UK for sale

[MikeG]

........
Don't even get me started on UK rail privatisation. To me it looks like a committee of very smart people sat down and tried to decide what model would be most unwieldy, most expensive for hte government, least good for strategic rail planning and worst value for the consumer - and gone with that one.

Remember when it was done? Right at the end of a conservative government term when they knew they were almost certain to lose the forthcoming election. The reason it was done the way it was, in my view, was to make it impossible to undo. Busting it up into a multitude of parts with a mind-boggling splitting of assets and responsibilities was simply a device to make sure that Labour couldn't easily renationalise. From that perspective, the privatisation was a brilliant success. From the perspective of those wanting a coherent transport policy, including affordable ticket prices........hmmmmmmm, maybe not quite so brilliant.

 

[The Don]

Remember when it was done? Right at the end of a conservative government term when they knew they were almost certain to lose the forthcoming election. The reason it was done the way it was, in my view, was to make it impossible to undo. Busting it up into a multitude of parts with a mind-boggling splitting of assets and responsibilities was simply a device to make sure that Labour couldn't easily renationalise. From that perspective, the privatisation was a brilliant success. From the perspective of those wanting a coherent transport policy, including affordable ticket prices........hmmmmmmm, maybe not quite so brilliant.

Even using that narrow definition of success they still messed it up. Components are now back under government control (railtrack and the East Coast Mainline spring to mind).

Even with the bizarre structures they implemented they could still have done a much better job. For example, the franchise lengths they chose seemed almost exactly in the "sweet" spot between being short enough to provide motivation to improve customer service and long enough to be able to make strategic investment choices. So we have a situation where the franchises are long enough for the incumbent to become properly complacent without being long enough to make significant investment worthwhile without significant government subsidy.

 

[MikeG]

Even using that narrow definition of success they still messed it up. Components are now back under government control (railtrack and the East Coast Mainline spring to mind).........

Come come, The Don. Do keep up. This is now Network Rail.

 

[The Don]

Come come, The Don. Do keep up. This is now Network Rail.

Damn, damn, damn I was trying so hard to get right - more coffee required methinks

 

[funk de fino]

Yes, I did. I relied on them. I spent thousands of hours on the trains in those days. They were truly awful.........although there were lots of porters available at the stations.

Yet, it was affordable. Not now.

 

[Craig B]

Yet, it was affordable. Not now.

From Glasgow to Carlisle (165 km) £27. Similar distance in Italy (170 km) €9,50 = £7.56.

 

[The Don]

Yet, it was affordable. Not now.

You're right, both for rail users and rail non-users.

Compared to the halcyon pre-privatisation days both fares and subsidies are up in both absolute and real terms (though a recent well above inflation fare rises have reduced subsidy from its peak levels).

 

[The Don]

IMO a government owned asset should only be considered for privatisation if....

• It's not important to the country's strategic interests. This could be used to justify keeping some parts of the defence industry within government control for example.
• It doesn't form part of the country's core infrastructure (thought this means I would have wrongly excluded BT from privatisation)
• It isn't in a monopoly position
• It is sold for a fair value

I'm less worried about ensuring that jobs are retained - some industries need modernising or are simply not viable at their current size. I'd even be prepared to offer "hot housing" on globally important industries like renewable energy with the government perhaps retaining a significant minority shareholding in perpetuity to ensure that the company isn't merely asset-stripped.

 

[MikeG]

I would agree with most of that, The Don, but my emphasis would be a little different. I would start with the premise that the government should only own anything if:

• it was of strategic national importance (and exclude money-making as a thing of national importance)
• its role couldn't be performed at least as well by private companies within a regulated framework
• it was a monopoly (one which couldn't be broken up)
• its ownership would be useful to our enemies

Those are all ors, not ands.

Sell the rest, for the best price you can get.

 

[ddt]

• it was of strategic national importance (and exclude money-making as a thing of national importance)
• its role couldn't be performed at least as well by private companies within a regulated framework
• it was a monopoly (one which couldn't be broken up)
• its ownership would be useful to our enemies

Those are all ors, not ands.

You basically just applied De Morgan's rule.

(with the exception that you left the "sell for fair value" out).

 

[MCel58]

I would agree with most of that, The Don, but my emphasis would be a little different. I would start with the premise that the government should only own anything if:

• it was of strategic national importance (and exclude money-making as a thing of national importance)
• its role couldn't be performed at least as well by private companies within a regulated framework
• it was a monopoly (one which couldn't be broken up)
• its ownership would be useful to our enemies

Those are all ors, not ands.

Sell the rest, for the best price you can get.

So on that basis we should place on auction tomorrow ever piece of art in every museum in the country and get the best price for our Monets, Dalis, Picassos etc, plus any R&D that can raise capital plus all the IPR owned in terms of trademarks, patents etc by any part of Government including all the books in the libraries or any copyrighted works in the archives. The sell it all is a very short sighted approach and sees everything in terms of cost instead of the value it adds to a citizen's life.
Of course on this basis we would not have privatised British Rail or Royal Mail or most of the transport system.

 

[PhantomWolf]

I look at it this way. If a Government owns a profitable business, then that profit is being used to pay for things that they'd have to tax us more for if they didn't have that business. Thus the more profitable businesses a Government owns the better as it means less and less tax for us to pay.

