Britain has spent the last few decades running a national experiment. We have taken essential infrastructure that behaves like a monopoly, we put it in private hands, and we hope competition somehow emerges. I can’t blame the utilities executives. They got lucky and landed the utilities in the 80s, like some awful game of Monopoly we still pay for. No risk and all reward, what a deal!
The results are familiar to anyone who has navigated unreliable rail services or warned their children of the dangers of swimming in the sea that was safe in their childhood. When a market is a natural monopoly, public ownership is not a nostalgic slogan, it is the prudent way to align economic incentives with the public interest.
That’s why returning railways, energy and water to public ownership is overdue. Where there is no market, there is no way for consumers to vote with their feet on the service and when the company is private, there is no way to vote electorally. The current way in which these essential services is run is not just economically inefficient, but anti-democratic.
Water, energy and rail are also the arteries of our economy. Every household depends on them; every business depends on them. These sectors are some of the most crucial to any plan to get Britain growing again. Yet under fragmented private models, we see historic underinvestment in our infrastructure, which the public pays for through higher bills. When all the profit is extracted, when it all goes wrong, it’s state rescue anyway. If the taxpayer is the insurer of last resort, we should own the asset.
Sceptics may claim that public ownership means complacency, inefficiency, certainly these are the charges levied against the old state enterprises. The irony is, where the government’s had to pick up the pieces post rail franchise failure, we’ve typically seen better outcomes.
It’s time we taxpayers stopped being taken for mugs and time the government stopped giving handouts to shareholders. At any rate, if Starmer runs the trains into the ground we can at least vote him out, and it’d be quite entertaining to witness any attempt to U-turn on a train line.
* Oscar Renton is a member of the Liberal Democrats and Young Liberals.
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Fully agree, but I don’t believe our leadership would support something that could be portrayed as socialist. Most of our MPs were elected in Tory areas and will want to hang on to Tory voters who decided to vote Liberal Democrat in 2024.
I fully agree with this sentiment, and you are by no means the first Liberal to consider it. Our 1945 Manifesto had this to say on the issue; “Liberals believe that the controversy for and against nationalisation is out of date … where public ownership is more economic, Liberals will demand it without hesitation … their tests for deciding which form is necessary are the service of the public, the efficiency of production and the well-being of those concerned in the industry in question.” A commitment to workplace democracy and co-operative worker ownership would help to further reduce the creeping centralisation that came with some of the old national industries if we were to ever adopt this as a policy.
Personally I think most of the public doesn’t much care whether utilities are in private ownership or public ownership or something in between. What matters is that they work, that prices paid (whether through taxes or otherwise) are fair value and that they are well maintained, new capacity is added where necessary in a timely manner, and that they deliver what individuals and business need.
That said, the route to go with water is (as has been done with rail) is to force the failing providers (like Thames) into bankruptcy by enforcing the “no dumping of sewerage” rules and then transfer the assets to public benefit companies envisaged by party policy. That is a market based solution – failing companies go to the wall!
Here’s Charlie Maynard (our MP for Witney – Camron’s old seat) campaigning for exactly that, so I think you are being a bit unfair on our MPs here: https://www.charliemaynard.co.uk/thames-water-special-administration
https://www.libdems.org.uk/press/release/lib-dem-mp-to-take-thames-water-to-the-supreme-court
The wider picture is the current dominant transatlantic version of turbo-capitalism which pretends there is no alternative. This provides cover for those who make a killing out of the utility monopolies. There are various models of capitalism around the world – likewise various models of state owned public service companies, not least in Europe. Part of our role as an internationalist party should be helping our country open its eyes to better ways of doing things.
Nowt new here. A bit of history to reflect on :
Proud to say in 1882, in my native town of Huddersfield, the Liberal controlled Corporation became the first municipality in Britain to operate its own tramway system. It received special parliamentary permission because no private company was willing to lease the lines due to the town’s steep gradients.
Later, the Light Railways Act 1896 and some later acts eventually removed the prohibition, allowing local authorities to both construct and operate their own systems. Municipal ownership and operation became the norm in the late 19th and early 20th centuries. For instance, the London County Council (LCC) began taking control of horse tramways in 1896 and became the country’s largest operator by 1910.
