When is renationalising OK? When the current Conservative government do it.
Last week the probation service was brought back into public ownership. The running of the service in England and Wales had been part-privatised just five years ago by the then-Justice Secretary Chris ‘impossible to fire, regardless of my failings’ Grayling. He was warned back then that it was a bad idea.
Announcing the significant reversal his most recent successor David Gauke said: “The system isn’t working.” The ill-conceived project will cost taxpayers around £500m. That’s essentially £2m of public money torched a week. Every week.
It’s not the first time something that had been publicly-owned but went private needed bailed out by the public. Last June, the East Coast Main Line train service failed and was taken under government control – for a third time. The Transport Secretary was sanguine about it. He said operators Stagecoach and Virgin Trains had failed because they “got their bid wrong”, like they were school children making a silly mistake in their GCSE maths mocks. The Transport Secretary overseeing the tender process and the subsequent renationalisation was Chris ‘yes, it’s me again, a Zelig of institutional failure’ Grayling.
But when is renationalising not OK? When the Labour opposition propose it.
There is an ongoing debate about the intentions of Jeremy Corbyn and John McDonnell to bring a host of utilities and big banner services back to the government. This is, of course, because of the insistence that Corbyn is Stalin in an ill-fitting suit, keen to wreck total havoc on the nation and seize lands and private property in a wholesale civic putsch.
The fear is that his renationalisation plan will mandate buying back private companies, not at what they are valued at now, but at what they were initially sold for. And this would leave thousands of small investors financially destroyed and pension schemes tattered.
There is an ongoing debate about the intentions of Jeremy Corbyn and John McDonnell to bring a host of utilities and big banner services back to the government,
The picture is, of course, much more complex than that. Look at water companies. The British public are broadly behind public ownership of water. A YouGov poll ahead of the last general election found 59 per cent in favour of it. Take Thames Water, the UK’s biggest water company with some 15m customers. Amongst its biggest owners are the Kuwait Investment Authority and the Abu Dhabi Investment Authority. These profits are not remaining in Britain to boost small-time investors.
And the other irony is that other nations are good at state ownership. Look at France. EDF is one of the biggest energy providers in the UK. It is owned by the French government.
None of this is to wave a flag for major Corbynomic renationalisation. Rather, to consider alternatives. There is much to be said for looking for a social enterprise solution to some parts of public ownership. That way investment could be protected without profit chasing at any cost. It means things necessary for all our daily lives could be future-proofed in inventive ways.
And better to get on it now before any more Graylings.