After Corbyn goes, the aspiration for public ownership must remain

British Rail trains
Peter Bolton

Following the devastating loss for Jeremy Corbyn’s Labour Party in the 12 December election, the Labour right has already been crowing about how the result ‘proves’ that Corbyn and “the far-left” were “toxic”. As the recriminations gather steam, there will inevitably be calls for the party to drop its commitment to renationalising the UK’s railway and utility companies. Progressives must stand firm in resisting such pressure. The evidence is overwhelming that public ownership is sound policy that enjoys strong public support.

Historical distortion

Historical memory about public ownership has been misshaped by years of propaganda in the mainstream media. Even one article in the nominally progressive Guardian encouraged readers to “forget the nostalgia for British Rail”. But the reality is that privatisation has never been popular.

Even Margaret Thatcher opposed selling off the publicly-owned British Rail. It was left to her successor John Major to do so in 1993. And at the time, the move was widely unpopular both in parliament and among the wider public. Much of the opposition came from within his own party. The Transport Select Committee, which was chaired by Tory MP Robert Adley, fiercely criticised the proposal. A revolt against the bill in the House of Lords was led by former Conservative Party minister Lord Peyton of Yeovil. And even Thatcher’s deputy William Whitelaw opposed the move.

Strong public support

Indeed, there is lingering support for renationalisation amongst conservative commentators. Even the usually hard-right Mail on Sunday columnist Peter Hitchens, for example, consistently expresses his fierce opposition to railway privatisation, as has the Telegraph‘s Andrew Martin.

Their views are hardly unusual. Just a few years after privatisation, 73% of all voters supported renationalising Railtrack, according to a 1999 Guardian/ICM poll. Today, the British public overwhelmingly supports renationalising not just the railways but also the water and energy companies, the bus system, and the Royal Mail. A YouGov poll taken in May 2017 found at least 50% support for nationalisation of all of these sectors. And in spite of the fierce smear campaign against Jeremy Corbyn by the media and the Labour right, this support has actually increased since he became Labour leader in 2015.

Price gouging and obscene CEO salaries

When you look at the facts, it’s not hard to see why. Customers have faced years of price increases from these private companies across the board. For instance, the energy companies British Gas, EOn, Scottish Power and EDF raised their prices twice in 2018. During the same year, energy prices increased by 21% in just five months.

The reason for this price gouging is simple. The current privatised system creates a huge overhead from profiteering by greedy corporate managers and shareholders. To take just one example, in the very same year that these increases took place, the CEO of Centrica, the parent company of British Gas, received a 44% pay boost. This increased his already obscene 2017 pay package of £1.7m up to £2.4m thanks to not one, but two, bonus payments worth £388,000 each.

Parasitic shareholders abusing natural monopolies

As for the shareholders, their profiteering is just as obscene. Utility companies pay unusually high dividends to their shareholders – creating a further overhead that gets passed on to consumers in the form of high prices. In fact, the stocks of the aforementioned Centrica paid the highest dividends of any FTSE company in the UK in 2018.

These high dividends result from the fact these companies are natural monopolies. As a result, utility bills have very low price elasticity – i.e. prices can go up with little effect on demand. This means that private utility companies can keep rising prices again and again without consequence.

Misperceptions and scare-mongering

As a result of these entrenched capitalist interests within the privatised system, a campaign of misinformation has arisen to provide bogus justification for the maintenance of the status quo. For example, there is ample fear-mongering about how pension funds are invested in the shares of these privatised companies. However, the reality is that pension funds own only 5% of the water and energy company stocks.

Present-day Conservative Party politicians and their cheerleaders in the right-wing tabloids love to pontificate about how British Rail ‘ran at a loss’ and was somehow ‘inefficient’. What they fail to mention is that the current system operates under considerable debt. As a result, a large proportion of spending within the railway industry is on interest payments for this debt. In some years, more has been spent on interest payments than track maintenance.

Natural monopolies and government subsidies

With respect to the purported inefficiencies of public ownership, they have this exactly the wrong way around. The reality is that natural monopolies tend to function better in the public sector whereas privatisation breeds inefficiency.

As a result of the above, the British government has had to subsidise the railway industry with about £5bn of taxpayer money every year. So in a cruel irony, the government has to prop up the system with public money without having any meaningful control over its operation. Worse still, it means that the taxpayer is subsidising parasitic shareholder profiteering.

Setting the record straight on British Rail

To be sure, there were problems with British Rail. But they resulted not from any inherent failure of public ownership, but from years of underfunding by successive Conservative governments. This was done as part of the classic neoliberal three-card trick described by US author Thomas Frank in his book The Wrecking Crew. Frank explains how right-wing governments underfund public services deliberately in order to make them fail and then present this failure as ‘proof’ of the need to privatise them.

