price seemingly in conversation with the suppliers – they all then strive to sell at the top price.
It was always hoped misguidedly that a regulator was there to protect the consumer when the market doesn’t permit it through competition. Cynically it is a Government fudge to replace lack of expenditure control elsewhere with an income boost.
March 31, 2024
I don’t think that OFGEM put retailers first: for a long time they have been putting green generators and National Grid first. Retailers are the piggy in the middle that gets squeezed. Just like OFWAT, OFGEM failed to understand the financial side of the retailing business, which is why so many companies failed at the start of the energy crisis, including the spectacular failure of Bulb which had been making ever increasing losses since it was founded. OFGEM allowed many under capitalised businesses to start up to be “competition” which were able to undercut the big players because they didn’t spend money on price insurance a.k.a. hedging, which was fine (to a degree) while prices were falling in wholesale markets, but which meant they were unable to supply at a cost below the OFGEM cap (which assumes extensive hedging) when prices started rising and they failed to pay for ROCs. None of the pain of failure was shared with generators and National Grid: the green profits were protected and were so big that government stepped in with its levy. Consumers and taxpayers got the tab for OFGEM’s failure.
March 30, 2024
All the points you make are good ones, and anyone who remembers the post war nationalised era will agree with them, but why are they not actively promoted and explained by so few of you Conservative colleagues?
March 30, 2024
It cannot be emphasised enough that nationalised industries have to compete with the NHS and the Welfare State for investment and therefore don’t get any. One only has to look at the Navy, the prisons, and the police to get the point.
March 30, 2024
Indeed – A lot of good sense there.
I’ve yet to see any real justification for Nationalisation. All we hear is the lefties complaining that “private companies make huge profit, how dare they!” Then they suggest that the profit once Nationalised would be used to invest in that industry.
They imagine that big profits would continue after being stolen from private management – How naive are these people!
Dogma, never common sense, rules the socialist’s mind – they’ve read a few books by Lenin, understood a fraction of what he was saying, then they dreamed of a socialist utopia – forgetting that total socialism has never been made to work, certainly not for the benefit of the masses.
March 30, 2024
Privatisation is a great idea but :
1) It needs to be accompanied by some sort of competitive market or else we are just swapping a pubic monopoly for a private monopoly. This is important because :
2) The shares should have been only legally held by âSidâ. Instead our de-nationalised companies are now even owned by foreign governments and the biggest shareholder in our utilities is a state described by our security services as âhostileâ.
3) Parliament, either by design or incompetence/negligence/indolence has allowed the âOfsâ (regulators) to be controlled by fifth column communists wishing to wreck our freedoms and prosperity.
So we have Ofgem freely admitting to a Parliamentary committee that their job is no longer to protect the public but to enforce Net Zero.
We have Ofcom investigating GB News for impartiality whilst allowing the BBC, the state broadcaster, to spout daily their climate crisis/emergency propaganda with never an alternative view being allowed. For a country caling itself a democracy this is shameful and a national disgrace.
And we have seen this week see how Ofwat has neglected to control water companies for the benefit of consumers.
March 30, 2024
There can be no real competition in essential infrastructure and where the private management fails the government (aka taxpayer) must underwrite all the losses.
In any case.
A lot of the privatised industries have fallen back into government ownership.. FOREIGN government ownership !
We’ve had the experiment.
The experiment has clearly failed. Our roads are turning to gravel and our rivers are full of turds. Everywhere we look is in crisis.
March 30, 2024
People now won’t remember how bad BT was. In 1975 I moved to a new housing estate (New Ash Green, Kent). We had to wait 18 months for a phone line. Shortly after installation (and paying full price) our service was changed to a Party Line. For those who don’t know the concept, you shared your line with a neighbour. Often you would try to make a call and you could hear them already on a call.
Privatisation isn’t without its faults but do remember how bad things used to be.
March 30, 2024
From the sensationalised reporting, even in the broadsheet papers, we really have no idea of the true situation with Thames Water.
