Why do some people think nationalisation a good idea?
January 7, 2018 164 Comments
All previous Labour governments have nationalised some state assets. The 1945-51 government did so on a large scale out of ideological conviction. The Wilson government of 1964-70 and the Wilson-Callaghan administration of 1974-9 did so alleging it would enable them to pursue an industrial and economic strategy that would lift the growth rate, with a continuous row over how far they should go as the left pushed for a more active strategy. The Blair-Brown governments came to office in 1997 accepting privatisation and saying they would not reverse the large changes from the Conservative privatisation programmes. Later in office they renationalised the bulk of the railway and went on to buy two of the largest commercial banking groups following the failure of their regulatory approach to banking.
The left who argued strongly for more nationalisations argued their case based on three main erroneous propositions. The first was that it would be better for employment and the employees if their jobs came from Ministers and a political process, rather than from competing private sector employers. Instead, as we shall see, the main nationalised industries ended up sacking large numbers of people.
The second was that it would cut out the so called "inefficiencies of competition" – the extra head offices and advertising programmes to sell different brands and services – making the nationalised industries more efficient and better for customers. Instead, monopoly pricing power wherever they had it was used to push up prices to pay for inefficiencies which the monopoly could not or did not wish to remove.
The third was that it would allow rational planning and longer timescale for investment. This they wrongly thought would lead to stronger and better based industries. Instead, the planners usually got it wrong, made large and wasteful investments and ended up having to close their own pet projects or sack their staff.
It would be interesting to hear from those of you who favour complete nationalisation of current railways why the nationalised Network Rail is not delivering a railway you are happy with.
As I will show from tomorrow from past experience, nationalised industries in the UK developed a bad record as employers, making hundreds of thousands redundant, pushed up prices a lot, and bungled large scale investment programmes badly.
Lifelogic.
Why do some people think nationalisation a good idea? Left wing dogma, the vested interests of some state sector unions and the funding basis of the Labour Party or just massive ignorance & stupidity perhaps.
Some people even think the dire NHS virtual state monopoly is the envy of the world. This when it fails daily, cancel operations for Jan, kills thousands every month and has fairly dire outcomes for a developed county. Some would even ban all private health care! It takes hours for them to get an ambulance to elderly heart attack victims. Perhaps best to call a mini cab or Uber. If the dire Khan the courts and May/Hammond have not killed the wonderfully efficient Uber that is.
If the state does something you have to kill or handicap the more efficient alternatives. This either by taxing and then supplying free at the point of use, or just by banning or licensing them onerously.
T May just now on Marr.
"We should be proud that our NHS has been named as the safest and best health care system in the world."
One assumes by some organisation who has never look at the appalling outcomes it achieves in general, the thousands of extra deaths we have from many conditions compared (even to the average of developed countries) and the appalling delays and rationing. The inability even to get an ambulance or medic promptly to many people in an emergency.
T May had nothing sensible to say on the subject, no solutions just the usual pathetic platitudes and false claims about the "envy of no one sensible", "our" as she puts it NHS.
Just charge those who can pay and give tax breaks for people who go privately or insure. Get some choice and market forces into the system dear, the government cannot run anything efficiently. Healthcare is far too important to be left to government.
It seems it is the Commonwealth Fund which came up with this.
It has the CEO of the NHS on the board of directors. So I do not suppose they would be keen to upset him.
The NHS is rubbish, the evidence is there for all to see.
It has sadly been sold to the public like a religion.
And the priesthood, our politicians, refuse to speak the obvious.
But anyone who has travelled, and is able to meaningfully compare with other places in the world can see how rubbish the NHS is.
It will never improve until and unless real buying power is in patients hands.
Exactly. Hunt is very good at apologising for the appalling service the NHS (sometimes) provides, but far too cowardly to do any of the obvious reforms that are desperately needed to make it work.
Yes. and Mrs May misrepresents the report – which covered only 11 countries. It is the most cost efficient, in that it costs the least per patient. It is not the best in terms of outcomes. The quality of care is very uneven and often far below what is expected in France or Germany – which cost more per patient. Despite this the report rated the NHS far higher on equality of treatment than Australia (No 2), by which it means whether you can pay more to get better treatment. In essence, the assessment is judged by a mix of political, medical and economic factors. http://edition.cnn.com/2017/03/17/health/health-care-global-uk-national-health-system-eprise/index.html
The Australian system is quit different. There is a "levy" or income tax surcharge to pay for a large part of the NHS equivalent Medicare but whoever can afford it buys additional private coverage in order to jump long queues for elective surgery. The Pharmaceutical Benefits Scheme is quite good but typically a scheme that is politically viable only in a country without large Pharma businesses that would lobby prices upwards otherwise.
Interesting graph on beds. 6m extra population from 2000 to present but bed down from 40 to 27 per 10k. But we have more managers to make the NHS the most efficient in the world, according to the Commonwealth Fund, run by the head of the NHS, among others in their spare time. And we wonder why it's a shambles every winter.
Anyway, off to have my pneumonia vaccination today, after waiting 2 months for supplies to come in and with the worst flu epidemic for 50 years about to burst. Boots were charging £70 for pneumonia but have run out of flu vaccine that work for the over 60s.
Unbexxxlievable!
According to WHO, UK is no 18, France no 1. According to the Commonwealth Fund's report, Mirror, Mirror 2017 (only of 11 countries), UK is No 1 and Australia No 2, France 10 and the USA 11). With personal experience of both UK and Aus I would say they are vastly different and the Australian system far superior. It all depends on how it is measured. UK beat Aus on the equity measure. I see nothing wrong in being able to pay more if you can to get better healthcare for yourself and your family. Socialists disagree.
yes Australia has far longer life expectancy for prostate cancer patients, but then it removes a lot more prostates a lot more early, and uses a lot more newer treatments which are only available here in private practice.
Australia has far better skin cancer stats because it, for instance, removes a lot more moles a lot more early.
Its easy to see why the NHS is far behind.
Looking at just two.
Rail,The critical problem with the semi-privatised rail system, is just that; SEMI-privatised. when there is a commercial enterprise competing for its income with a state-owned part of the system, then the state-owned part inevitably subsidises the commercial arm. This will not come as a surprise to anyone other than a civil servant, apparently.
The NHS is a national jewel. Compare our per capita health cost to that of the USA. The UK is about half that of the USA, depending on where you look. Reason: profit. Do we want someone to profit from our ill health? The main issue with the NHS is management of resources; how do you find managers with the same vocational motivation as that of the medical staff. I have no answer to this.
Reply Figures for health untrue. You do have to include the costs of the Inland Revenue in our health costs as that is the way we collect the money, as you count the insurance collections costs in the USA
David Murfin
"You do have to include the costs of the Inland Revenue in our health costs as that is the way we collect the money,"
Really? Please tell me how the costs of the Inland Revenue collecting taxes would be reduced if the NHS were privatised.
Well they would have to collect less tax so the work load should go down. But in reality government departments rarely get smaller just because they have less or indeed nothing useful to do.
Peter Parsons
They would still be collecting the same taxes, just maybe in smaller amounts. There would likely be no reduction in cost as it costs the same to collect £10 in tax from most people via PAYE as it does £15 or £20 (or £200 or £2,000 or £20,000).
The original assertion that there is a marginal cost to HMRC of collecting a proportion of existing taxes for the NHS is not credible.
Collect less tax? What about the taxes on the companies and their staffs providing the privatised health service? Including those in the expanded health insurance market. And that would not have to be spent on health.
The U.K. spends only marginally less on health as a %age of GDP than many European countries, which deliver much better outcomes as a result of mixed systems including extensive private sector involvement. What is never measured in these figures purporting to show what good value the NHS is is the cost of rationing. The cost to people and employers of delays to treatments and just the difficulty even of seeing a GP. I suspect if a proper estimate of the cost of all the patient time wasted and the cost of inferior outcomes was added, the NHS would rank as one of the most expensive systems in the world.
@Peter woods; I agree, it is the "SEMI-privatised nature of the railways" that is the problem, but it is not just the state owned part of the rail industry that is the problem, franchise system of TOC with one commercial enterprise competing with another commercial enterprise that is causing problems and so one, the integrity of the system, that had been there since before the First world war, no longer exists. Even if it is accepted that a private railway system is better than BR was, it doesn't mean any operating model will work.
There are far to many TOCs, simply so that HMG can maximise the money raised via the franchising system, what we need are single fully private geographical railways, based on something akin to the pre WW2 'big four' companies, being responsible for every aspect of their network from infrastructure, passenger to freight services.
If these geographical four or five TOCs can not act as a free market commercial enterprise, raising finance in the usual ways, needing to go cap-in-hand to the Govt. for new trains or what ever then surely that is the case for a return to BR – is it not, after all why should taxpayers subsidise private enterprise?!
