Until the 1980’s, when the utilities were privatised by Margaret Thatcher, they were in the Public Sector. And what a success privatisation has been. It has created dozens of millionaires paid for by the general public through higher gas, electricity and water bills!
The half-yearly profits of the utilities and their Chief Executive’s pay are obscene.
| COMPANY | HALF YEAR PROFITS 2022 | CHIEF EXECUTIVE’S PAY |
| EON | £3.4bn | £1m |
| National Grid | £3.4bn | £6.5m |
| RWE | £2.2bn | £3.6m |
| Orsted | £1.5bn | £1.7m |
| Centrica | £1.3bn | £4.5m |
| SSE | £1.2bn | £4.5m |
| Uniper | £1bn | £1.6m |
| Scottish Power | £925m | £1.15m |
| Drax | £225m | £2.7m |
| EDF | (£225m) loss | £1m |
Lightsource did not attend the meeting with the Prime Minister and their figures are not available.
The total disclosed half yearly profits are £14.9bn: which will be in excess of £30bn in the full year.
Instead of considering a windfall tax on these excessive profits (as has also been considered in respect of petrol) to provide help to those least able to afford their gas and electricity bills, if the gas and electricity companies were taken back into in public ownership these profits and the cost of excessive salaries could be used to reduce the bills for everyone. Instead of many Chief Executives and senior managers earning between £1m and £6.5 million per year there would be just two Chief Executives, one for gas and one for electricity, paid on public sector rather than private sector pay scales earning around £200,000 each. (The highest paid local government Chief Executive gets £185,000 for, arguably, greater and certainly wider responsibility)
So just how bad is the situation?
According to a report in The Guardian 2/3rds of UK households will be trapped in fuel poverty by January meaning their fuel costs will be 10% or more of their income. 18m families, or approximately 45m people, will be struggling to make ends meet. 86.4% of retired people and 90.4% of single parent families with two or more children will fall into fuel poverty.
This comes at the end of a decade during which the rich have got richer whilst the majority, subject to austerity, have got poorer. According to a report by the Paris-based World Inequality Lab, 2020 saw the steepest increase in billionaires’ wealth on record. In contrast 100m additional people, worldwide, sank into extreme poverty.
A consequence of this widening inequality is that, prior to the recent cost of living crisis, there were 3.9 million children living in poverty in the UK. The Government had focused on making work pay, but two in three children who were in poverty had a parent who was in work. These parents were no more able to do anything to help their children than are older people who have no earning capacity or borrowing power, many of whom prior to the abolition of the “default retirement age” had been forced into retirement and condemned to spending the rest of their lives in poverty.
Children brought up in poverty are less likely to do well at school, more likely to have health problems, making a demand upon the NHS, and have a shorter life expectancy.
Prior to the current cost of living crisis there were two million older people living in poverty in Britain, With the known correlation between income and demand upon the NHS it is not surprising, that 4/5th of the expenditure of the NHS went on older people. Britain has one of the lowest State Pensions in the western world and yet during the current year the government reneged on the “triple lock” and discontinued free television licences effectively reducing pensions still further.
According to Philip Alston, special rapporteur on extreme poverty to the UN, who visited the UK the year before the pandemic, Government Ministers were in a “state of denial” about poverty. He said that despite being in one of the world’s richest countries he had encountered “misery”. Quoting figures from the Joseph Rowntree Foundation, he said that more than 1.5 million people were destitute at some point in 2017, meaning they lived on less than £70 a week or went without essentials such as housing, food, clothing or heating. A fifth of the population, amounting to 14 million people, were living in poverty, Prof Alston said. And the situation is now far worse.
How has this come about?
No matter what excuses are given, and who so ever one tries to blame, the current crisis is due to the unacceptable face of capitalism, greed and profiteering as the rich exploit the poor to line their own pockets. If one takes petrol, as an example, consumption has not dropped despite the increased price which would suggest there is no shortage and it is not a matter of rationing, or supply and demand, but sheer profiteering. Shell doubled its profits in one year to £9.4bn. And BP announced profits of £6.95bn between April and June.
The price of gas and electricity in Mw/h is three times higher in Great Britain (£400.01 or 473.33 euros) than it is across the whole of Europe where it varies between115.38euros and 149.61 euros.
Since the privatisation of water, by Margaret Thatcher in the 1980s, bills have gone up by 40%, £72bn has been paid out to shareholders and the bosses have received £58m in the last five years alone. This has not led to improved efficiency either, with 3bn litres of water lost through leaks every single day; not to mention the illegal discharge of affluent into our rivers, lakes and sea.