Incidentally, in the First World War, many of the new Kitchener Pals battalions were made up entirely of a city’s transport department (e.g. in Glasgow… which suffered terribly on the first day of the Somme). Geoff Reid might be interested to know that many of the Bradford Pals were employed in the transport department.
I agree with the main premise of this article, that where there is a natural monopoly and no opportunity for meaningful competition, then we need to be careful about private ownership and it might be that public ownership is better. But I think some of the details are questionable.
Is rail a monopoly? Iffy in most of the country: Outside London and a few big cities, rail has to compete with cars – and rail is actually quite a small player in the travel market: The vast majority of long journeys are made by car.
As for water: Underinvestment on old Victorian systems was a problem even before it was privatised. In fact, the Government not wanting to spend money on essential investment was one of the reasons for privatising it in the first place! Environmental regulations and monitoring of waste etc. have become massively stricter since privatisation, which makes it hard to definitively say whether the record of privatised companies is actually any worse than the previous nationalised utilities. And Scottish Water, which is nationalised, doesn’t exactly present a glowing example of good practice.
Underinvestment on old Victorian systems was a problem even before it was privatised
In fact in general underinvestment is a bit problem in any nationalised industry, because if an industry is nationalised then it has to compete for funding directly with big political departments like health, defence and education. If a government has to choose between paying off striking doctors and fixing leaks in underground pipes, it’s always going to be the doctors who get the money and the pipes, which don’t get headlines, will just be left to crumble.
Private monopolies will never be efficient. It’s not obvious that public ones will either. Where we do nationalise, that can only be the start of a process. We also need to look at which activities really are inevitably monopolies.
As Simon says, rail does not have a monopoly everywhere on personal journeys or freight. It does however have local monopolies especially for the carfree.
Water and sewage are two different businesses, both are monopolies and should end up in public hands though not necessarily central government and ideally with no common management. That would make the water suppliers a stakeholder in cleaner rivers. I agree with Tristan on how.
Electricity generation, storage and distribution are also different and there is no requirement for common ownership. The current pretence of vertical integration serves no purpose. Generating companies do not get their own electrons transmitted to their own consumers by the grid. I would suggest a UK Grid in UK ownership and regional grids (including final mile) also in public ownership. Generation and storage could have real competition. The national grid would operate an electronic market in which the regional grids, big suppliers and storage companies bought and sold on second-by-second pricing including futures. Regional grids could offer a variety of contracts from the fixed payment contracts for domestic customers to a version of the national system for small generators and those who can vary their consumption by price.
Might having the State as a wll informed, assertive, major shareholder be worth considerin?
Might an enforcing reulator he[p?
Ditto limits on execurive pay, dividends and debt?
A simple first step would be to abolish all of the ‘regulators’ whose sole function is to create the illusion that the government is not responsible for the many failures of our essential services. We know that governments all micro-manage and meddle, so that the regulators are actually doing what they are directed to do. Let’s have direct control and responsibility out in the open – a named ministry and minister whose job description spells out their role. We have a very serious problem with public trust of politicians, which is well-deserved. Requiring ministers to carry the responsibility for their actions would be a good start towards turning the sorry shambles around.
The current Lib Dem policy is set out in motion F11 of the 2021 Spring Conference, which you can find here https://www.libdems.org.uk/conference/motions/spring-2021/f11 and Policy Paper 140, which you can find here: https://www.libdems.org.uk/conference/papers/spring-2021 Both are titled ‘Giving Consumers a Fairer Deal’.
I suggest that you all should read these.
It is important to distinguish between the very different market models for different utilities, from water which is a natural monopoly throughout the supply chain, to mobile telecoms which has competition at all levels.
The Policy Working Group (of which I was a member) did consider the case for nationalisation of utility companies, but concluded that this would in practice be unaffordable. A public benefit company model for the natural monopoly parts of utilities (all of water and the distribution parts of gas and electricity) would deliver most of the benefits of privatisation and is an achievable objective. Lib Dem spokespeople have advocated this public benefit model in the recent discussions on the failings of water companies.