In addition the companies must be free to develop both track (incl new routes) and train to respond to and anticipate demand for both freight and passenger services, and to respond to competition from other transport modes.
May and the head of the NHS keep quoting that it has been found to be the most efficient and best system in the world. This comes from the Commonwealth Fund in Washington. Just look at the Wikipedia on it. The boss worked for the Democrats and Obama. On the board is a Simon Stevens.
The rest of us can compare experience of the cont
Indeed, a rather pathetic fig leaf for May to use. The government have no sensible vision to sort the NHS out. Her Chancellor with his recent increase 12% IPT on medical cost is as usual heading the wrong way.
Under Mrs Thatcher medical cover (provided by employers) was tax and NI free and I think there was no IPT on it either. That is the way to get more money into healthcare and to hugely lighten the load on the NHS. Not cancelling January operations at the last minute!
Dr. Redwood,
in the USA, each part of their system, in the commercial sector, must pay their shareholders, the insurance companies and the hospitals are for profit businesses. So look at the result: https://data.worldbank.org/indicator/SH.XPD.PCAP
USA US$9,400 per cap. UK US$4,000 per cap. (+/-)
There are other systems throughout the rest of the World which are rather less costly and rather more economic than The US model.
You are comparing one extreme with another at the opposite end of the scale, millions of US citizens think the US model has and is failing its citizens.
David Cockburn
Part of the reason the NHS costs less is that it doesn't support the latest treatments. That's also the reason cancer sufferers die sooner.
Indeed, in many cases they do not treat, or severely delay treating the elderly. Planning, one assumes, that many will fall off the waiting list by dying first.
Its not just the elderly.
Take students for instance. They often release the appointments for treatment for entire halls of residence during the summer break when they know the student population will mostly be away. So the students fail to show up for the treatment, and they all go back to the beginning of the queue. Or indeed it becomes the problem of the NHS commissioning group wherever the student moves after they graduate. Tricks like this can massage the waiting lists down significantly without actually treating anyone.
Or the wheeze they pulled on deaf relative of giving an appointment via the phone, knowing fine well the patient was deaf, it was only a coincidence that I happened to be there and answered the phone.
This is how NHS admin staff make a success of their careers.
Reply to Reply.
Figures for health – do they include the cost of treating whoever rolls into our country, hands out, big smile, knowing they won't be paying anything? Fly in, then free holiday, expensive medical treatment thrown in -all on the UK taxpayer. Fly out. . . .
Unless, you are a fake asylum seeker, lying about where you came from, only intention is to stay and be a financial burden, and maybe a danger, to the people whose taxes they are living on.
We're talking individual unpaid bills running into hundreds of thousands. Make no mistake. British taxpayers are dying because of this theft.
Yes I do want someone to profit from my ill health if they can cure or treat it well they deserve too and I am happy to pay.
You have that option already.
Indeed but I have to pay three times. Though NHS staff still profit from their work do they not?
Please show me the study, any study that shows the NHS even in the top 20 of health outcomes. The NHS is awful and its acknowledged by health professionals the world over. Why do NHS apologists ALWAY mention the US system? Is it because its the only one in the world thats worst ? Why not compare the NHS to the worlds top health systems, France, Germany , Holland, Singapore, Switzerland, in fact any of the very many better health systems. Please also let me know why not one other single country has ever implemented a similar system
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html
UK is in the middle of the European life expectancy table.
yea despite not because of the NHS.
Did you read the link? It lists the UK as 35th which proves my point I think .
"UK is in the middle of the European life expectancy table." No need to worry then….. oh boy
Something these comparative studies neglect is that a large proportion of the costs of healthcare in the USA is spent on elective or cosmetic treatments that are rarely available to NHS patients, nor should they be. So they are not comparing like with like.
Indeed the US system it not worse at all, but it is better than the NHS almost anything is. But there are far better systems.
They probably put the tax up on private health in order to improve the equality measure. If fewer people can afford to go privately, then even if they die early, at least they will be equal with the NHS customer that just pays through their tax and has to accept what is offered by the commissars. Equality is the most important objective, especially if we may all have to spend an infinite time afterwards in heaven or hell, where all will be equal.
Look at the mess the government is making of centrally planned and religiously driven energy provision. Rolling out duff and premature bat and bird exploding technology with tax payer subsidies and freezing the elderly in their homes. Even announcing the end of coal generated electricity at some arbitrary date plucked out of thin air by idiots.
In education what is wrong with giving people education vouchers they can top up and thus some real choice for their children? Why do people who want to use private provision have to pay twice or even three times? Why does the competition authority never look at the grossly unfair competition from the state sector in say health, schools, TV/radio and housing? The state should only do the very few things it can actually do best. Defence, law and order and a fair system to resolve legal disputes, some held for people who genuinely cannot work for health reasons, education vouchers perhaps and some infrastructure. Not much more than that.
Currently the biggest and most important nationalised industry in the country is the NHS which is notorious both for treating its employees badly and and for its inefficiency. It also delivers outcomes for its customers which are less good than those achieved in other European countries.
Far less good.
http://www.telegraph.co.uk/news/health/news/11891554/UK-cancer-survival-worst-in-western-Europe.html
How about water companies? Privatized but instead of us paying one bill through rates we now get two bills community charge and water bill! In addition we pay for the Environment Agency and additional sum on top of our community charge! So three bills instead of one! The water companies have increased the charges beyond belief, a few cat CEOs but no better service.
Energy companies acting under govt control by implementing the EU strictures through the Climate Change Act. No one in their right mind would keep this act. It has cost the consumer a fortune through obligation to the environment i.e. EU directive o be the same across EU countries. Closure of perfectly good coal fired power stations. Drax power station burning wood chip from wood cut down in the US shipped by diesel boats across the Atlantic, transported by Deisel lorries to the power station to be burnt! And the govt somehow thinks this helps the environment! Idiots. What would happen if the energy companies were allowed to act like private companies and generate power from any source it wanted? As it is a few cat CEOs getting rich, also ministers leaving office getting employed by green companies and lobby groups to enrich themselves, implementing EU policy through the govt pretending it is their idea. Nationalisation of energy and water companies would change what exactly?
Get rid of expensive LAs to the taxpayer and get private companies to provide local services, that would be interesting.
To listen to the Left, the main reason for nationalisation is hatred of profit. To them it is obvious that nationalised profits stay within an industry to benefit us all, but privatised profits go only to fat cats, speculators and suchlike bad hats.
Broadly, I think, a private company serves its customers but a nationalised one its employees. When steel was first nationalised a family member at the local steelworks noted that one man was replaced by 47 others. On denationalisation the 47 were again replaced by one. On renationalisation the one again became a whole department.
Incidentally, the reason health was nationalised in 1948 was not that many lacked health care, which was not true and never claimed, but that central planning on the wartime model would bring huge efficiencies. Well, we know now.
Do not all workers profit from their work? Nurses profit, doctors profit, drug companies profit, surgeons profit everyone who works for the NHS or supplies it profits. What on earth is wrong with profit?
Without profit would they turn up to work at all? Could they afford to even if they wanted to? The hatred of "profit" is absurd. Without profit we would not even eat.
As you said a few days back:- "We have a nationalised railway in all but name" – indeed we have, so why is this allegedly Tory government not doing anything about this sad state of affairs? While at it they could address the dire NHS and the education virtual state monopolies too.
But no, we have soft socialists in numbers 10 and 11. People more concerned with issuing more red tape over say the gig economy or the (non existent, other than by choice) gender pay gap or wasting vast sums on green lunacy, Hinkley C or HS2.
Rail companies cannot be allowed to fail.
So too with all essential infrastructure. Water, electricity, roads…
Therefore participants in such 'privatisations' know they are ultimately underwritten by government and will never engage in the business in a truly enterprising spirit.
JR unwittingly admitted in his blog on 1/1/18 that both Tory and Labour implemented what the EU told them, hence no difference. What is disappointing is that JR then hypocritically claimed at both recent elections the differences and ridiculed UKIP, who by his own admission on 1/1/18 was the only party offering to leave the EU and all its refs, directives and laws whereas both Tory and Labour only offered to implement on its behalf pretending it was the govt ideas.. He cannot have it both ways. Sadly, May has completely capitulated in phase one of her talks to keep the U.K. Tied in to the EU by another name, her lever to the leave MPs in her party is that Labour joined by the traitors in her party will get her what she wants, so May is getting them to accept remaining in by another name or Labour. The gutless Leave MPs in the Tory ave accepted her position instead of ousting her.