What would be the payback from public ownership?
There are 27.8m households in Great Britain whose average fuel bill in the first half of 2022 was £1,971 per year – projected to rise to £4,200 per year by January next year. Domestic consumption accounts for 29% of gas and electricity use with the majority in the commercial sector. If the £30b profits were shared pro rata between the sectors, £10b would represent £359 off the average household bill – which would still be higher than across Europe. However, this reduction is based upon the first half of 2022 and as the Price Cap is raised profits will soar making the reductions, which would also apply to the commercial sector, greater. And there would be other savings to be made on the number of Chief Executives and other senior staff and the salaries paid reducing bills further.
In an ideal world the first 12,000 kWh of gas, the first 1,900 kWh of electricity and first 127 litres of water would be at a greatly reduced rate (if not free) with the cost shared between increased charges for consumption above this level and taxation in that income tax is the most equitable way of paying for public services. This would also save millions on debt collection and court costs etc and improve mental health and the physical consequences reducing demand upon the NHS.
* Chris Perry is a former Director of Social Services for South Glamorgan County Council, a former Director of Age Concern Hampshire, a former Non-Executive Director of the Winchester and Eastleigh Healthcare NHS Trust and a former presenter of an award-winning public affairs programme on Express FM.
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51 Comments
Yes, yes, yes.
“In an ideal world the first 12,000 kWh of gas, the first 1,900 kWh of electricity and first 127 litres of water would be at a greatly reduced rate…”
Why these quantities? the average usage in the UK is 12 MWh gas and 2.9 MWh electric
( https://usave.co.uk/energy/how-much-energy-does-the-average-uk-household-consume/ )
I think this is an excellent idea, but would go with lower quantities for the reduced rate tranche – maybe 2/3 average do 8 MWh gas and 2 MWh electric. The increased cost for higher usage would be a powerful incentive to use less, without forcing most families into fuel poverty.
Compared to Europe,we are being ripped off.
A rare and delighted response, I agree with each and every bit of this Chris!
And the best is the latter idea. Charge less, or very little, for basic use. Charge more for over use and unnecessary use. A green policy. A policy for the very people who suffer. A policy to win and gain support with!
And by the way, ten per cent of your income on energy is not the worry. Some of us already on low income are worse off than that!
Unpopular as the view may be, I am not convinced that £200K pa is going to attract the right calibre of executive. That does not justify the huge rewards currently being paid, but please be aware that this may not be enough.
Public ownership is unlikely to be a panacea in itself. It’s not as if previous excursions into nationalisation have been huge successes. The nature of the problems and issues simply seem to change.
So please let’s not be too glib about all this. There needs to be a carefully considered model to improve the current situation. Might we be able to focus on that too?
Ofgem ha a target return on capital of 4.4% when setting prices for the energy sector Ofgem boosts investment for Britain’s electricity networks
The Labour 2019 manifesto planned to nationalise Utilities by replacing shareholdings with government-backed bonds. In this way, shareholders will become lenders to the electricity industry and instead of receiving a dividend each year, will receive interest on the loan (bonds typically make an annual interest payment to their holders). Labour said it ouldl be able to cope with honouring these debts because it will pay a lower interest rate, because government debt is considered less risk by credit rating agencies, than that paid by a private company owner paying for nationalisation.
It seems unlikely that profits of energy companies can be used to sustainablty reduce bills, Instead, any profits remaining after paying interest on government borrowings will be needed to upgrade the UK’s ageing infrastructure in order to make it ready to distribute power generated by renewables. In addition, the government will also need to fund extra capital investment in renewable energy such as wind and solar farms.
We need thought through energy policies and thought through social welfare policies like a guaranteed minimum income if we are to offer credible answers to the British public at a general election.
The idea of a low-cost or free energy and water allowance is a good one, forcing rationing for higher levels of use as Jenny Barnes comments. However, Income tax is not the most equitable of paying for public services; Land Value Tax on excess profits such as the windfall tax is.
You claim electricity prices are three times higher in the UK than across European countries.
Moreover, you claim European electricity prices vary between 115.38 euros and 149.61 per MW/h.
Both these claims are nonsense.
Just to take two examples: in July 2022, Italy was paying wholesale energy prices of 441.74 euros per MW/h; France 400.95.
Nearly all countries across Europe have experienced severe increases in electricity prices since the start of the year. (Countries with massive hydro capacity are a partial exception.) The UK is no exception and has similar prices to other European countries as one would expect.
