Privatisation v nationalisation

[Davy]

Been hearing bits and bobs on radio in regard to railways. I don't know much about it all but I always felt that while there should be some competition, the goverment should have held on to some industries. Not being a union member throughout my entire working life I am not an expert that's for sure, in regard to how effective they are, and suspect that the ongoing battles with the unions and tories in particular, pushed the privatisation onwards. Doubtless this will be a thread where some people feel very passionate about the subject and I do see that without the unions there would have been a lot of firms still dictating Victorian policies within the workplace. On the other side, the unions did not in the end help the miners as the strikes put paid to many pits that became waterlogged and could not re-open, including the showpiece pit at Seafield in Fife.


One area I do believe privatisation has worked and that is in the housing association sector. I have seen many flats being given over to people, and by and large the housing associations look after their homes better and often give more in the way of redecorating grants than the council. I reckon the council just has far too big an area to look after and have not co-ordinated their work very well. I would prefer to see additional housing associations take over more areas and not be allowed to branch out too far. Their rents are also often cheaper than the council.

Anyway I suspect most replies will be from the union/anti-privatisation supporters and that is fine, but would be good to hear opinions from both sides. As I said I do not believe that there is a blanket rule for all and that both sets of ideas can work depending on the situation.

 

[Smurf]

I think essential public services such as the supply of water, health service, education etc should be publicly owned. Ideally I'd extend it to not essential but I don't think history tells us the railways for example were better when nationalised.

 

[egb_hibs]

Generally against nationalisation as its anti democratic and not usually efficient. However, that's a default not an exclusive position; things like roads that are shared by all and require national coverage are a good example of something the state can do best. A different question is state provided versus state delivered services; for example healthcare should IMHO definitely be free at the point of use and thus paid for by tax, but that doesn't mean the state has to run it.

Interesting you pick out housing as something that has worked well with privatisation. I think that what was good in theory has in practice been a total mess due to other state meddling in the economy as well as globalisation. We have the ridiculous distortion of the housing market which seems to me to be an argument for retention of some social housing.

The state's biggest problem is that statism is self perpetuating - it becomes so engorged doing things it shouldn't be doing, I suspect often just to build poltiical power bases, that it loses the ability to properly fund and do the things it should do.

 

[southfieldhibby]

I've always thought the 3 thirds option was a reasonable solution for stuff like trains. Unions/Govt/Private sectors working together. Things like health/education/emergency services should be locked into 100% public ownership.

 

[aggie]

I've always thought the 3 thirds option was a reasonable solution for stuff like trains. Unions/Govt/Private sectors working together. Things like health/education/emergency services should be locked into 100% public ownership.

Never heard of that, M, but I'd certainly like to know more.

My own position is that where a service, if privatised, delivers a completely captive, regular, and self-replenishing market to profit/shareholder-driven companies - e.g. no-one can really decide to go without electricity, for example - then they should be completely nationalised (so energy, health, education, etc).

Housing, roads, trains etc is slightly different in they are not 'services' in the same sense, they are more concrete 'things' (does that make sense?); but nonetheless they are essential to any Joe Bloggs looking to go about living a normal life, so I'd like to see some state oversight/involvement - perhaps this 3 thirds option.

 

[egb_hibs]

[MENTION=7996]aggie[/MENTION] - oversight is a key word. That is fundamental part of government. The idea of government as a provider of services is much less obvious to me.

A couple of people have mentioned education - it's not at all clear to me why government should provide schools and universities least of all have a monopoly on them. They're a latecomer to that party, haven't - to put it kindly - demonstrated they do it better, and especially in a monopoly situation are prone to ideological interference.

They should, however absolutely be providing oversight - common standards, inspection etc, and should oversee public funding.

The blurring of oversight aka governance aka the business of governing bodies, with provision, is a bit queer.

 

[HenryLB]

Never heard of that, M, but I'd certainly like to know more.

My own position is that where a service, if privatised, delivers a completely captive, regular, and self-replenishing market to profit/shareholder-driven companies - e.g. no-one can really decide to go without electricity, for example - then they should be completely nationalised (so energy, health, education, etc).

Housing, roads, trains etc is slightly different in they are not 'services' in the same sense, they are more concrete 'things' (does that make sense?); but nonetheless they are essential to any Joe Bloggs looking to go about living a normal life, so I'd like to see some state oversight/involvement - perhaps this 3 thirds option.

I think a large part of this is just the issue of scale and how it affects the possibility of competition. One also can't go without food, but market forces have driven down prices in that arena because producing milk or grain is low cost and can be done practically anywhere with not much expertise.

Generating electricity or building rail or hospital infrastructure is tremendously difficult and expensive, which creates automatic barriers to entry, and thus hits competition. Attempts to create pseudo markets don't seem to have been very successful at circumventing this.

That's not to say certain things are just better kept out of (or in) the market for other reasons - moral or militarily strategic ones, for example.

 

[Davy]

Interesting you pick out housing as something that has worked well with privatisation. I think that what was good in theory has in practice been a total mess due to other state meddling in the economy as well as globalisation. We have the ridiculous distortion of the housing market which seems to me to be an argument for retention of some social housing.
.