By the way, the first British legislation on the nationalisation and regulation of utilities are the Post Office Acts of 1657 and1660. You can find the 1660 one here:
https://www.legislation.gov.uk/aep/Cha2/12/35/contents/enacted It says:
“WHEREAS for the maintenance of mutuall Correspondencies and prevention of many Inconveniencies happening by private Posts severall publique Post Offices have beene heretofore erected for carrying and recarrying of Letters by Posts to and from all parts and places within England Scotland and Ireland and severall parts beyond the Seas the well ordering whereof is a matter of generall concernment, and of great advantage as well for preservation of Trade and Commerce as otherwise, To the end therefore that the same may be managed soe that speedy and safe dispatches may be had which is most likely to be effected by erecting one Generall Post Office for that purpose,”
Many of the issues addressed in this legislation are still relevant today, as discussed in my post on Linkedin
https://www.linkedin.com/posts/simon-pike-200b1b19_the-long-history-of-communications-regulation-activity-7349007581639524352-KjuN
How does a public benefit company differ from a publicly owned one apart from sounding less socialist? The representatives of the public would still need to define what constituted the public good. Any investment would still need to be provided by customers or the government. You would still need to compensate existing shareholders (except in cases where the company would we worthless if rules were enforced).
How does a public benefit company differ from a publicly owned one?
According to Google’s AI:
As proposed by the Liberal Democrats, a Public Benefit Company (PBC) is a specialized corporate structure designed to prioritize environmental and social goals over maximum shareholder profit.
These companies would remain private, for-profit entities, but would operate under a legal requirement to pursue environmental goals and cap profits at a “reasonable” level. Dividends would also be restricted, and environmental experts would be on the Board.
Legislation is required to cerate this new legal entity.
The model is based on “Public Benefit Corporations” that operate in 36 US states, so the model exits.
@Tristan Ward
That’s really interesting, it sounds sort of like a for-profit social enterprise!
@Simon Robinson “ Environmental regulations and monitoring of waste etc. have become massively stricter since privatisation”
I strongly recommend watching the well researched Channel 4 three-part docudrama, Dirty Business. It’s only 3 hours so watchable in an evening. From this you will see that the regulations have been rendered useless. It also reminds us just how bad the crony culture is.
The taking back of the utilities into public ownership, with no reduction in price to the user, means all of the surplus revenues can be reinvested giving a Triple whammy:
1. The infrastructure will improve
2.monies no longer (Unnecessarily) flow out of the country to foreign owners, thus negatively impacting our balance of payments.
3 more money remains in the Uk domestic economy, benefiting UK residents.
So given the £B’s involved it means the UK economy doesn’t need to be so large, enabling some natural shrinkage and thus reduction in consumption and emissions…
@ Simon Robinson you state, “Scottish Water, which is nationalised, doesn’t exactly present a glowing example of good practice”.
Can you provide evidence for your assertion, Simon ? An A1 search on the internet on Scottish Water produces the following :
“Key Aspects of Scottish Water:
Quality: Scottish tap water is widely regarded as some of the best in the world, largely sourced from pure, soft-water catchment areas.
Performance: It has the highest customer satisfaction rating in the UK.
Ownership: It is a public utility, often praised for lower costs compared to private counterparts.
Environmental Status: Around 87% of Scotland’s water bodies are rated as good or excellent.
Potential Issues: Some, particularly in older properties, may face issues with legacy pipework (lead, nickel). Occasionally, water can have a slight chlorine taste or, in rare cases, earthy/musty tastes.
Overall : Tap water in Scotland is safe, high-quality, and generally preferred by residents.”
As a resident of Scotland I agree.
@David Raw – totally different story at the other end:
“ Sewage was dumped in Scottish rivers and lochs for more than an estimated 600 hours per day last year.
Official statistics from Scottish Water, published on Wednesday, show 21,660 discharges were logged in 2023 – a 10% increase from 19,676 the previous year.
The duration of the overflows was also published, with sewage spills totalling 221,002 hours across the whole year.”
[https://news.stv.tv/scotland/sewage-dumped-in-scotlands-rivers-and-lochs-more-than-600-hours-a-day-in-2023]
Remember these are just the discharges they are admitting to. Given the results of data analysis from other regions, these figures represent the visible tip of an iceberg.
@ Roland I think my AI sources are later than yours, Roland.
Can I assume that you disapprove of the fact that the nationalised Scottish Water body was formed on April 1, 2002, under the Water Industry (Scotland) Act 2002 ……. by the then Lab-Lib Holyrood Coalition Scottish Government ?