I live in Spain and can assure you that electricity prices have gone through the roof this year, causing social uproar and various (not very successful) government attempts to alleviate the problem.
Unfortunately, you seem to be associating a Europe-wide – in fact worldwide – phenomenon with something peculiarly British to do with ownership structure.
This makes a mockery of the facts and your proposed solution would not change those relevant facts.
Lastly, you cite raw figures for profit, but don’t tell us the turnover of the relevant companies: it’s the percentage profit they are making which indicates whether a company is making excessive profits or not. Needless to say all these companies have massive turnovers and do not have excessive profits compared to turnover.
Finally, company executives are obscenely over-paid around the world in almost all industries.
Chris Moore, saying as a general point that Chris our writer here, is talking nonsense with regard to Europe’s prices is exagerating. To dismiss based on one country, that in which you are, is unfair. Chis in this piece is advocating sensible radical policies. Of course as others would correctly add, public ownership of utilities is not ideal, but, other than private companbies absorbing massive subsidies, the only other alternative is a contract that limits the companies profits, or shares them with govt, who use theirs to do the subsidy..
What some countries, like France, are doing , is they are buying in energy but not passing the hike to consumers. No reason why this cannot happen as Chris suggests, by rationing or allowing a certain amount subsidised.
We can do things if we require them!
Joe Bourke@. My assumption was that investment in infra structure would be capitalised over several years and that therefore the declared profits in the accounts would be after re-investment in infrastructure and other capital expenditure.
Delighted there is support for a lower tariff ( or possibly no charge) for the first (how ever many) units of gas, electricity and water used.
Hi Lorenzo, I’m comparing UK prices to prices across the whole range of European countries. I mentioned by name Spain, France and Italy and I could have chosen many others.
It’s just false to say UK prices are three times that of other European countries.
UK does not exist in a vacuum.
@Graham Jeffs
“I am not convinced that £200K pa is going to attract the right calibre of executive. ”
Please define (a) ‘the right calibre of executive’ and (b) how you think their pay should be determined – thank you.
Chris Moore
We are saying the prices are going to be three of four times higher, they are already nearly three times
https://www.chroniclelive.co.uk/news/uk-news/edf-energy-bills-france-uk-24750274
I can’t read my meter and don’t wish a smart meter. I contacted the Ombudsman and SSE are not reading the meters of disabled people. I’m not the only one complaining.
Customer Service is awful and after we resolve this I’m changing supplier
Meters should be read once a year anyway.
Graham Jeff, The Chief Executive of Birmingham City Council is paid £186,000 for responsibilities far wider than managing a single utility service so I would have thought £200,000 ish was more than enough. The Prime Minister is paid £160,000.
Given the performance of the utilities, to date, the multiple million pound plus salaries do not appear to have recruited people capable of providing the public with a service. They would appear to have been more concerned with making a profit.
@Graham Jeffs – Unpopular as the view may be, I am not convinced that £200K pa is going to attract the right calibre of executive.
But what is the right calibre of executive for a utility? And what should they be paid relative to others?
Also is the board room of a utility a stepping stone to a career in the cut-and-thrust world of commercial enterprise, or is it a step off the carousel/a change of pace for experienced people in their 50’s and early 60’s? These considerations will also impact both the potential candidates and their remuneration.
Hi Lorenzo,
The article makes claims about wholesale electricity prices which are incorrect.
UK prices are similar to those of other countries. There is no connection between these prices and company ownership structure.
Electricity companies can’t avoid those wholesale prices. Neither in the UK, nor France, nor Spain etc.
What governments do to mitigate prices is another matter.
To my mind, we should not be subsidising energy use. We should be subsidising the poorest off through very significant negative tax or benefit transfers.
Higher energy prices should lead to increased efficiency in energy use. This is what we need to happen to mitigate global warming.
But for the moment, GW is forgotten apparently.
“We should be subsidising the poorest off through very significant negative tax or benefit transfers.”
And helping them to reduce their energy use e.g. getting their homes insulated.
Gas prices
The price of gas […] is three times higher in Great Britain […] than it is across the whole of Europe…
That is not correct. UK gas prices are now largely set by the cost of imported LNG (that being our marginal source of supply). Currently, we are also importing huge quantities for regasification and export via pipeline to fill continental storage facilities. Due to limited LNG terminal capacity in Europe and the UK pipeline being maxed out, the European gas price, $78.9/MMBTU today, has risen to a record 35% premium over the UK price of $58.6/MMBTU. The UK price is over six times higher than the US price of $9.25/MMBTU where there is an abundance of shale gas released by hydraulic fracturing.
