ICSM Business News: OPINION - whether you agreed with Margaret Thatcher’s privatisation programme or not there are many questions about the successor companies

By Harry Mottram: You only have to list the number of energy companies that have gone bust in recent years to know something is amiss with the sector. Back in the early 1980s there were publicly owned regional boards for electricity and for gas along with showrooms in many towns and cities where you could speak to a human being about your bill or to buy a new cooker of fridge. By 1989 these had all been sold off to a variety of companies before being sold on again and again. Since then, more than 50 private energy firms have gone bust with the core of the ‘big six’ ( British Gas, EDF Energy, E.ON, npower, ScottishPower and SSE) scooping up their customers' so nobody goes without power. When each one went bust they left staff without a job and a list of suppliers without payment while it is the public purse that picks up the pieces and redirects their customers to a larger outfit with no choice in the matter.

Moving to water and we have all witnessed the drawn-out death throes of Thames Water with its £20billion debt mountain and history of dumping sewage in its rivers and the sea. South West Water also has a poor record with pollution and high water bills while South East Water, Southern Water, Yorkshire Water, SES Water and Portsmouth Water have all seen a series of red warning lights flashing over finances and resilience – concerns over the future supply of water due to a lack of investment. Despite these issues the owners – of which some are foreign pension funds, private equity groups and foriegn Governments – pay themselves millions in dividends, bonus and salaries. This is not good business for British companies.

Tory Prime Minister John Major was warned that privatising British Rail would be ‘the poll tax on rails’ and so it has turned out to be. Slowly in the last couple of years the Government has been taking back the rail firms into public control to make them more efficient and cheaper for the public. Notoriously the so-called private rail companies rely on public money to operate while some are owned ironically by foreign railway companies. Privatisation has seen a decline in services and a hike in prices – that’s shown in widely reported statistics since John Major’s plan to privatise the network. A midweek midday train from London to Edinburgh this autumn is around £80 while a flight from London to Edinburgh is around half that. Those with long memories will recall that Government owned British Rail was not a beacon of efficiency but if properly run like the state-owned Swiss railways it has to be better and cheaper than the fragmented private set up.

There are so many examples of poor results and scandals in the world of the privatised companies from buses to the Post Office and from the Ordnance Survey to the Probation Service that it is no surprise there has been a sea-change in political thinking. That doesn’t have to be nationalisation with all the baggage that comes with it – but having the British taxpayer in charge is essential. And there are various models from not-for-profit, state owned enterprises, municipally owned companies, co-operatives, mutual societies or firms with a controlling stake by the Government or local authority to prevent the sale of assets. How things pan out in the next few years we must wait and see – but where profits go to private shareholders and companies abroad it means those millions do not go into British jobs, contracts for local firms and they stop new infrastructure and investment benefitting the UK’s economy. The alternative is to keep paying over the odds, to see little or no investment and a decline in services - and for those successor companies continuing to leave a trail of debts with suppliers and contractors - and the tax payer picking up the bill.

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