All I have gleaned is that borrowing has grown to ÂŁ17bn. During privatisation, ÂŁ2.7bn has been taken out in dividends but no dividends at all have been taken since 2017. That’s a very long time for a pension fund get no return on its investment.
Assuming for the moment that the company is efficient and well managed, why have no dividends been paid for seven years ? Expenditure on improvements to the network demanded by environmentalists and politicians must have far exceeded revenue, while the regulator has not allowed bills to rise to cover said expenditure.
The fairness of the dividends taken before 2017 has to be seen against the investment put into the business.
The key question is, how much money had the investors put in and what return have they taken out ?
If their return up to 2017 has been too high, that needs correcting. If it has been very low, it can only be because revenue has been artificially kept low by the regulator.A totally unsatisfactory situation, extremely poorly managed by politicians and the regulators they appointed.
Going foward, if huge additional investment is required, either bills have to rise to allow for it, and for the shareholders to get a modest return. If that is not acceptable to politicians, the improvements they are demanding need to be scaled back.
March 30, 2024
I am at a loss to understand what has gone on with TW. Surely it has changed hands several times in recent years?
When it happened did the majority share ownership buy the small shareholders out for a poor value – or was it a fair price, so who complained? Is the current ownership 100%?
March 31, 2024
The cap encouraged them to borrow short term at very low interest rates – a short fix on a mortgage if you like. Now that interest rates are no longer ZIRP, refinancing comes with an ever rising interest bill. They should have been issuing 10 and 25 year fixed bonds at least – but OFWAT would have needed to allow them to earn the extra cost of long term borrowing, provided they did it. It’s really Chapter 1 of a finance MBA to try to match the maturity of borrowing with asset life.
March 31, 2024
I looked at the accounts for Kemble Water Holdings, the ultimate parent for the year to March 2023. Among the things that shocked me were
Gearing of 88%
Vanity programme to achieve Net Zero by 2030: climate change is ranked 4th risk
Ranking liquidity risk for financing 14, interest rate risk at 15, inflation risk at 16. Yet these are precisely the factors that have blown up in their faces.
The maturity profile and nature of their debt is also a concern, especially linked with hedge derivative losses. The accountants mention significant risk to the going concern assumption based on financing risk. The company had negative enterprise value, with debt and negative equity exceeding assets.
It is plain they have invested substantial sums in recent years, with assets at cost of ÂŁ26bn and accumulated depreciation of ÂŁ7bn at an average rate of about 2.5% or 40 year average asset life (reservoirs are depreciated over 250 years). Investment has exceeded turnover, and revenues do not cover operating and financing costs.
March 30, 2024
Sadly, with the abject failure of this “Non Conservative” Government, they have left the door wide open for Labour.
Labour will nationalise some Utilities, allow unchecked immigration, continue to worship at the money pit called the NHS, and almost certainly introduce a hate crime bill similar to Scotland. They will double down on Net Zero until it blows up in the face of reality, but by then, a great deal of damage will have been done.
You may have the answers, Sir John, but nobody in Government takes you seriously!
Also, you talk about the effects of Net Zero but refuse to face up to the cause, just as the Government will not either!
March 30, 2024
Privatisation is justified and the best approach where there are alternatives but in the case of certain utilities this is not the case ; there is no alternative to Thames Water where I live . Centralised administration depends on the background and skills of its management and direction ; sadly this is lacking today . As a pensioner I am badly let down in so many directions and am powerless ; those in the centre have lost the support they have received in the past .