‘UK NBP NATURAL GAS (USD/MMBTU)’:
https://www.tradingview.com/symbols/NYMEX-NBP1!/
‘DUTCH TTF NATURAL GAS (USD/MMBTU) (ICIS HEREN)’:
https://www.tradingview.com/symbols/NYMEX-TTE1!/
‘HENRY HUB NATURAL GAS FUTURES’:
https://www.tradingview.com/symbols/NYMEX-NG2!/
MMBTU = Million British Thermal Units.
NBP = National Balancing Point, a virtual location in the UK pipeline network where demand and supply balance at the quoted price.
TTF = Title Transfer Facility, a Dutch trading platform which sets the benchmark price for gas in continental Europe.
Henry Hub = Distribution hub in Louisiana which is the pricing point for US natural gas.
‘European LNG prices hit record discount to Dutch TTF gas’ [23rd. August 2022]:
https://www.reuters.com/business/energy/european-lng-prices-hit-record-discount-dutch-ttf-gas-2022-08-23/
@Nonconformistradical “And helping them to reduce their energy use e.g. getting their homes insulated.”
My concern there would be that the poorest are least likely to own the homes they are paying to heat.
It might be difficult to provide an incentive for landlords to incur a cost that benefits their tenants, and I imagine that any scheme to address the insulation of rented homes would have to be handled carefully lest it look like a subsidy to wealthy landlords.
There must be a level of executive remuneration where greed becomes more important than doing one’s duty. Wasn’t there an instance of a company being given millions during COVID furloughs and the CEO grabbing £2m for himself as a bonus?
Regarding salaries, several of those companies are regulated monopolies with no competition and limited opportunities to innovate or diversify. I find it staggering that the boss of the National Grid gets paid £6.5m. You or I are unlikely to be able to have our electricity delivered by anyone else.
Chris Moore
My feeling is the article refers toprice to consumer. No one denies the wholsale situation. It is what govt does that is political. My view is to transfer subsidy to those worst off with regard to income is just. As well as this, to freeze prices by a subsidy to companies as well as a the state eventually going into the energy market. The idea climate change is forgotten is daft. We all read here, I support it, charge less for initial essential usage. Charge more for over using.
@Chris Moore. Thank you for some important fact checking. The distortions and hyperbole in the main article were reminiscent of a 1970s Labour Party conference. It’s incredible that ‘nationalise it’ has any traction as an argument on a liberal website. Neither does dressing nationalisation up as a ‘radical’ idea bring it back within the liberal ambit. Nationalisation was a big state policy, implemented when centralizing power was thought to be commensurate with efficiency and ‘one size fits all’ commensurate with fairness. Liberals were always suspicious of these claims, and ought to remain so.
Seems all a bit simplistic socialism. A bit strange to see it on a liberal website. In regards to CEO pay, even if the utilities were nationalised that wouldn’t mean the pay is less. Utilities would have to compete in the market for “talent” and so would have to have competitive pay to get the best employees. Also, if the water companies were nationalised that doesn’t mean they suddenly offer cheaper bills, profit is usually a small percentage of the overall costs charged. And the problem with nationalised utilities is that you have to invest taxpayer money into them in order to improve them, something govt is often reluctant to do. Private companies can raise money for investment on the debt markets. If we want to improve their service then we should simply regulate them more and better.
@Kyle Harrison
“Utilities would have to compete in the market for “talent””
Please define what kind of talent (and experience) would be required for running one of these utilities.
Privatised utilities pay £bns in corporation tax whereas when they were nationalised they required heavy subsidies.
The “private” utilities are actually heavily regulated and the biggest price rises were in the years immediately following privatisation with modest rises since then.
In the case of water, leakage levels are a legacy of when they were nationalised and leakage is down by 1/3 (not enough of course).
I can see a case for reform of regulation but not for public ownership.
Marco: Where is your evidence? Transport was subsidised, but so is privately owned transport on the railways and the buses. (Significantly more than nationalised transport ever was.) Power has always made money. Water was originally municipally owned and charges were set to cover costs. Not to mention that many railway franchises plus Network Rail are effectively in the public sector already.
I suspect, like many in our party, you believe the propaganda put out by the Tories to justify privatisation.