If you want further prof of there being no difference May has implemented all of Miliband's energy policies and she publicly stated she would build on them. Cameron had previously ridiculed Miliband, but this was just to get in office. Under EU rule voting is a token for us small people to believe there is democracy, just like crime commissioners ad Mayers. It was to create an illusion of democracy when the EU were dictating from the centre and both Labour and Tory happy to go along with the charade for self serving greedy reasons. Why have none of the traitors been deselected? Why has there not been a clear out of Labour politicos from all quangos and changes in civil service to rid socialism that has infected all of our public services and the inspectorate bodies who check for compliance? Toryies have been in office for over 7 years!
Reply There was a crucial difference in 2015 because conservatives offered a way out if the EU through a referendum. That was what I wanted. I did not ridicule UKIP, merely pointed out they would probably not win a single seat and would not therefore be able take us out or give us a referendum.
To reply – Indeed too much brand loyalty & inertia from the Conservative Party. Alas now a wet, socialist, green loon, party in the main but the alternative is even worse. Lots of always have always will Tory voters so with a FPTP system UKIP can not break through. Nor even come close to it.
FPTP means many millions like me have NO REPRESENTATION but loads of taxation!!!!
Leslie Singleton
Dear John–I gather you do not like what I have written but without UKIP there was as much chance of the Conservatives delivering on a referendum as of Cameron telling the truth
Reply Not so. It was the large number of Conservative MPs with votes in the Commons that secured the referendum
I expect many pro-nationalisationers will cite examples of the intermittently or terminally bad management of private organisations.
What tends to be omitted from such arguments is that private companies that fail can (or should usually be) allowed to die, nationalised businesses or services do not that.
Edit, final words should read "do not do that".
Well it all rather depends on what is being nationalised ?
A monopoly is still a monopoly no matter whether it is in part, or in whole, State owned. Many of our utilities companies are nationalised, just not owned by the UK Government. We are charged large fees as we cannot easily, water in point, use another supplier.
What is of primary importance to me, is not whether it is State (UK or non-UK) owned, but whether or not there is competition. If there is competition in the market, not only do we get cheaper prices, but we get innovation and proper investment. This means that the UK Government does not have to provide endless subsidies for inefficient companies.
We can simply say; "Sink or swim ?" Because there will be another supplier waiting to takeover. If you have a UK Government owned company it becomes politically charged. Ministers and government comes under undue pressure to put evermore money in. Witness the NHS.
We cannot have a situation like we did in the 60's and 70's of the Trade Union tail wagging the UK dog.
It would be nice to know how much subsidy the UK Government provides as a whole ? Overseas Aid. EU Contributions, including farm and other subsidies. Charities. Local Government. Anything and everything that is not actually required of government. How many billions is that ?
And finally. I would like to point out that the early rail and canals were not publically funded or subsidized. If there was a need, private money and enginuity would get it done. Yes it needed and act of Parliament. But that is there job, until they gave that to the EU.
We nationalise things because the country is broke.
This is the real reason why we sold off the railways.
– BR was understaffed, not over staffed
– it had not had a strike for 12 years up to privatisation (last strike 1982 – privatisation 1994)
– BR was underfunded not over funded (far less subsidy than today)
– Much of today's railway has had to be re-nationalised (Network Rail and also TOCs taken on by foreign governments)
– BR was not incompetent (Much of its stock, staff and infrastructure is keeping the industry going today)
There was also the ideological *stamp out the unions* motive behind rail privatisation. It had the reverse effect. The delay penalty system caused a reluctance to use novice crews and encouraged poaching of experienced staff between TOCs.
"Much of today's railway has had to be re-nationalised (Network Rail and also TOCs taken on by foreign governments)"
Some things are just too big and too vital to be privatised.
The idea of open competition – of minor taxi firms and bus operators dipping in and out of the rail industry is a silly one.
***Correction***
"We *privatise* things because the country is broke."
Or "we are broke because we nationalise things" – (or regulate and tax them to death).
We're broke because fewer people are engaged in making things.
We keep our standard of living where it is through national and private debt.
mike fowle
I don't think it is correct to say that the last strike on British Rail was 1982. I was commuting until 1986 and my travelling was bedevilled by strikes right until I left.
I've travelled by rail to work since 1984 and don't recall any strikes until recently.
Not sure if you used BR but I did and you're deluded if you think they offered a decent service . In 1975 BR increased rail fairs in one year by 51%
I don't think they offered a decent service – they were literally starved of funding. The people in it, however, were highly productive. More passenger miles per member of staff than anywhere in Europe.
So what the service was absolutely abysmal, it was vastly overpriced and inefficient. Suggest you have a look at Japanese railways, the best in the world , oh and provided by more than 100 private companies.
I do agree that the present half in half out system in the UK is a crock
But John exactly the same article, with obvious adjustments, could be written from a left-wing point of view, extolling the virtues of nationalisation and the despair of private (for profit) ownership, especially within the service industries such as transport & health.
My point, both left and right extolling such virtues from nothing but the ideological conviction you accuse only Labour of having. What most people want is what works, for some industries/services that will be public, for others it will be private, and the post war consensus (certainly during the Conservative years) understood that, after all the 1951-64 government denationalised some but not all of Atlee's immediate post war nationalisations, whilst the Blair govt. only renationalised failed or failed privatised industries and services.
I must say, considering that the Fix Term Parliament Act is still extant, that with DUP support there should be little chance of a GE before 2022, you are spending a lot of time fighting old wars (such as what caused the banking crisis, the chicken or the egg, so to speak…) and worrying about things that can't are unlikely to happen before at least 2022 – your more recent writings say far more about the prospects for this govt. than they says anything about JC or his Labour party.
John, what often let the UK's nationalised industries down was not the fact that they were nationalised but both union and govt. interference, the latter flip-flopping with each manifesto, reshuffle or change in the party of govt. – and it is still happening in the NHS etc, how many 'reviews' has the NHS had in the last 20 years or so…
Why is it that other countries, even the USA (effectively), can have nationalised industries/services and make them work but the UK can't?
Rail privatisation was not preceeded by industrial strife. In fact there had been subdued unionism relative peace for the 12 years before.
Later in this thread I show that EU Directive 91/440.[9] was responsible for rail privatisation by pro EU Major against the wishes of Eurosceptic Thatcher. (if not published can be found on Wiki.)
https://en.wikipedia.org/wiki/First_Railway_Directive
"These national companies were vertically integrated organisations and it was difficult or impossible for private or regional enterprises to run their own trains on the national networks, or to compete in other EU countries' railway systems. Thus in 1991 EU Directive 91/440 was created to make it a legal requirement for independent companies to be able to apply for non-discriminatory track access (running powers) on a European Union country's track."
"Though the original directive was seen by some as a law bringing about privatisation of the railways, there are no requirements in the legislation requiring any level of privatisation. The main aim of the process was the "de-monopolisation" of European railways, with the aim of increasing competitiveness,a process referred to as 'liberalisation'.
Now the question is:
"Which way did the Major government vote on that Directive?"
I'd hazard a guess that the Major government actively supported it, and maybe even had a hand in getting it initiated.
@37/6; I was referring generally, and you can't deign that there were politicised union activity between 1948 and 1994 (how many times did the rail unions 'black' movement by rail of products owned by companies in dispute with other unions for example…), whilst the EU Directive you refer to only required "open access", not privatisation – hence why DB & the SNCF are still a wholly owned by their respective States to this day!
Don't get me wrong, I agree with much else you have to say, what is more I 'understand' your user name reference too – probably the only other person on this site. 🙂
Sympathy strikes were outlawed in the twenties and further legislated against in 1990.
Only issues of Health and Safety risk can be 'blacked' in law.
@37/6; Sorry, Sympathy Strikes might well have been outlawed but that did not stop bogus H&S action, if it was OK not to work to the rules one week why the need to suddenly start doing so the next when all that had changed was the wish to support another union in their dispute? Nor did those earlier laws stop "unofficial action", that the union leaders then did little to stop.
It is not that simple because when governments denationalise a piece of infrastructure it is the government that then mandates the structure of the market in which the new enterprises operate. I haven't done so but it would be interesting to go back to find out the reasons the railways which were developed entirely by private enterprise and had brought prosperity wherever they went across Britain, were nationalised in the first place. What had gone wrong, if anything?
I think there is a strong case for nationalisation (or even "Europisation") of network services.
That would include railways, telecoms and power distribution.
This is because a network requires co-operation rather then competition.
However this would only be possible if we could prevent hijacking of national services by industrial action – which could be a potential security and economic threat to the UK.
The answer is to rid ourselves of most of the employment laws that have protected industrial action. We should also employ management that have a package that incentivises efficiency. If they overspend then they should be sacked.
As for the rest (the vast majority non-network business), we know from experience that nationalisation of commercial enterprises does not work e.g. British Leyland and plenty of others.
We need to allow free markets to flourish with a minimum of regulation and government interference.
