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This is not a blog which expresses instant opinions on current events. It rather uses incidents, books (old and new), links and papers as jumping-off points for some reflections about our social endeavours.
So old posts are as good as new! And lots of useful links!

Monday, October 28, 2013

A case-study in political stupidity and ideology

Southern England is in the grip of strong winds and floods - and an excellent article in The Guardian reminds us of the ideological imbecility which has gripped the political class in that unfortunate country - 
Trains are being cancelled en masse while would-be travellers are instructed to follow news from that array of corporate names which still feel like some alien imposition on national life: First TransPennine, CrossCountry, First Capital Connect, c2c. Even the most efficient set-up can probably not do much about "localised flooding, fallen trees and debris on the tracks". But still: as rail travel is disrupted, thousands of people will once again seethe with fury at the operating companies' shortcomings, whether unfairly or not. Public anger, moreover, will also reflect a firmly embedded belief: that the approach of politicians to the railways is lily-livered at best; and at worst, completely barmy.
If you want a good example of the latter, consider the fate of the east coast mainline, which runs between London, the north-east and Scotland. In 2006 GNER lost its contract to run trains along the route when its Bermuda-registered parent company filed for bankruptcy. The franchise then went to National Express, which soon defaulted on its payments. So the then-Labour government created a not-for-profit public operator called Directly Operated Railways, which has run the service for the last four years with much success.Since 2009, DOR has paid £602m into public funds: over £200m more than National Express did, and £209m more than Virgin Rail – the franchise-holder for the west coast mainline – has managed during the same period. Its public subsidy is comparatively minimal – seven times less than that paid last year to Virgin. Its record on safety improvementsis jaw-dropping: "major customer accidents" are down 81% since 2009. And customer satisfaction and punctuality are at unprecedented highs.Now, of course, the government wants to re-privatise it – which is where things get truly absurd. Among the top bidders for the franchise is a consortium split between Eurostar and Keolis, both majority-owned by the French state firm SNCF. As well as Virgin, another probable contender will be Arriva, the British train company wholly owned by Deutsche Bahn, which is in turn wholly owned by the German government. As is increasingly the case across a whole range of national infrastructure – from power stations to water suppliers, via airports and bus companies – supposed free-marketeers are gleefully happy about state ownership of British assets, as long as it's somebody else's state that's doing it. In the case of the railways, moreover, you end up with the inevitable consequence of profits being skimmed off and invested in trains and tracks overseas.This is another of the insanities at the core of an economic model that George Osborne in particular wants to develop. Labour argues that the east coast mainline should stay in public hands and that DOR should be allowed to bid for other train franchises, following the same revenue-generating model as publicly owned firms from Germany, France and the Netherlands.But is that really enough? The Greens' Caroline Lucas, a rare voice of sanity, recently tabled a private member's bill outlining a simple alternative: that over time, as rail franchises expire, they should be restored to public ownership – which would cost peanuts, repatriate a fair bit of money, and commence the abolition of all the complex and costly stupidities that privatisation produced. This would at least slow those outrageous ticket price rises. And just imagine: we would also get the kind of integrated railway system to which politicians could finally apply some joined-up thinking.
And the economics correspondent of the same newspaper actually had the courage to argue that basic utilities should be returned to the public sector.
Four of the "big six" cartel, which controls 98% of electricity supply, have now increased prices by over 9% – blaming green levies and global costs – while wholesale prices have risen 1.7% in the past year and profit per "customer" has doubled.
Thousands of old people will certainly die this winter as a result of the corporate stitch-up that is called a regulated market – designed in large part by the same John Major who last week called for the introduction of a windfall tax on energy profits.
Meanwhile, David Cameron's coalition has signed a private finance initiative-style deal with one of the cartel, EDF, and two Chinese companies – all three state-owned, but by other states – to build a new nuclear reactor which will guarantee electricity prices at almost double their current level for the next 35 years.
As if all that wasn't grotesque enough, most of profitable Royal Mail has now been privatised by the supposedly dissident Vince Cable. The current loss to the "taxpayer" from selling shares below their market value is upwards of £1.3bn – more than the government's entire planned savings from benefit cuts in 2013-14. And its biggest shareholder is now the hedge fund TCI.
Within days, the Co-operative Bank had also fallen prey to US hedge funds, as Conservative ministers put out to tender the country's most successful rail service, the publicly owned east coast mainline. Never mind its reliability, value-for-money, popularity and the £208m dividend payment to the public purse. Privatisation dogma is undisturbed by evidence.
But then privatised water companies are planning to increase prices by 40% by 2020; Simon Stevens, an executive for the US private health firm UnitedHealth, now bidding for NHS contracts, has been put in charge of the NHS in England; and the security firms, G4S and Serco, are allowed to bid for a share of the probation service despite fraud investigations into existing deals.
It should be obvious that powerful interests are driving what is by any objective measure a failed 30-year experiment – but which transfers income and wealth from workforce, public and state to the corporate sector. In the case of privatised utilities, that is the extraction of shareholder value on a vast scale from a captive public.
What's needed from utilities are security of supply, operation in the public interest, long-term planning and cost effectiveness without profiteering. The existing privatised utilities have failed on all counts.
The case for public ownership of basic utilities and services – including electricity, gas, water and communications infrastructure – is overwhelming. It's also supported by a large majority of the country's voters. But it's taboo in the political mainstream.

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