 

[MikeG]

So on that basis we should place on auction tomorrow ever piece of art in every museum in the country and get the best price for our Monets, Dalis, Picassos etc, plus any R&D that can raise capital plus all the IPR owned in terms of trademarks, patents etc by any part of Government including all the books in the libraries or any copyrighted works in the archives.

I was talking about businesses and services, MiaC, not possessions such as art, patents, trademarks, archives, books etc.. Maybe my list wasn't well enough written or explicit enough. I would argue that my second point covers all those: the role of housing the nation's treasures, IPR, etc, couldn't be performed as well by the private sector.

The sell it all is a very short sighted approach and sees everything in terms of cost instead of the value it adds to a citizen's life.
.......

What's that got to do with it, if the service or whatever remains just as it was? The value added to a citizen's life doesn't have to change with a change of ownership.

I don't care if my passport comes from a private company, or my cataracts are removed by a private clinic paid for by the NHS.......so long as the service is either the same or better than what went before. Remember the fuss when council services had to go out to compulsory competitive tendering? Ooooh, the bins will never be properly emptied, the grass in the park will be knee deep. Remember? The world didn't end, did it. The jobs are done efficiently. The instinct to hold on to so much stuff done by government as if they are the only people who could possibly do it is so British, and so short-sighted.

 

[MikeG]

I look at it this way. If a Government owns a profitable business, then that profit is being used to pay for things that they'd have to tax us more for if they didn't have that business. Thus the more profitable businesses a Government owns the better as it means less and less tax for us to pay.

And when the business isn't profitable?

 

[luchog]

"Other state-owned assets being lined up for sale include the legacy Royal Mail pension assets, the uranium enrichment company Urenco, the income-contingent student loan book and further public sector wireless communication spectrum."

Any idea of when the BBC might be available for purchase? It's about time the US upgraded its crappy, out of date, defective entertainment system. It just keeps playing the same garbage over and over.

 

[Craig B]

And when the business isn't profitable?

Yes, you're right. There are things markets are better at. But other things no.

When the business isn't profitable they go bankrupt indeed. However if the army doesn't make a profit, it should be liquidated? Sorry Russkies, we can't fight you; our defence forces have gone bankrupt.

 

[PhantomWolf]

And when the business isn't profitable?

Depends on the business.

If it is a strategic asset, or infrastructure, then we take the loss, though I am all for restructuring them to try and make them at least break even.

Some things shouldn't be making profits or breaking even though, the military, emergency workers such as the police, the health system, these things are required at the worst times in people's lives, they shouldn't be expected to pull out the credit card to use them. As a society we should be willing to pool our resources together and make sure that these things are provided for those in need of them.

Other assets such as ports, airports, rail can charge users and thus make a profit happily, but if they aren't, then that doesn't mean that they should be sold because they are of strategic importance to the country. (And after Private business has run them into the ground and asset stripped them you have to spend billions recovering and fixing them back up, a lesson apparently not learned by our Government who sold and had had to buy back the rail system and fix it back up not once, but twice.)

I do agree that a Government shouldn't run a business, but I have no issues with them being the Shareholders and collecting the dividends from one.

 

[ddt]

However if the army doesn't make a profit, it should be liquidated? Sorry Russkies, we can't fight you; our defence forces have gone bankrupt.

In the 70s, Dutch comedian Paul van Vliet had a sketch "Majoor Kees". As one of the democratization measures, he introduced the four-days fighting week. And he had notified the enemy there would be no point in invading the country between Thursday 5PM and Monday 9AM as there would be no substantial resistance.

More seriously: Blackwater, and other private military companies. Even in a core government operation like the military, there is outsourcing.

 

[PhantomWolf]

In the 70s, Dutch comedian Paul van Vliet had a sketch "Majoor Kees". As one of the democratization measures, he introduced the four-days fighting week. And he had notified the enemy there would be no point in invading the country between Thursday 5PM and Monday 9AM as there would be no substantial resistance.

More seriously: Blackwater, and other private military companies. Even in a core government operation like the military, there is outsourcing.

And look at the mess Blackwater caused in Iraq.....

 

[Craig B]

At the beginning of the twentieth century, before the advent of Labour governments, Glasgow city council owned the city tramways and electric subway, as well as the city's electricity supply and telephone network, and main gasworks. It owned the water supply too. It was not alone in this. The concept of collective control of infrastructure is neither new nor necessarily socialist.

This is from the wiki biography of one of the provosts (equivalent to mayors) of Glasgow at that time.

Born in Glasgow in 1851, (Daniel Macaulay) Stevenson made his fortune in the shipbroking and coal exportation industries before being elected to the City Council as a Liberal in 1882. Whilst on the Council, he was responsible for the Sunday-opening of the City's museums and galleries in 1898, the establishment of free branch libraries in 1899 and the introduction of a municipal telephone service in 1900.

For this, see http://www.britishtelephones.com/histuk.htm, entry for 1899

He was elected Lord Provost of Glasgow from 1911 until 1914, at which point he was awarded an honorary LL.D. by the University of Glasgow, and was created a Baronet.

http://en.m.wikipedia.org/wiki/Sir_Daniel_Macaulay_Stevenson,_1st_Baronet
So, not really a foaming Red.