@Kenneth; "However this would only be possible if we could prevent hijacking of national services by industrial action"
That could be done quite simply, along with a 'no strike' agreement there would be annual statutory reviews for T&C's plus pay etc. Getting rid of employment laws woudl; be no help, in fact it woudl make things worse, employees have grievances, the employer then digs in and sacks those who strike, fine you say, plenty of people willing to work out their after all, indeed but how many will have the skills to walk into such roles without training first, services or repairs could be delayed far longer than most strikes would have been.
Derek Henry
Look how that played out in the banking sector. Looks like you've learned nothing at all. It was the state that created £750 billion from thin air in one night that saved you. Taxes were not needed have never have been since we have left the gold standard.
The state typed £750 billion into a computer leyboard. Job Done.
@Derek Henry; On the other hand… The free market typed £750 billion into a computer keyboard for that PPFI and the state paid it. Job Done. Ho-hum!
No it didn't the numbers didn't come from anywhere.
Unless you still believe we use the gold standard and your taxes fund something.
@Derek Henry; Then your own comment was equally meaningless and without point – which was my point!
This argument does not stand up. In telecommunications national, world and regional standards ensure interoperability while allowing enterprises and governments choices over what they choose to do. It is facilitated and regulated by the ITU as is radio broadcasting. Similarly the Internet has developed standards of interoperability; the WWW, Wi-Fi all these are standards facilitated by inter-governmental bodies while no government owns or manages any of it except as a user like any other for its own services and communications.
Because private monopolies may be as bad as public. It's the management that will look after itself instead of the customer. We can keep the property owned by the nation but privatise the management with limited time and measured performance.
Nationalisation is an ideal, not unlike Christianity, all working towards the common good. Unfortunately the British are not monastic by nature, they do not think or act in this way. As the provider of a service the nationalised employee has no incentive to continually improve his productivity or the service. The management, not normally the brightest in the market place, have no incentive to make a profit for future investment. When did any of them ever announce that profits were sufficient to cover investment. The latter is always covered by government/taxpayer annual handouts. nationalisation is in fact totally alien to the UK spirit of enterprise. I concede that it may appear to work in some countries, but the UK is not one of them.
Ed Mahony
You're right, in a sense, about comparing nationalisation to Christianity. And we cannot impose Christianity on others!
Saying that, Christianity is not about envy! Nationalisation is often about the politics of envy.
Also, Christianity is also far more flexible and practical than people think. For example, the Catholic Church teaches the strong should have something to aim for in life and should not be unfairly held back. Saying that, the vulnerable should also be protected. It's a balancing act. Where employers, as well as employees, and the rich as well as the poor, should all be treated with justice and fairness.
Just the same as the EU works for some but not us.
British psyche is unique. We are very individual and are wary of large organisations or bossy people.
What works say in France wouldn't stand a chance here.
'Unfortunately the British are not monastic by nature, they do not think or act in this way'
– Britain had some of the leading monasteries during the Middle Ages. Britain lost its monasteries not because of a national mind-set, not even because of religion, but because of politics!
Rather than comparing monasticism to nationalisation, I'd compare monasticism more to the military!
Lastly, nationalism is socialist / communistic in background. The Communists tried to suppress Christianity, and failed miserably (same for other anti-Christian secular movements throughout history). Because Christianity is based on love (soft + tough love + truth + beauty + joy + family etc). No secular system can defeat that – ever!
Pride ? Last time I looked the British Army was nationalised.
You recruit people who are givers and care about the service they give.
Nationalised industries and the associated central planning were not the only way to waste taxpayers money. The Nimrod MRA4 was ultimately cancelled in 2010 as a result of the Strategic Defence and Security Review, at which point it was £789 million over-budget and over nine years late. The total cost to taxpayers was north of £4billion.
The MoD produces an annual report. The 2016 report revealed a string of aborted programmes, write-offs and careless book-keeping; £1.8million was blown on a cancelled contract – but the MoD refused to say what it was – An MoD spokesman was reported to have commented: "Writing off of expenditure is sometimes the right decision to take in the interests of value for money in the longer term." My take on it is that the Ministry of Defence is squandering billions of pounds on kit and supplies it does not need while trying to save money by getting rid of troops, assets etc.
Privatisations of state run assets do not always work. The privatisation of British Steel was a disaster, we lost a strategic industry and thousands of skilled jobs; the steel for the new aircraft carriers was bought from Germany
Iain Moore
The privatisation of BS was not a disaster. Before privatisation BS was losing 1.4 billion a year . Months after the Conservatives came to power the steel unions went on strike for 14 weeks demanding a 20% pay rise. It was producing 15 million tons of steel with 150k workers, after privatisation It was still producing 15 million tons only with 30k workers. It is what happened after that which is the problem, not privatisation.
Megalomania, the left believe they know everything, their values are the only values that are right and they should be the only people to run things. With such arrogance they want to interfere in every aspect of our lives, and believe being able to organise a comrades celebration in a union bar makes them well placed to run a large commercial organisation or service.
It is indeed incredible that with 100years of case studies from around the world as to what a disaster socialism is, anywhere and everywhere, and the decades of experience we had in the U.K. with how utterly useless socialist economics have been, there continues to be support for socialist anti-market policies. I suppose left wing brain washing in the education system must be part of the explanation. I have just been reminded that Diane Abbott is on record as saying "on balance Mao did more good than harm".
i think the nationalisation of the banks recently is a red herring. This was an emergency. Not down to ideological policy. If they hadn't nationalised the banks, disaster could have hit our economy and others. If the financial services sector had been more efficiently regulated, the banks would never have been nationalised.
Saying that, privatisation is an essential part of a growing, healthy economy. But it must be applied practically, on a case by case basis. Not ideologically.
Eric Sorensen
Travel by train in the UK is among the worst in the UK. From whatever point of comparison.
Not being able to sit down is unheard of in many other countries. This is a matter of owners being ruthless in pursue of profits because customers cannot go elsewhere.
It is also Labour's best friend because people are feed up with politicians' promises that never materialise. The government should introduce mandatory refund systems so that you'd get half the fair back if the service provider cannot meet demand. I am sure the overcrowded trains will miraculously start to improve.
Epikouros
Those who believe nationalisation and other socialist policies are the road to prosperity, social justice, greater efficiency and a better means to satisfy supply and demand of goods and services than the profit motive. Are seriously deluded and must be suspected of having a paucity of intellectual ability. There is no conceivable rational argument that supports those beliefs. On the other hand if they believe that free market capitalism and the private sector have flaws and shortcomings then they have a case and indeed they should be addressed. However socialism in any form is not the the way to do it. In fact socialist experiments have been the cause of making many of those flaws or at least making them less easy to fix.
There is only one flaw that exists that actually needs attention as all others are self fixing and that is human proposentity for opportunistic dishonesty. The establishment of robust contract and property rights and a binding legal framework ensures that the opportunity to dishonestly profit from the private sector is extremely difficult. What has allowed the rise in dishonesty which is not as great as some would lead us to believe as there are those who claim dishonesty when in fact non has occurred is the increase in government and bureaucratic interference, regulations and rules especially of the left wing kind and to control economic activity and human behaviour. . Also an interference by politicians of all persuasion to introduce policies to increase their popularity and reward their followers and friends(cronies).
But we should have a pragmatic, not an ideological, approach to free market capitalism / free market capitalism should be bespoke not one size fits all.
Take one extreme example – roads. With roads you can privatise some of them. Not all of them.
And free, market capitalism has to be regulated from one degree to another (even though regulation is flawed to a degree as well ..). Because people in business are flawed, just as people outside business are flawed. And so we all need to be regulated, to some degree, whether in business or outside business, driving on the road, or whatever. If you free, market capitalism isn't regulated properly then you get free, market anarchy resulting in all kinds of economic turmoil, costing the government more in the long run.
Lastly, it's also a case of national mood and patriotism. If your trains are abysmal (and all the profits going to foreigners), kind of makes people feel a little bit less patriotic.
At one time you could buy a ticket and take any reasonable route between two stations using any train which came along. Now, if you have a ticket from one operator, and that train is cancelled for any reason you can't just assume that another operator will accept it. It may or may not be honoured. So I would dispute that the rail system is as quite a fully nationalised as JR claims.
Recently our gas supply was cut off. An engineer from the gas network came out and decided that the problem was with the meter which wasn't his responsibility but was the responsibility of the gas supplier. So now we have the same gas in the pipes, and the same electricity in the wires as we always had but somehow the "suppliers" of the gas and electricity are all different. We supposed have a choice. We can, if we choose, pay what sounds like a gas company to "supply" our electricity and what sounds like an electricity company to "supply" our gas. Maybe it is possible to pay what sounds like a telecoms company to supply our water. I'll have to look into that!