Reply There could and should be an alternative, just as you have choice apart from BT
March 30, 2024
I feel a lot of us, Sir John, would go along with your general opinions re most things ‘nationalised’. Reasons involving lack of psychological motivation (oo) to ‘do a good job’: therefore poor delivery of the goods are what come to my mind first. I know you could detail strong back-up evidence – given the space – to give credence to what you are saying. This is always the way with you. Smile. What would also interest me and many others is how you would recommend handling, say – and first of all the water supply industry and sewage ridding-of industry which most of us feel are just not up to it. How would you tackle? How would you keep them private and efficient so that both those who back them with their financing and the end-receivers of their activities (the public) are kept satisfied and happy with the companies for a job well done…
Reply I will write again about this in a later piece
March 30, 2024
The trouble with nationalised water is that it’s someone else spending your money. The people working in it are paid by the government and they are quite ready to go on strike for more pay and you don’t matter. The trouble with privatised water is that it’s someone spending their money on you. They would rather maximise profits and skimp on investment. The solution is you spending your money on you. That way you get quality and value.
If you owned your utility, together with all your neighbours, money could be spent on fixing leaks and reducing sewage spillage because that’s what you would want. If the executives don’t deliver, they can be retired from the board. You could have some representative non-execs from amongst your number to keep an eye on things.
Some details would need to be sorted out. For example, Cumbria isn’t going to vote for Thirlmere just to supply Manchester, so perhaps the reservoirs need to be retained as national property and further reservoirs decided by central government, which the water companies have a license to use.
Reply Prices and investment are determined by the Regulator
March 30, 2024
I have a number of questions, regarding the Theory? Needed to answer the problems of providing Public Services, well for Customers, cheaply, and one that maintains a High/Right level of skilled Staff!
Is it possible to re-build (over time) the structures, of the services or resource, provided? Building out the Monopoly! It’s been a natural response, to Problems, to build a State/Natural solutions, a Monopoly!
Now is time to consider this point; Because Government’s (All) do not have access to the money/investment needed, not at a cheap enough cost, anyway!
From a practical point of view;As part of that, I support the ‘Golden Share’ option? From Central or Local Governments, Mutual ownership, or a State Responsible Bank (truly Accountable to Government/Parliament)? British Primary Steel making would be a viable candidate! And, there many others! The Key to this, working in the long term, is it working in the British Interest, is a Strong/Strategic Regulator! One that is responsible to Parliament, for maintaining The British Interest!
For Example; A competitive structure could be made to solve the problems providing support services (Equity Loans) to Start-ups and the Self Employed! But not one for predators, company’s or Individuals, driving up prices, cost, and ownership of People’s equity! So, the role of a Regulator (and Police; Fraud) would be very important!
The solution we have now is not working, are very expensive, and run by predators! Whether Politicians like it, or not! Both, Nationalisation and Privatisation have become a fetish! We rebound from one to the other, and NOT solving either! Have you tried to get a Start-up loan or any support? VC’s want control, and still charge a fortune, they don’t have any real competition!
But, there needs to be discussion of how we look at things, and do we know what is possible! The truth is we are stuck back in the eighteenth/nineteenth century! The NHS, for example; What other country has a completely monolithic structure, like the NHS? Most are some kind of Hybrid, and fare or good reason! Public, Private, Mutual, Insurance, or even a Stand off, mix? Competition for the allocated Resources, and, all over seen by a Regulator, and Parliament!
The trouble we have, is very few Politicians will enter into the discussions, in fear of exposing the truth! The Structure of the NHS is not the Worlds best! It’s out of date, very inefficient, and is so expensive to run, we are finding it too much of a burden on the British Economy! Not adjusting, during a Down-turn! Everyone has to cut their “cloth, when things go bad”!
Even us!
But, what we can do is to act in the ‘British Interest’ !
Not some extreme Ideology, one side or the other!
It’s the only way to make the Economy open too, and work for, everyone, providing the Opportunities need!
RDM.
March 30, 2024
The only thing worse than a public monopoly is a pivate monopoly. It is very difficult to ensure proper competition between suppliers when the basis of supply is national infrastructure. In the case of railways, athough they have enormous advantages compared with road transport it is not even entirely clear that a national railway can be profitable when competing against roads. Public subsidy seems to be necessary. They are inherently long term prospects requiring investment in static infrastructure, so private leases of that infrastructure to periodically competing lessees needs to be long enough to cover payback periods on investment in improvements. But longevity combined with fixed geography/topography of routes means there is no competition for the period of the lease. There is a grey area with interconnection with other modes of transport also not all within a free commercial market.
