In his book Private Island (Verso 2015), James Meek dissects the impact of privatisation sector by sector. Some 40 years down the line, the result of this privatisation is that the vast majority of us, either as users of these services or as those employed to deliver them, are now worse off. Collectively we have seen the transfer of the nation’s infrastructure from our control and ownership, to private investors and foreign governments.
We all need access to universal basic services such as education, energy, healthcare, housing, telecommunications, transport and water. Forty years ago, most of these services were provided by companies owned by national or local authorities and accountable to ministers. Since then, the neo-liberal agenda adopted by successive Conservative and Labour governments has seen these companies move into private ownership, or private companies become more directly involved in the delivery of these services.
Privatisation and the people
Meek describes how privatisation was trumpeted as giving people more choice with competition driving down prices. But there is little or no choice when a business has a monopoly or is part of an oligopoly; they are free to exploit consumers, and they have done. When the national grid needed to re-engineer part of its network, Powergen found itself with two power stations that had become indispensable to the re-engineering work, so they increased the price to the consumer and took millions in extra profit (p. 130).
The progressive commercialisation of the NHS led to patient deaths as the culture focused on business needs, not patients’. In Stafford hospital between 2005 and 2009, it was found that hospital patients died neither cared for nor cared about (p. 180).
With councils banned from using the proceeds of the ‘right to buy’ to build new houses, fewer new homes were built, pushing house prices to levels where few can now afford them, leaving many with the insecurity of the private rental market.
The botched upgrade of the West Coast Main Line caused years of disruption for rail users in the North. The Hatfield disaster caused four deaths due to a lack of maintenance by Network Rail (p. 77) and more recently, Network Rail was again at fault with the death of three people at Stonehaven.
Privatisation and the workers
The privatised companies were keen to shed their well-paid, highly skilled staff, says Meek. Railtrack dismissed the core of its in-house expertise, and put the design work for the upgrade of the West Coast Main Line out to tender. A solution based on unproven technology was chosen, delays and billions of extra cost were incurred as engineers were called in from the US to complete the project (p. 56).
A reliable but badly run electricity system was destroyed rather than reformed (p. 151). The country no longer has the capability to design large scale nuclear power plants, and we are now relying on the unproven French EPR technology to provide a new generation of nuclear power.
A study showed that if councils had been allowed to continue maintaining the housing stock, more than £1bn, could have been saved (p. 215). Good jobs with good pensions have been progressively replaced with casual labour (p. 26). Job and housing insecurity has a growing problem for many.
Britain’s new owners
In 2007 the flooding in Gloucestershire resulted in a widespread failure of the water supply. Bottled water had to be provided and distributed across the county because management at the newly privatised Severn Trent Water Authority had failed to realise the risk of flooding to its Victorian infrastructure. After the flood profits went down, but dividend payments went up! Customers unable to take their business elsewhere had to continue using them (p. 108). Throughout the water industry, new owners replaced equity with debt, and cash flowed out as dividends and interest payments.
Investing in our public services where the law favours the owners above the consumer has encouraged investment from states like France and China, and major pension and equity funds. Depending where you live, using electricity funds the Chinese Communist Party and using water helps pay pensions in Canada and Australia.
Whilst housing associations that flourished under the Blair and Brown governments were not allowed to make a profit or pay dividends, they borrowed heavily from the banks. As a result, the banks are now heavily dependent on interest paid for these loans, and are clearly profiting from higher property prices.
As Meek describes, successive governments have failed to fund our public services, choosing instead to run them down and sell them off so that others could profit from them. Some of the lies fed to the people and propagated by the media include (p. 253-255):
- Privately owned companies are structurally more efficient than public ones
- Privatised (networked) services compete in a free market
- Shrinking the State means lower taxes
- Privatised (networked) services are affordable to everyone
- Privatisation benefits British companies trying to compete abroad
We were told that ‘borrowing limits’ meant that we couldn’t invest in the services we need. But as we have seen, the government can borrow money to fight wars, support the banks, and manage a crisis such as a pandemic.
By opening up opportunities for investors to profit from public services, members of government, and their advisors have also benefited from highly paid jobs with salaries much greater than what they would have received as public servants.
We’ve been robbed and they keep coming back for more!
As I reached the end of the book I felt a deep sense of sadness. It was as if we have all been drugged and robbed, handing over things without realising what we are doing. The opiate of the nation was television and along with the press people were urged to “Tell Sid” to buy shares in something he already owned. The result is that we no longer have what our children should have inherited.
The final pages though contained some hope, as the author shared some thoughts on what needs to be done to help turn this around. Top of the list is that the fees we pay for essential services are in effect taxes and should be considered by analysts as part of the overall tax burden (p. 255). Earlier the author had put it (p. 150) as:
“What is being privatised was taxation. Effectively the French, and Chinese governments have bought the right to tax British electricity consumers through their bills”
However, today we are where we are. Successive governments have failed to invest in services such as public health and medical care. They gave responsibility for our energy security to companies owned by foreign governments. We are currently being fleeced by corporations profiteering from the pandemic and escalating energy costs. The press and broadcasters do not attribute any responsibility for this to themselves, or the advocates of the neo-liberal doctrine that they support. As a nation we appear to be collectively suffering from a sort of Stockholm syndrome, as we keep listening to the same people encouraging us to elect the same politicians to parliament who just keep on abusing us.
Read this excellent book and cry in despair.