So there is a case for having what are really natural monopolies under state control.
The current railways are fragmented, inefficient and lacking in transparency.
Train operators are heavily subsidised at times and occasionally have to be bribed to extend their contract when no credible replacement operator is prepared to take on the route in good time.
Old private railway companies, like the Great Western, ran the whole show in their area. They did not work alongside a separate entity that was responsible for the tracks and station buildings. They were fully accountable to the public and had nobody else to blame if things went wrong on their lines.
There is no clarity on fares and various wheezes need to be tried (split journeys etc) in order to obtain the best fares. The ticket clerks cannot simply point to the best fare. You have to check what they tell you. The customer who has done research often knows more than the company employee about cheap fares.
On a recent trip to Wales there were clearly insufficient carriages for the number of passengers. A replacement bus failed to turn up on the return journey. Ticket staff could give no information as to why. A compensation claim took over a month to be fully replied to and a further two weeks on top for a cheque to arrive. The rail companies do not care. They just blame the bus operators instead on monitoring them. A bus is a lot cheaper to run than a train and saves money for rail companies. So they try to use them frequently at weekend under the pretext of track maintenance..
English Pensioner
The problem with the privatisation of the railways was the model that was used; the track and buildings was owned by one company and the trains, run as franchises, by others.
I feel that the railway set up after the 1923 Grouping was better, with the four major companies owning the track and running the trains in their sector of the country. Thus any improvements required to run longer trains or extra trains were a matter for internal discussion within the company, not between two separate companies each wanting to pass the costs involved to the other. The same applied when something went wrong, it was in the company's interest to get it fixed as soon as possible, not a matter for discussion to determine who was to blame and who pays.
Bring back the "Big Four".
The aim of some on the Left may be to provide an outcome as where " the main nationalised industries ended up sacking large numbers of people" to all the better show that capitalism fails.
If rail privatisation is so wonderful why did the government not privatise the whole thing once and for all?
Because we have a 'Conservative ' Government who are frit, and rarely if ever stand up for conservative principles and values.
Because the EU wouldn't let it. It didn't want any monopolies.
The problem with Nationalisation is that politics become involved with running of the business, with management, and investment.
Politicians are usually not businessmen with commercial experience, thus those industries soon become cash starved of investment, become overloaded with staff, and fail after a number of years.
Nothing I would like better than for our basic services of life, Power generation, water treatment and supply, gas, and transport to be run by the State instead of Private often Foreign Companies, but past history shows that those in put charge (political appointments) are often not the right people for the job, and will not be left alone by the politicians to run them efficiently or with enough investment.
You are all too dogmatic. There are examples of poorly run 'nationalised' services and there are examples of well run ones. Some rail companies are good, some are not. Some hospitals are good, some are not. Some schools are good, some are not.
But the exact same applies in the private sector too. Some companies are good and well run, others are not. G4S, for example, which does a lot of work for government, clearly does not always excel at what it does.
The same can also be said of the charity sector and, indeed, of central government. And it boils down largely to one thing: leadership. I do not care much for Michael Gove. But he clear leads his departments well. He was good at justice and looks like he will be good at DEFRA where, ironically, he is clearly listening to experts.
The same can not be said of Liam Fox, David Davis or Chris Grayling. They are clearly all incompetent leaders and it reflects across their department as a whole. David Cameron and Tony Blair were competent leaders. Theresa May is not.
Barack Obama and Bill Clinton were competent. George W Bush was not. Trump possesses no leadership skills.
And herein lies a real irony in the hard-right's attitude to public services. You want to axe management and put all the cash in to frontline services. A great sounding goal but it fails to recognise that you only get great frontline services in a well run organisation – and that means you need effective management. Whitehall could start by setting an example and sacking the incompetent politicians running government departments – that is most of current government.
But which one responds to its customers fastest?
Which one goes broke if they don't?
It's the public sector curse OPM (other people's money)
Much is wasted.
Much is cheaply spent
There are poorly performing organisations in the private sector but they do not last very long.
In the State sector they go on forever.
Surely you mean SOME here are dogmatic and others are not, Andy. *sarcasm*
"In 1991, following the successful Swedish example and wishing to create an environment where new rail operators could enter the market, the European Union issued EU Directive 91/440.[9] This required of all EU member states to separate 'the management of railway operation and infrastructure from the provision of railway transport services, separation of accounts being compulsory and organisational or institutional separation being optional', the idea being that the track operator would charge the train operator a transparent fee to run its trains over the network, and anyone else could also run trains under the same conditions (open access)."
https://en.wikipedia.org/wiki/Privatisation_of_British_Rail
The penny drops.
Eurosceptic Mrs Thatcher was against rail privatisation, Pro EU Major for it.
It was sold to Tories as the injection of competition into a failing industry (only because it was underfunded !) but the EU was against this bad idea all along.
Any improvements in rail have come at a huge cost and I could cry at what BR could have done with all the extra investment.
The unions were already tamed by Mrs Thatcher and there were no major rail disputes in the 12 years before privatisation.
Should read "… but the EU was FOR this bad idea all along."
Bert Young
Nationalisation of anything implies a management from a public service style committee ; it would be subject to the swings and roundabouts of political guidance ; I would be against any such decision for this reason . I was an appointed invigilator at a meeting when the newly appointed Director of Finance ( Shirley ) addressed an audience of business people following Beeching's appointment to British Rail ; I remember questioning him about the longer term implications for British Rail under changing Governments . He was confident and hopeful in his reply but did admit such changes would have knock-on effects to its running and guidance . The meeting generally was opposed to a British Rail .
Private organisations are subject to severe competition and control from its investors ; they can only survive if they produce results that are compatible with market forces . In an increasingly international world these pressures are considerable and are present every day . Longer range strategy is adopted by most of the public companies today and its practice has lead to much more efficient organisations . This is not possible with nationalised companies .
Perhaps some people think nationalisation can be a g0od idea because in certain cases it can be a good idea. Just as in other cases the best model will be private ownership and control, albeit within whatever laws and regulations may be necessary.
But I think another good idea is to understand when you have deprived yourself of the opportunity to choose between the two models, and I note that during Andrew Marr's interview with Theresa May this morning neither could bring themselves to admit that while we are still in the EU we cannot legally restore the operation of rail services in this country to any state owned monopoly, as some might wish.
http://johnredwoodsdiary.com/2018/01/04/we-have-a-nationalised-railway-in-all-but-name/#comment-911170
"Any licensed rail company can now offer its services anywhere in the EU."
It is a constant problem for Theresa May, and for most of her Cabinet, that even if they now accept that we must leave the EU because that is what the electorate decided in the referendum they cannot yet accept many of the arguments for leaving the EU. She could have told Andrew Marr that this was another instance where our public policies were in effect being predetermined by the EU, but it was not her instinct to say that.
hans chr iversen
latest interesting statistics on trade , a growing amount of out trade is with the EU
Exports 2015 48.0%
2016 48.2%
and imports from EU have also grown percentage wise over the same period
We still trade bit more with the rest of the World (more than 150 countries as oppose to 27)
How about correcting those numbers for the various distortions … but it doesn't matter anyway; we will continue to trade with the EU countries after we have left the EU, even if they spitefully and foolishly choose to recreate unnecessary obstacles to that trade; at the same time we will have more freedom to develop trade with the rest of the world with about 80% of the total economic activity and rising; and in any case increases in trade only make a minor contribution to our economic growth.
Jagman84
It simply means that we are transporting more non-EU destination goods via Rotterdam. The true level of our exports to EU member countries (as a final destination) is somewhat lower.
Take off the Rotterdam and Dublin effect and you will see that the apparent increase is due to improved exports to the ROW.
Practically all cars are transhipped at Rotterdam and count as EU exports and incoming cars are transhipped to smaller vessels and count as EU imports.
The actual figures are approximately 60/40 in ROW favour.
It's not 48% of out trade.
Over 80% of our trade is generated internally within the UK
So it's under 20% of our trade is international trade of which about 40% odd percent is which the EU .
And then there is the Rotterdam effect…
JR:"All previous Labour governments have nationalised some state assets."
There is the idealogical, doctrinal reasons for nationalisation, 'control of the means of production by the proletariat', which is distinctly out of favour by today's Marxists.
Today, Marxists are into 'intersectionality', playing one group off against another. And in fact the Tory party has enthusiastically jumped on board that bandwagon.
But the real reason why Nationalisation fails is because it's rasion d'etra, is the very antithesis of the Capitalistic economic order. The preservation of jobs over all else.
The Capitalistic economy will allow a company to fail if its economic model is not successful. Where as a Socialist government will pour resources into an industry to allow it to continue employment.
Another mark against the Tory Government is it's preferential support of the Banking industry, over £100bn on RBS alone, to preserve jobs.