There is also the question of more remote small communities. If they cannot be included in the network economically is there a moral or social duty to provide for them at a loss to the enterprise and therefore, subsidised by the taxpayer?
it seems to me that however you structure the organisions needed to maintain, improve and operate the national transport system there needs to an overall guiding hand so government involvement is a necessity.
March 31, 2024
If you own your own home you have a private monopoly over it. Is that bad?
April 5, 2024
But I doubt you share your own home with all your neighbours.
March 30, 2024
Iâve worked for both a public organisation and a couple of large USA companies. The public organisation was much better run until the Labour government of the day decided to outsource it. Instead of criticising public organisations you should reform the red tape and woke nonsense that your government has insisted they introduce. Itâs all mismanagement from the top and the buck stops with politicians. Is it any wonder our productivity is so low?
March 30, 2024
If a government any government was really interest private enterprise, real private enterprise it would be clamping down on take-overs that inhibits competition, the type of competition that I believe Sir John might wish this Country was built on.
To many take-overs are based on removing a competitor from the market place, getting into a market on the cheap and depriving it of additional competition. Then the one that kills good strong companies the leveraged buyout, as in where a company is snapped up and paid for by mortgaging all its assets â we have a couple of big retail outlets that are going down the pan because of being leveraged up to the hilt â the buying company, they get to stay immune, they stay intact.
Then the next can of worms is the countries that weaponize trade. Why trade with those that set out to use their tax system to cut export costs to undermine markets. The EU is one of the ones in a constant war with all outsiders, the common agriculture policy (CAP) has killed of many third World countries that have tried to move ahead, just feed their people. China has funded their Auto Industry in recent years to the tune of ÂŁ57billion – just so they can undercut and destroy the free World Market. These people are not protecting âhome marketsâ they have declared war on other countries and have weaponized trade.
March 30, 2024
6. A dream for all Public Sector Trade Union Leaders. A State monopoly ruled by union dictate. Whatever could go wrong there?
March 30, 2024
But we need to learn how to regulate utilities rather better. Hong Kong was a very good model; why didnât UK civil servants learn from them ? In particular the degree of borrowings / gearing must be limited as must return on capital
March 30, 2024
ânationalised industries were bad for customers, charging too much, bad for taxpayers, costing too much, and bad for employees, getting rid of so manyâ
That sounds like how so many of our privatised industries are being run.
March 30, 2024
You can only determine whether nationalisation is a good or bad idea once youâve determined the criteria for nationalisation âŠ.I fail to see or understand this governments policy towards nationalisation
March 30, 2024
Fix the nationalised industries,don’t waste services on private.In health they tend to get in those who talk the talk ,look at paper qualifications,but cannot understand the inside workings.Its pitiful really.
March 30, 2024
Just why you give yourself this pressure of a daily blog.Other sites blog 2/3 times a week .Do you get pleasure from daily entries or do you feel that you are compelled to write..a habit of a lifetime.
Reply There is so much to fix. What’s your problem with it?
March 31, 2024
No problem…You recently seem to be getting exasperated, therefore stressful.
Iam just wondering also if it will make the impact which you try to achieve when the contributors are not representative of the voting population.Your blogs attract a niche cross section.
Reply I am not stressed. The tweet short versions get plenty of viewers.
March 30, 2024
First sentence disappeared into cyber space.Thats private.
March 31, 2024
The public sector pensions bill has hit a record ÂŁ2.6trillion, Treasury figures show â making it more than the entire size of the UK economy.
The retirement pot for more than five million workers including doctors, civil servants and teachers had risen by ÂŁ333 billion to ÂŁ2.64 trillion by the 2021-2022 financial year, the Treasury said.
Pension liabilities for the NHS scheme alone â which has 1.5million members â now stand at more than ÂŁ1 trillion.
Former pensions minister Sir Steve Webb described the total figure as ‘eye-watering’, The Telegraph reported.