And even if publicly-owned rail did, by its nature, have to be run at a loss, one has to consider whether this is really a problem. As US-born travel writer Bill Bryson put it:

the grounds that it doesn’t pay its way… is the most mad and preposterous line of argument imaginable. We’ve been hearing this warped reasoning for so long about so many things that it has become received wisdom, but when you think about it for even a nanosecond it is perfectly obvious that most worthwhile things don’t begin to pay for themselves. If you followed this absurd logic for any distance at all, you would have to get rid of traffic lights, lay-bys, schools, drains, national parks, museums, universities, old people and much else besides. So why should something as useful as a railway line… have to demonstrate even the tiniest measure of economic viability to ensure its continued existence?

Cross-country comparison

A final thing to consider is the experience of other European countries. Though some have regrettably introduced a degree of privatisation (with similarly negative consequences), they have generally resisted going as far down the rabbit hole as the UK. As a result, they consistently offer passengers much lower fares when compared with the UK.

But one does not even need to look outside the UK’s own borders to see the success of public ownership. Scotland and the north of Ireland both successfully operate their water systems under public ownership, while Wales operates on a not-for-profit basis. The private water companies in England, on the other hand, have been embroiled in a series of controversies including multi-million-pound fines for sewage leaks into their water supply.

Staying on message in the post-Corbyn era

The Labour membership needs to keep public ownership at the heart of the party’s project. As Corbyn steps down from the leadership, Blairites will no doubt attempt to move the party back to the dark days of neoliberalism-lite. Both they and their Tory ideological brethren need to be called out on their nonsense. For they are exactly the kind of people Oscar Wilde had in mind when he spoke of those who know “the price of everything, and the value of nothing”.

Featured image via Flickr – Jeremy Segrott

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  • Show Comments
    1. The intellectual and moral core of Corbyn’s message was a set of truisms: society should be organised around the well-being of everyone, but we have distressed groups and their needs must be urgently addressed. No one disagrees. Johnson could not have said publicly: “I don’t care if 4 million children are in poverty, people work 40 hours a week and can’t pay the rent, dementia sufferers are being looked after by old relatives who can’t cope, thousands are sleeping rough etc. The intellectual and moral core of Johnson’s message was a set of lies: society should be organised around the free market and the provision of opportunity, but if opportunity doesn’t come your way or you are unable to take advantage, too bad. Of course, he had to promise money for the NHS, police officers, nurses, to counter Corbyn’s policies. But the essence of Toryism is a denial of truisms everyone accepts. Because they accept them, given they are true, there has to be a supervening distortion to justify fling in the face of them: ie people are to blame for their own poverty (including children one assumes), opportunity is enough, we work hard for our money, why should we be taxed to provide for the lazy and feckless etc. This is how our politics always works. No one can deny that society should be organised to provide well-being for all, nor that the right thing to do when people are in distress is to offer help – but people can escape from the political consequences of these truisms by importing a set of ostensible meta-truisms which in fact are lies. No Tory would dare say publicly that if children are living in poverty, too bad, it’s their own fault. Yet they said not a word about child poverty during the election, which is tantamount to the same thing. That’s why the precise words used to counter Tory propaganda are so crucial. You have to find a way to get behind the distortions and excuses by which people conceal from themselves what they know is true. A picture of Johnson with the words “Child poverty doesn’t matter” is the kind of thing you need. Johnson would have been forced to respond and then he would be skating on thin, melting ice.

    2. So now we have to take time to reflect.
      We should start with principles. Principle are important, because without principles how can we decide what we want to achieve and why?
      We then need to apply our principles to our models of how the world works to derive actual policies. That means our models of the world had better be reasonably accurate, or our policies, when implemented, won’t create results matching our principles.
      So, as well as principles defining how and why we want to change the world, we had better understand it first too.
      The below is an attempt to do this. It starts by deriving some moral principles, based on some fairly minimal assumptions about the nature of reality, especially what’s called the mind-body problem. Then, as political philosophy should be applied moral philosophy, it derives some political principles from those moral principles.

      https://gezwinstanley.wordpress.com/questions-and-some-answers-how-to-live-with-yourself-and-others/

      In the second link, given that all interactions with other people should be consistent with those moral principles, it attempts to derive a “moral economics”, including the appropriate role for economic democracy, planning and markets, drawing upon an understanding of how societies seem to work in practice.

      https://gezwinstanley.wordpress.com/what-is-economic-justice-and-how-can-we-create-it/

      Perhaps not for the faint-hearted, but may be a potentially useful starting point for anyone who feels like doing some fundamental and serious reflection over Christmas.

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