So, despite Redwoods assertions to the contrary, there is little difference between old style Marxists and modern day Tories.
Indeed.The growth achieved here and elsewhere in the west over the past decade or so is reminiscent of the Krushchev boom in the USSR in the late 50s/early 60s when even their harshest critics in the west marvelled at the growth that was being achieved.
In reality,as became clear subsequently,they were consuming their national capital at a far faster rate than their output was growing.A period beautifully described in Francis Spufford's book "Red Plenty."
Treacle
The reason people are left-wing is that they are envious of people who have things that they do not, and want to punish them. So people want to nationalise the railway companies because they want to stop any profits going into the hands of "the rich". It's as simple as that. If you give people the opportunity to become rich themselves, they stop being left-wing. That's what happened under Thatcher, but the Conservative Party has stopped trying to do that now, and instead offers soft socialism.
Only a minority will get rich..
Because the British are like your daft neighbour. He thinks he's good at everything. He moves into a lovely house and garden. He changes the gate for no reason one knows and it never quite shuts properly. He resurfaces the drive and within weeks it starts to crack. His car comes into attention. You hear hammering many hours a day and encouraging revving-up but it never leaves the drive.
We British are lousy at organising transport. Nationalised or private. We are good at growing stuff but overdo it. We haven't the time to harvest it let alone eat it. But we are very enthusiastic.
Yossarion
Because they know it would mean better pay, job security and a better Pension Scheme, like MPs are on.
We're starting to get back to normal Sunday morning service on TV after the holiday break, with a prominent europhilic Labour supporter inviting a euromaniac left-wing Guardian female journalist onto his programme which is broadcast on the first channel operated by the pro-EU BBC at the expense of license payers, so that she can spread more of the anti-Brexit pro-EU lies and distortions which routinely appear in a eurofanatic low readership non-newspaper masquerading under the title "Independent", which might otherwise escape the attention of 99.9% of the British public:
http://www.independent.co.uk/news/uk/politics/brexit-latest-news-uk-university-eu-academics-resign-immigration-brexodus-citizens-europe-a8143796.html
"More than 2,300 EU academics resign amid warning over UK university 'Brexodus'"
That's out of a total of more than 25,400 EU academics on the rolls of the institutions which responded, and a rate of departure which is said to be 19% higher than before the referendum; in other words if the referendum has had any effect at all it has operated on about 2% of all the EU academics in post in the UK, whose total numbers have actually remained about the same as before the referendum …
The despicable Remoaners just cannot help themselves; they lied through their teeth to try to get us to vote to stay in the EU, and having failed on that despite all the advantages they enjoyed they now continue to lie through their teeth in their increasingly desperate attempts to frustrate the will of the people as expressed in that referendum.
Yawn. If you want a country where your view, and only your view, is aired go and live in North Korea.
If not accept that many people – myself included – think Brexit is a total catastrophe and we will not only tell you every single thing that it has damaged in our country but we will sing and dance about it too.
And as most of us have at least 20 years in hand compared with most of you will we clearly win in the end.
Come on Andy…it's not a "total catastrophe"…be realistic.
Could still be a long while with life expectancy now nudging 100.
I expect the EU you love will have imploded by then. (You DO love it, don't you ?)
He is assuming that a) he will live another twenty years, and b) he will not change any of his views over that time. Plenty of people have come to see in the light of experience that what they had believed in their youth was quite mistaken, but that will never happen to Andy who is already omniscient and so can learn nothing more.
Actually I would just like to have my view aired rather more often than it has been over recent decades, let's say about half the time instead of maybe a twentieth of the time as it is. It's your side which has tried and is still trying to suppress free debate so it can spread its lies unchallenged. And of course you have a good reason for that, because once opened up to proper challenge your lies will be shown up as the lies they are.
Malcolm Edward
The people (as in politicians and would-be politicians and political pressure groups) who want to "nationalise" industries, are people who wish to accumulate a lot of power to themselves. When industries are nationalised, they are not owned by the population at large, but controlled (and effectively owned) by the small group of people in government, it is a con to say they are publicly owned – members of the public can have no say, and cannot trade their shares as they have none. In fact private industry is more publicly owned.
The power-crazed people who want to control everything are on the whole people who have not succeeded in business (usually because they haven't tried) and instead they want to use the electoral system to put themselves in charge of running businesses. Rather than accepting the limits of power, they want untrammelled power – power which can be abused because they will suffer no personal penalty if they get the economics wrong.
This small number of people (of very limited experience and know how) think they can make better directed decisions than the multitude of people with varied backgrounds and experience in industry and commerce, and who have a vested interest in making good decisions and responding to markets. This is clearly unreal and wrong, but seems to be immaterial to them.
I conclude this is a power game and not about representation. The consequences for the wider economy and population is of no interest to these people (if for no other reason than the overwhelming historical evidence to improve lives is in favour of free markets and devolved decision making with positive feedback) – of course they will sweet talk to make it appear otherwise, why should power grabbers have any intellectual honesty – its for themselves.
I think the conservative party need to make it clear that the public do not own nationalised industries in any normal way, and that Corbyn et al are just motivated by a power grab, to the cost of the tax payer and cost-free to themselves.
RupertP
You ask why the public might prefer nationalisation – The public thinks that under privatisation, the public is paying for the cost of the service + private profit (including excessive pay to the bosses). Furthermore, the public thinks that the cost of the service could, in theory at least, be lower than it is in the private sector.
A key example where costs could be lower in the public sector is in financing rolling stock. UK 30 year gilts currently yield 1.74% whereas the ROSCOs (Rolling Stock Companies) are paying in excess of 5% (Example: Angel Trains reports that its weighted average cost of debt is 5.72% as at the end of 2016).
Why doesn't the government either lend money at preferential terms to the ROSCOs or set-up its own ROSCO in competition to the private ones to take advantage of its lower financing cost? The lending route might be more acceptable to government if it wanted to ensure it didn't kill off the private ROSCOs completely.
Personally, I think a mix of public / private is best. The private sector should ensure services are run efficiently / managed innovatively, whilst the public sector is able to both regulate fares / standards and also to access cheaper finance than the private sector. Cheaper government finance could be used to finance assets with long term lives (trains) at a lower cost than the private sector can.
Full privatisation of UK trains is not desirable from a competition policy perspective, as train services are a natural monopoly and private operators (in the absence of appropriate regulations / restraints) would otherwise use their local monopoly to extract super profits from the travelling public where there is often no viable competitive alternative.
Labour favours nationalisation because unions can control state sector employees. They can call strikes, and employees can vote to walk out, because they have no fear of redundancy as there is no alternative provider for customers to turn to. Any wage demand is met from the public purse, no need for the business to pay its way or other piffling inconveniences like that.
State sector employees also tend to vote Labour on the grounds that Labour would be more likely to keep the racket going, so the larger the public sector the better as far as Labour is concerned. A less charitable view would be to call it jerrymandering the electorate.
I remember British Rail before it was privatised, it wasn't popular.
Jon A
Many things we refer to as privatised when they are really not. They are actually outsourced.
The railways are not really privatised. We call them franchises, and they are run a bit like a school kitchen. The state owns the facilities, but we have outsourced the day to day running of it as its cheaper. The only competition that exists is on the renewal of the franchise when another catering company or railway company might be able to reduce cost or offer to refresh the kitchen.
The state sets the pricing for the school dinner / train ticket and subsidises this where necessary.
The issue comes when we forget we have outsourced it and start thinking its privatised. This usually occurs when there is no real competition for the outsourcing and only one private company is truly bidding for the work.
Large Government IT Projects, the Railway Franchises, Utilities, 'NHS Privatisation' are all examples.
People work for private companies and see in them all the bad points which are said about nationalised industry.
Waste, needless duplication of work, people appointed through cronyism and nepotism, lack of incentive, cavalier attitude to staff, redundancies, sudden changes in work-practice,instability.
Many cannot remember nationalisation. They think it may be better than the present.
I must say that at ground level, working for a private company, a local authority a or a nationalised industry…I have experienced all …is the same in many ways. But with a private company one expects the profit-motive to win out against all forms of bad. It does not. It does not work even in the most humble establishment. An owner, yes even an owner, or a manager, a supervisor will pressure someone to leave even if they are the best worker the world simply because to use an old expression "their face does not fit."
Human beings are mentally and socially incapable of making free enterprise and nationalisation work properly and efficiently for the good of all and not even for the selfish
good of themselves.
Many people have remarked to me "You are not human!". I do try, without a shred of humour, always not to let such flattery get the better of me.
