Nationalisation: Bad 50 Years Ago, Worse Today

Excitement across the Yorkshire Dales with the news that the area is to be the latest to be featured on the Monopoly board. The game’s UK makers Winning Moves have invited the public to suggest local landmarks such as Bolton Abbey as replacements for the traditional London areas such as Mayfair. In Skipton, the Craven Herald and Pioneer reported that the Chance and Community Chest cards may be changed to include failing to pick up after a pet and fines for illegal camping.

Whichever corner of the world Monopoly features, two constants are the utility companies: the Water Works and the Electric Company. An apparently dull option – no building little green houses or red hotels – the solid financial returns they can offer are enough to make the fattest of fat cat bankers purr.

The announcement about Monopoly’s very own Tour de Yorkshire came a few weeks after the Macquarie Group reported another stellar year at its AGM in Sydney. The Australian financial powerhouse is the world’s largest infrastructure asset manager.

For its critics, Macquarie is the vampire kangaroo, a Goldman “great vampire squid” Sachs mini-me, draining the wealth from British utility companies, including Thames Water. Supporters point to the £50 billion the group has invested in UK infrastructure since 2005.

The ownership of UK utilities is now on back on the political agenda. In his most recent poll, Lord Ashcroft (of this parish) found the majority of respondents were in favour of the government owning and running water, rail, gas and electricity companies. Among Labour voters, more than 70 per cent agreed: among all voters the figure was 60 per cent – a level of support it would be hard to quibble with in a referendum result.

Nationalisation fans said that state ownership would lead to “more investment, better service and lower charges”: they agreed that “important services should belong to the people not private companies”.

This is repudiation of privatisation is under-reported. It seems that the flagship policy of Margaret Thatcher’s nation-changing premiership is in danger of being sunk. That sound we hear is the ghost of a Prime Minister Past rising up in righteous horror.

Nationalisation was bad 50 years ago; it would be even worse today. It led to uncompetitiveness, over-manning, bottomless money pits of subsidies and bail-outs to loss-making industries which cost the taxpayer billions, as well as over-mighty Trade Unions with their Marxist barons who delighted in holding the country to ransom.

Anyone wanting a glimpse of grim 1970s nationalised Britain and British industry should check out old episodes of The Sweeney and Top Gear’s British Leyland challenge. As Mrs Thatcher noted in her memoirs: “Just as nationalisation was at the heart of the collectivist programme by which Labour Governments sought to remodel British society, so privatisation is at the centre of any programme of reclaiming territory for freedom.”

In 1985, the Prime Minister told a joint session of Congress that, having been dismissed as a pipedream, privatisation had become a very popular reality. Two million people had just become British Telecommunications’ shareholders. “That is what capitalism is: a system which brings wealth to the many and not just to the few.”

Privatisation revolutionised Britain for the better. It is unlikely that the re-nationalisation of Britain’s utility companies and rail network would be now up for debate if household energy bills had not gone through the (perhaps uninsulated) roof in last year.

State ownership of the country’s energy utilities would not have prevented war in Ukraine, which according to the Energy and Climate Intelligence Unit added an estimated extra £800 to domestic gas bills in the 12 months after the invasion. Even France, where three-quarters of the electricity is meant to be generated by state-owned nuclear power, has not been immune from an energy price shock, says the IMF. It noted “in 2022 nuclear facilities did not function at a full capacity due to maintenance issues causing outages at these plants.”

The growing demands for the de-privatisation of water has coincided with the boom in wild swimming by the bourgeoisie, who haven’t been backward in coming forward about sewage pollution. But north of the border, publicly-owned Scottish Water monitors just 3.4 per cent of overflows and sewage was released into waterways 14,000 times in 2022 says the Marine Conservation Society.

Macquarie is currently in the spotlight because of its previous involvement in Thames Water which it sold in 2017. There are suspicions it passed a toxic debt-laden parcel just before the music stopped. The company points out improvements in leakage and pollution rates, as well as a fairly modest 5.5 per cent return on equity in its 11 years of ownership. In 2021 it acquired a majority stake in troubled Southern Water.

Many, including the Labour Party in its 2019 election manifesto, reject privatisation on ideological grounds. They fail to answer how the state, via the taxpayer, is going to provide the billions needed to invest in UK infrastructure, whether upgrading Victorian pipework or delivering Net Zero. Companies like Macquarie have the competence to undertake global grands projets. Reflecting the reality of nationalisation today is the state-run NHS.

Amid the unexpected questions about private vs public ownership, the regulators’ role is overlooked. They are supposed to be protecting the consumers’ interests, vital in the context of monopoly providers. But earlier this week the Office of Environmental Protection suggested Ofwat could well have broken the law over its guidance about sewage overflows.

In 2004, a short paper “Lessons from Privatisation” by David Parker was published by the Institute of Economic Affairs. It noted that the establishment of the regulatory structure was “piecemeal and ill thought out”. As it observed, “its ramifications are still with us in terms of controversy over the regulatory rules, structures and processes”. Two decades later, this issue needs revisiting.

Regulatory bodies should not cosy berths for ex-civil servants and former MPs who are no match hungry, profit-motivated investment firms. Regulators should take time out to have a game of Monopoly: the banker usually wins.