Yes we should not have sold off council houses as all the best houses went at a knock down price, and those unfortunate enough to buy slum housing got suckered later in rebuying schemes. But where housing associations are now taking over often derelict housing and rebuilding, or taking on new builds it makes perfect sense. Believe me I see a lot of housing in my job and the private sector are miles ahead. I also live in a housing association flat where the rent is cheaper than council and service way superior.

I in no way include buy to let market, private sector leasing schemed etc, where the council through council tax rebates have to fork out up to £1000 rent for people who are unemployed or on low wages


edit, just to clarify that housing associations are actually classed as social housing....Prospect, Dunedin Canmore, Castle Rock, Port of Leith etc

 

[Doc Shrink]

edit, just to clarify that housing associations are actually classed as social housing....Prospect, Dunedin Canmore, Castle Rock, Port of Leith etc

Good edit.

Housing Associations (Registered Social Landlords) are non profit distributing companies. They 'make profits' in order to develop services and houses but don't hand them out to shareholders. Many are also registered as charitable bodies.

A lot of the 'private sector' in rented housing is in fact horrific!!

:approve:

 

[casey1875]

Personally I think that it would be beneficial to have the railways renationalised. All the TOC's have multi million pound profits yet are still looking to get rid of staff at every possible opportunity. Replacing these staff with agency workers which is no good for anyone really with the uncertainty of this type of employment.

The government already heavily subsidise the TOC's heavily in order for the quiet trains to be kept running. They should be allowed to offset this with the profit of the busier services.

 

[Jack]

I think apart from nationalisation there's an important issue about who runs what in the UK.

Our airports, air traffic control, railways, gas and electricity companies to name but a few are owned and run by foreign companies. Our new nuclear power stations with the fuck up French and human life means fuck all to the Chinese is utter madness but only the tip of the iceberg.

These are core industries.

I don't think I am for mass nationalisation of these core industries but I think the government should have a major stake and be able to dictate how these industries are governed and run for the benefit of the population.

Non critical industries I see room for investors/shareholders to make money but for something like health I see it as morally wrong for some to make profit, nay it's a conflict of interest to profit from other people's suffering.

I think there should be enough not for profit housing associations, as mentioned above where excess monies go back into improvements etc. for everyone that needs one. It breaks my heart hearing all to regularly of crap private landlords - fuck the lot of them! Although there's the other side of the coin where the dafty government gives the rent to irresponsible tenants who piss the money away on drink, converse trainers and big fuck off tellies before they pay their rent!

So aye. There's room for a model that fulfills the needs of the many over the profits for a few.

 

[jadamson2704]

IIRC the profit margin for some train operators is 3%, which is pretty meagre. What bollockses up the system is, as casey1875 states, the ideology that the railway is self funding and self sufficient hasn't worked out. That is due in part to the people in the DfT who set up the franchises.

GNER went bust in 2007 as the parent company couldn't make its premium payments to the DfT (not GNER's fault really), so the franchise was re-tendered to National Express, who promised to pay MORE in premiums than GNER! And they royally fucked it up, hence the East Coast franchise going back to arms-length public operation to stabilise it before it being let out again to Stagecoach/Virgin.

Southeastern (London-Kent) was let on some optimistic passenger loadings and growth projections which didn't happen, so the operator is now in 'revenue support' (ie subsidy for shortfall in projected income) while still raking in lots of money and even profiting by a few million pounds. Clever thinking there.

At the other end of the spectrum, the franchises can also be horribly pessimistic with dire consequences. Northern Rail and Arriva Trains Wales franchises were signed on a zero-growth basis, which was so wide of the mark in reality. I don't have the data to hand, but some routes have recorded percentage points of patronage growth in the teens/twenties in the last fifteen years, with no scope/incentive to source additional trains to ease overcrowding. This is thankfully being rectified in northern England, but Wales will need a lot of time and effort to properly fix.

What also didn't help was the way Railtrack (predecessor of Network Rail, owner of track, points, signals, landlord of all the stations) farmed out all of its engineering knowledge and maintenance to companies like Balfour Beatty, Jarvis, Carillion etc in he late 90s. This was improperly controlled and managed, leading to degradation and neglect of what was an already worn out and underinvested railway. Then we ended up with the Hatfield crash, which caused the bankrupt Railtrack to fall apart and Network Rail take its place, with a not-for-dividend remit. Investment has increased, it is generally a lot safer and better maintained now than it was. The railway has seen some amazing resurgence in recent years, especially in Scotland with the Alloa line, Airdrie-Bathgate, Borders Railway, mass electrification, new trains on the horizon.

Apparently even Maggie Thatcher was loathe to privatise the railways, but didn't do anything to stop it in its infancy in the early 80s.

I think there is something to be said for a mix of private operational endeavour with public ownership/governance. Some rail franchises are let out now basically as management contracts, where the scope of operation is very heavily prescribed, with not much room for innovation/ballsing it up. It is then inherently more stable and hopefully requires less financial support to prop it up.

This model of mixing private enterprise managing public assets could easily have been applied to the traditional heavy industries such as steel, manufacturing, energy. It would be difficult, and need lots of careful oversight, but if managed properly would have been extremely lucrative (IMO).

The one thing that derails that whole ideology is the NHS and PPP. What a clusterfuck that has become. Private companies managing publicly owned essential services for a profit. Private companies building schools and hospitals in contracts that really screw over local authorities to the point of financial ruin in some cases.

Rambling over... Please continue with your well structured debate! ������