Stephen Berry
Remember that in the 1930s, it was an article of faith on the Left and elsewhere that capitalist democracies like the UK were finished and that state control of the economy was obviously more efficient. The Labour government of 1945-51 nationalised about 20 per cent of the British economy driven by this belief. By the 1950 and 1960s the idea was being questioned and it's worth remembering that what the Left think today is unlikely what they will be thinking in 20-30 years time.
Even partial privatisation of the railways has brought about improvements as anyone who travelled on the nationalised railways regularly can confirm and the dramatic improvement in passenger numbers suggests. One obvious benefit is that a strike tends to be isolated to the one company. If there was a strike under BR then the whole UK network was immediately under threat.
Chris Grayling is talking about returning the maintenance of track and infrastructure to the operating companies and this should be done as soon as possible. The operating company has an obvious incentive to ensure that track maintenance is up to scratch. It is remarkable that the Tory government which privatised the railways thought it could produce a better solution than the market had arrived at over time.
"One obvious benefit is that a strike tends to be isolated to the one company. If there was a strike under BR then the whole UK network was immediately under threat."
"Even partial privatisation of the railways has brought about improvements as anyone who travelled on the nationalised railways regularly can confirm and the dramatic improvement in passenger numbers suggests. "
Dodgy.
We've had fuel price rises and a war waged against motoring. Also a population boom making cities too expensive for people.
37/6: Remember that the road network is nationalised and road building is decided by government. In those circumstances, it's much easier to wage a war against motoring because Green ideas are fashionable at the moment.
Ideally, rail and road investment decisions should be made according to demand and markets have proven themselves to be far and away the best method of achieving this.
Privatised rail in the UK is now mostly a question of keeping up appearances.
The Hatfield rail crash and consequent damage liability meant that a huge chunk of the privatised Network was very quickly taken back under state control. Network Rail was just renationalising a large debt laden element of the railways
Massive subsidies are given to private companies to encourage them to put a bid in for particular routes. These companies can walk away without penalty if they find the task too onerous. So there is no great saving over the days of British Rail – far from it.
The government still maintains huge control over rail. It is too much of political risk to allow it to go its own way. Hence Grayling's interventions on Southern Trains.
So why keep up the pretence that privatisation of Rail is a success.
Off-topic, JR, did you see that there are 3 Tories among the 20 MEPs urging Theresa May to keep us in the EU Single Market and the EU Customs Union?
https://www.theguardian.com/politics/2018/jan/06/brexit-may-urged-to-stay-in-single-market-by-20-british-meps
"The best way to secure Britain's prosperity would be to remain close to Europe, inside the single market and customs union, and to secure a deal that keeps Britain in the room," write the MEPs, who are supporters of the Open Britain campaign."
I could suggest that those three should be the next in line to leave the Tory group, either voluntarily like previous renegades, or compulsorily. However of course it would be much better to force them to resign their seats altogether, that way they would no longer be able to vote against our withdrawal agreement, and moreover we wouldn't have to pay quite so much towards their pensions … what a scam this has been, and we have "Sir" John Major to thank for it as with so many other aspects of our national betrayal.
Assuming (1) MEPs are smart (at least the ones you've selected) and (2) dedicated to the national interest., it should be no surprise if a lerge majority of UK MP's and MEPs dislike the idea of a hard Brexit..
What do you know about it?
Why do some people think nationalisation a good idea? People see how remarkably efficient the government is through the nationalised taxation of our people. Makes bags of money!
Julian Hodgson
I wonder why the advocates of nationalisation don't call for the the same to be applied to food production and distribution? Surely this is the most basic of human needs and therefore the primary responsibility of government? I sometimes hope a communist government led by Corbyn try this because the counter-revolution which would surely follow – probably within about 4 days – would destroy socialism and its specious appeal for ever.
Socialism is old hat and the fact that the UK is under the influence of left-and right wing charlatans says something about the UK electorate. Happy electorates tend to be more centrist. You one should wonder why the UK, among European nations, has such a strange love affair with extremist ideas? Bad public sector management perhaps? A press with bad habits? Lack of civic education? Who knows. But rest assured, Corbyn or Farage (they are equivalent charlatans) would not last a single day if they were in government and did what they promise or if they did try to govern and discovered that that task is too hard.
Reply There are plenty of nationalised businesses on the continent.
Mr Balance
"Happy electorates tend to be more centrist. " So tiring hearing this myth repeatedly.
Marching into Iraq is not centrist politics.
Supporting intervention in Libya is not centrist
Advocating staying in the dictatorship of the EU is not centrist
It is about as extremely ultra far right as you can be in the UK without being locked up in jail
I'm against it.
The reason it isn't working is the billions you are giving it of other people's money.
Axe the subsidy
Miss Brandreth-Jones
Some wonder why private companies go overseas to operate . We lose the services and they become inferior. Publicly owned are less likely to run away for more profit else where.If the problem with nationalised is the running , that can be fixed . If the companies have gone to fresh territory then that cannot. We should not be blackmailed by industry telling us that they will go overseas if tax conditions are not to their liking.
Billy the kids
Well if you have a car and wouldn't dream of going by rail you would welcome a government giving incentive for people keeping off our roads. That's why i love the rich living abroad. I can walk on the moors without some fence and a sign saying Private Property…the basis of which is to protect it from me in case I disturb extremely slow flying low flying cumbersome birds they hunt with a scatter gun and still miss each Sunday.
PaulDirac
No arguments, just recall British Leyland, British steel (of the 70's), British coal, and the infamous British Rail.
All were committed to waste and absolute union power, only people who "missed" the winter of discontent can be nostalgic or want mammoth nationalisation back.
BUT, what about this government's folly, or rather Osborn's folly – HS2, guaranteed to be the largest white elephant in Western history.
And meanwhile using Chinese money and French company to build our nuclear power station.
When John Major's Conservative government privatised the railways they created Railtrack to look after railway assets. I understand that what was created was in mnay ways a property company and was run as such (with some making fortunes for doing next to nothing). It typified the reason for not privatising natural monopolies that provide public goods. The owners are incentivised by private profit rather than public good.
Railtrack's successor Network Rail is only a 'quasi' nationalised company as it operates at arms length from the government. I think it is more responsive to the public good. However, I acknowledge the difficulties of incentivising efficient practices in nationalised industries. It may be possible to move towards the best of both worlds in terms of incentives to efficiency and public good by co-operative and stakeholder ownership and control of the railways. This could be set up to provide both incentives to efficiency and response to passenger demand; though it would take a while to work out the practicalities.
All these views of nationalised industries and state and other monopolies are very interesting.
How is British Road Services getting on?
D Gardener
Nationalisation evolves from megalomania or the the complete arrogance of Politicians to effectively state that they are better equipped to run a huge conglomerate than those who are fully trained and have the long term professional job experience to do so.
Would you employ a plumber to advise you on your next car purchase? Or would you expect that same plumber to carry out the surgery on your aunt's bladder?
The principle with Nationalisation is exactly the same, When novices replace experts, it is never going to be a profitable arrangement and in the case of Nationalisation, it becomes a terrible burden upon the poor tax payers and has done so each and every time it has been forced upon us.
Check out the rest of the world especially The Korean peninsular. Just who is the better off Nation there? The Capitalist South or the Nationalised North?
A further example I have just though of is much nearer to Home. The Millennium Dome.
Under Labour Government control it was an £800M disaster and it it was sold off to the Private Sector for a pittance (To save money LOL) BUT it is now a success.
I feel that is the case with Defence and Police and Security. Home Secretary Rudd majored in History at University then worked in Finance and according to Wikipedia Rudd helped to find extras for the film Four Weddings and a Funeral (1994), for which she was credited as the "aristocracy co-ordinator", and appeared briefly in one of the church scenes in the film.
That should be a comfort for our army marching on Tehran
Do you really think Ministers manage? They have their mandarins to do that for them. Of course ministers should check that the ones he/she's got are sufficiently competent..
Maybe you should read up on Korean economic development. A very intructice case. Korea's growth project was designed by the State and executed by business people who were in a way, supervised by the state bureaucracy until the middle of the 1990s and even now it is impossible to know where the state stops and the private sector begins. The lesson is if you give managers clear tasks and monitor their performance (audit firms do benchmarking routinely for large corporations and public sector managements) it does not matter if they work for the state of for Unilever. You should not let the political state buy votes by supporting lost cases. No quality of management can turn that around. The only thing left is asset stripping (or private equity as it is called today).
People who want nationalisation are usually motivated by a hatred of anyone doing well through hard work. They don't love the nationalised monopoly: they just want it to stop anyone making any money.
On the subject of this leaked reshuffle – if it is a leak and not media fantasy: why can't the PM understand that it is not the sex or race of a minister that counts but whether they are any good? We are contantly being told she wants an administration that looks like the country. This is insane but I suppose the young men around her have told her that, the ones who are doing the leaking. They don't look like the country, you may be sure.