@David – You may have noted I quoted an actual document and gave a link to the source, not an AI hallucination. As to whether your source is “more current”. I would suggest going from the 2022~2023 discharge levels to “ Around 87% of Scotland’s water bodies are rated as good or excellent.” would be the sort of transformative result SW would be shouting from the roof tops. The fact they are not, tells us the website data is not giving a true picture.
I think the 2023 data on illegal dumping of sewage would seem to indicate there are deep seated problems at Scottish Water that the 2002 nationalisation hasn’t addressed.
The labourites tried nationalisation before and it generally doesn’t work. Govts cannot run business.
Surely it is better to strengthen the regulator.?
“Surely it is better to strengthen the regulator.?”
This is still Govts intervening in the so-called free market.
We’ve supposedly had privatisation of the railways since the 80’s but in practice this has meant that they end up being run by foreign governments rather than our own.
Significant portions of UK infrastructure are owned by foreign firms, sovereign wealth funds, and other governments.
Newcastle United FC is Nationalised in the sense that it is owned by the Saudi Arabian Govt via its Sovereign Wealth Fund. It’s probably doing better than it was under the previous UK private ownership!
So it’s not that we think Govts can’t run businesses in general. Just that they need to be someone else’s government. Maybe we need to take a look at how the Singapore government manages to run its own Nationalised industries. Singapore Airlines (55% Govt owned) seems to be doing well.
@David “The labourites tried nationalisation before and it generally doesn’t work. Govts cannot run business.”
Given the number of private water companies apparently nearly bankrupt and dumping record amounts of sewage into waterways, plainly private industry cannot either, even when their product is required for life and their customer base is a captive audience!
To put it politely, this article would have benefited greatly from more research.
…or warned their children of the dangers of swimming in the sea that was safe in their childhood.
So after record investment, sewage pollution is worse now than it was in 1990? In reality, Britain’s bathing waters have improved dramatically from some of the worst in Europe to the best…
‘How has bathing water quality improved since the UK’s water industry was privatised?’:
https://gemini.google.com/
“Sceptics may claim that public ownership means complacency, inefficiency, certainly these are the charges levied against the old state enterprises. The irony is, where the government’s had to pick up the pieces post rail franchise failure, we’ve typically seen better outcomes.”
Change tends to work well initially, and then degenerate. When it’s privatisation, things start well, until the industry captures the government regulator, when things go downhill, most blatantly with water. When it’s nationalisation that is new, things often improve initially, as the OP says. But the risk then is that complacency sets in, unions potentially grab too much power, and the nationalised industry becomes slow to embrace necessary change.
Mao wasn’t wholly wrong. There is a case for continuous “revolutionary change”! Those who now advocate nationalisation should seek to provide better ways for “government to run business” and avoid the dangers of complacency and union capture. How about an industry supervisory board, run ny randomly selected members of the public, with a budget to employ a small professional team of investigative auditors?
@Jeff – you are aware AMP8 is a 2025-2030 “best endeavour’s” investment plan ie. future spend, not previous spend. So your Gemini prompt isn’t going to return the result to the question you were probably trying to ask.
Basically, AMP8 represents a significant increase in expenditure by the water companies, the only question is whether Ofwat has the teeth to enforce – I suspect without a removal of the crony management class the answer will be NO…
I’m inclined to agree on our water and sewage services. The track record since privatisation has been so terrible that there is no way back for private ownership. Regarding energy there is the potential for more competition so strict rules might allow it to remain at least in private ownership.
Roland 7th Mar ’26 – 4:17pm:
@Jeff – you are aware AMP8 is a 2025-2030 “best endeavour’s” investment plan ie. future spend, not previous spend.
Yes, of course; it’s the agreed plan for the Assessed Management Period 2025-2030.
So your Gemini prompt isn’t going to return the result to the question you were probably trying to ask.
It answered the question I asked perfectly well by stating: “Even when stripping out operational costs to look strictly at capital investment (enhancements and maintenance), the annual spend is roughly 10 times higher than the levels seen in the decade before privatisation.”
Basically, AMP8 represents a significant increase in expenditure by the water companies, the only question is whether Ofwat has the teeth to enforce…
It’s a 71% increase over AMP7 (2020-2025) in which Ofwat successfully enforced investment spend. However, work completed fell short, due to the pandemic and inflation being higher than expected.