It is not so much who owns a business that matters, as whether there is any real consumer buying power. Whether there is a feedback loop between the consumer that acts in a really quick decisive way, in the way that a consumer deciding to buy in shop X instead of shop Y has. It is the thousands of individual consumers moving their small individual buying decisions which forces businesses to improve, optimise, take on board emerging new approaches, give optimum consumer service, and so on. It is the ability of innovative business to attract consumers, and their money, and take business from their less nimble competitors that ensures for most of the private sector there is continual improvement and innovation built in, where the consumers can force big change not by A) complaints and pollical pressure (as is the only way with monopoly public sector providers) but by B) simply taking their money and business elsewhere with little or no fuss.
The problem of course comes with monopolies, such as the only train line between town Z and town U, whether it is publicly or privately owned or operated, the individual consumer has little ability to take their business elsewhere. And it is these monopolies that need special attention.
However, the reality is the state goes out of its way to create and impose monopolies where none are needed, in so called "social housing", in healthcare, in social care in the community, in schools, and so much more. The state should instead make sure people have funds to access service they need, but ensure in as far as is possible as much consumer choice as is possible as the only way to force detailed and ongoing improvements. Top down and state controlled attempts at improvement are always sub optimal compared to really empowered consumers.
The railways "privatisation" was a mess for a number of reasons, it should have given ownership of track maintenance and improvement to the corresponding primary train operator. So, the West Coast mainline track should be under the control of the people running the majority of trains on that track, and the same for the East Coast mainline, and so on. It should also have learnt from the "best of the rest of the world" instead of trying to reinvent the wheel, why politicians in this country constantly try to meddle and invent new structures for things where there are proven ways of doing it successfully is beyond me.
I also find a lot of common sense in the letters pages of the railway magazines. Many of the ideas there are a whole lot better than those coming from the pollical class.
Reshuffle interesting tomoz.
Altho I don't warm to JRM
I give him credit for laying out his ( faith ) proclivities.
Nobody can then have anything on him.
In fact he's gone up in my estimation.
Truth trumps everything .
Snap time
JRM?
I do like him, he is very bright and very popular. If you watch him on QT the audience sit and listen to him, he really cares about ordinary people and most ordinary people get that.
He is a catholic but has made it clear that he can't and won't force his beliefs on anyone.
As a side issue the whole history of the way leading British Intellectual Property in train engineering has been allowed to leak to other countries, and have those countries undercut us is worth a casual think.
I dont see why this country should not be making much more of the rolling stock it uses. The politicians have pretty much conspired to stop this happening.
The question to answer is whether you consider the railways as economic activity in their own right (such as airlines are), or whether they are simply an enabler of economic activity, allowing goods and people to move around as needed (like roads).
I subscribe to the latter view and, as a regular rail user, what I want is a reliable service at a reasonable price. I don't want to have to deal with multiple, competing, operators, and work out which ticket to buy from which operator, and then work out what to do when I find out the train I bought a ticket for isn't running, and I can't use the ticket on the other trains that are running (because those are the rules), and I have to end up paying out twice for the same journey and then claiming back.
Private enterprise has a place in delivering rail services, but it is not under the current model. TFL has this right. TFL engages private operators to deliver services, maintenance etc. across the network, but it's all hidden from me and it doesn't matter which line(s) or services I use, I only ever have to interact with TFL. The national rail network should adopt a similar model.
Very strange to ask for arguments only from proponents of nationalisation. The railways are an interesting case. Developed almost entirely by private enterprise. Where the railways went, prosperity followed. Now they are mature so that free enterprise model is difficult to emulate and not necessarily desirable. In terms of development railways do not need overall or greenfield expansion unless Britain's demographics or patterns of trade or industrialisation dramatically alter (although they might as a result of regulation in response to climate change and consequences for electricity generation and energy intensive industries). But change is required because, despite the maturity of the railways there are still gaps in coverage, eg., trans-Pennine (ditto roads); new technology enables trains to travel faster and more trains to travel on the same track; there are also bottlenecks of single tracks; changes in other modes of transport influence passenger and freight demand for rail.
It seems to me that there is considerable scope and need to modify the provision of track and the best way is to enable private enterprise to anticipate or follow demand by building new rail track or modifying existing track. The difficulty with national government ownership is that governments are generally bad at anticipating change (even that resulting from their own policies), too risk averse with public money and bad at negotiating and running contracts with private industry. Poor government management thus risks the entire rail system rather than merely a part of it (as it does with the NHS and the EU). Government ownership and management need to be scaled back. Regional and local governments are relatively more incompetent and also more open to local corrupting influences eg., by property developers.
The current set-up supposedly enables competition between operating companies. However the franchises restrict them to existing tracks. How can a train operating company compete with air transport, road freight or other train lines? How can it balance freight and passenger use of the same track in response to market demand? This is not true enterprise, nor true competition. the scope and dimensions of competition are highly restricted.
And is the track owner and manager motivated to respond to these market forces in harmony with the train operators? It does not seem so and it is a government run organisation.
Nationalising the lot – or even doing so on a regional basis – would enable track and train to be in harmony but then neither would be responsive to demand and both would become inefficient, wasteful, bloated organisations. It would be a step backwards to where we were when we realised it was no way to run a railway. Let's not learn that all over again.
There is enterprise in some government organisations but in general it does not last – especially after years of infection of UK government by the EU's philosophy of technocratic and bureaucratic government as superior to parliamentary democracy – and it is almost always stifled sooner or later.
It is neither necessary nor desirable for the Government to decide whether train operators and track companies should work together or what they should build or operate. Government should stick to safety and the normal business of industrial regulation. It should release these great assets for enterprise to determine how, where and when they should be developed in response to market demand and it should resist the temptation to define the market and how it should operate as it does now with the train operating companies. Release both and trust to monopolies regulation (as determined by the UK, not the EU).
One of the problems with the large nationalised industrial blocs such as health, transport, state administration at local, regional and national levels, is that management colludes willy-nilly with large, bullying unions and militant unionised factions, into reducing efficiency and raising costs.
They are the sworn enemies of rationalisation, let alone automation: I recall feeling bemused when one day, during a prolonged and unexplained stop at a station, I heard the driver of the Northern Line underground train lecture his passengers over the intercom on the foolishness of TfL plans to run driverless trains.
I don't think private workers are keen on automation either – they are the sworn enemies of it too but can't do anything about it.
In the west you have to put them on welfare.
Who pays for that ? Where do the costs show up from these 'savings' ?
Interesting comment from our host above about the cost of tax collection via the Inland Revenue being needed to be taken into account to arrive at the true cost of the NHS.
It brings me to the ultimate privatisation. Why not privatise the Inland Revenue ?
It's not as daft an idea as it sounds.
For example, whenever a Chancellor introduces a new tax no thought is given to the extra cost of designing and implementing a collection system for it, a method of dealing with disputes and the re-writing of the tax codes every year. The cost to the country is enormous with armies of lawyers and accountants being needed to deal with it all. I have to spend up to £2,000 pa on accountants fees just to deal with two simple property partnerships and the rules have been getting more complicated every single year under Brown, Osbourne and Hammond.
Unlike, for example, running prisons, basic administration is probably what private business does most efficiently and Government does rather badly.
If HMRC were privatised, any sensible organisation would switch to a simple flat tax system which would cost a tiny fraction to collect and administer and would eliminate most tax avoidance schemes. It would also mean that everyone who used services provided by the State would be paying something for them, an important principle that the Conservatives have moved away from, at their peril, under Cameron. Regrettably Hammond and May have been continuing down the same misguided route.
After a massive initial reduction in costs ( probably by a factor of ten or more ), every time a Chancellor wanted to alter something he would need to ask HMRC what costs would be added to the annual bill for collection and administration. This would have to be published along with the proposal in the Red Book on budget day. It would concentrate minds beautifully.
The real cost of tax collection for the NHS and everything else would also be known to everyone.
Reply In a democracy you could not give tax raising and choosing powers to a private company
There is no reason why citizens should not be able to choose from several private firms which offer services to collect taxes on behalf of the state. Those firms could compete on customer service levels and fight to win more customers. Then the state could just regulate and monitor such firms and collect the money. Sure the firms should not be setting the tax rates, but I am not so sure the only way of administrating taxes is to have the public sector do all the work.
Why do Politicians never want to privatise the BBC?
Its hardly a critical need and there is no natural monopoly, so why? Public service programes could be purchased, probably more successfully than any other liberalisation.
Why privatise railways, water, energy and leave the BBC in a state funded and favoured monopoly position, which has to resort to the use of state backed sanctions in order to enforce its dominance.
When the £4 billion tax cut that is the BBC is subject to voluntary encryption and subscription model, which excudes a anti-competitive law which requires funding if you use a competitors services.