In my view, it can never be right to make huge profits for the necessities of modern life, water, power and public transport. Many EU countries still have public ownership in these areas. It’s time our party realised that public ownership of these vital industries is not only right, but popular.
@Nonconformistradical
‘The right calibre of executive’ is likely to be one who has the ability and will to deliver positive change in a company. Being able to deliver change is often a skill that seems to be missing. How that perspective applies to the companies listed I cannot say, as I do not know whether we are comparing apples with apples. By that I mean whether the businesses themselves are directly comparable other than that they are end suppliers of energy. The answers to that should govern the issue of basic remuneration and any additional rewards.
In respect of remuneration, @Roland makes valid points. As above, I would expect individual companies to require executives with differing levels of experience depending on the breadth of their operations. The way in which they earn any rewards over and above their basic package then needs to be carefully tailored to the attainment, for example, of improved levels of efficiency in terms of delivery to customers, development of green technologies, etc. In the case of water companies, the targets may well be much more obvious and one might want penalties in respect of pollution as deductions from rewards achieved elsewhere in the business.
I welcome this article by Chris Perry it brings into sharp focus the failure of the privatisation experiment favoured by Thatcher and her Tories. The private sector would manage energy, water and transport far more efficiently than the public sector.
The assumption made at the time was that consumers would get more bang for our £. Time has proven that not to be the case.
Clearly Thatcher did not take into account the greed factor. Nor did she take into account the private sector selling on previously public assets to large multinationals.
There are certain services – energy, water and transport, which are essential to everyday life, the value of which goes far beyond that of monetary return.
As Chris points out in the article, the wellbeing of the public has a knock on effect on other services not least of all Health.
So, when setting the nation’s budgets, government should take into account the ‘Common Good’.
Any future Liberal Democrat led government, or one in which we were looking to be part of, would share our ethos for fairness and equity, and set a Wellbeing Budget.
One further point, we need to have a clear vision of what we mean by fair and equitable, and not be diverted from that vision by the ‘look over there’ diversionary tactics of dissenters.
The main article seems naïve and the data unhelpful. Also, it doesn’t help us consider the water utilities.
For example, we need to start by understanding by company:
a) What element of Chief Executive’s Pay is basic remuneration?
b) On what basis, by company, were rewards above basic earned?
c) The same as a) and b) for water utilities
d) For all – what are the performance hurdles that are currently in place?
e) How do these performance hurdles match our supply and environmental targets?
f) What have been the levels of capex in each of the past five years?
g) How do f) match the projected needs in respect of environmental issues?
h) How do f) compare with dividends paid?
i) What element of f) could be regarded as development capex as opposed to remedial capex which could otherwise have been written of as ‘repairs and renewals’?
j) How much cash outflow is there in respect of ‘repairs and renewals’?
k) ……and so on!!
It would also be useful to have five-year MATs of all major elements of cash flows – revenue/direct costs/overheads/capex/CT/interest paid/dividends. Probably some of this information is unavailable for commercial reasons – but in fact the companies might do themselves a service if it were. Then everyone can make informed judgements – but as @James Fowler and @Kyle Harrison have reiterated – ownership change won’t be the answer. It’s what happens to the profits that is key – particularly in terms of capex.
Let’s do it!
kyle “Private companies can raise money for investment on the debt markets. ” Governments can borrow more cheaply.
I really wonder if some of the contributors had any experience of nationalised industries before privatisation…They had their problems but most of those faults have worsened since they were privatised…
Take water…The Thatcher government wanted to privatise it in their early years but were afraid of public opposition..Their answer was to deliberately curtail the ability of the Regional Water Authorities to borrow money for essential capital projects. Before Thatcher they could borrow money easily and cheaply; her restictions on their borrowing meant a lack of major improvements which she then blamed them for not building. She promised that privatisation would result in new reservoirs, replacement of Victorian sewers/pipes, etc…Over 30 years on not one new reservoir has been built and the water companies are still blaming leaks on Victorian plumbing..
As for the assertion that ‘the “private” utilities are actually heavily regulated’ may I suggest a listen to the head of Ofwat’s (Mr. Black) R4 interview..
Finally, as for CEO’s pay…Many CEOs ‘moonlight’ on advisory boards on CEO salaries and contracts ?????
@Graham Jeffs
“The right calibre of executive’ is likely to be one who has the ability and will to deliver positive change in a company.”
That seems a very nebulous statement. Define positive change – might that conceivably be lining executives’ pockets at the expense of investment?
Mick Taylor – Agreed! Privatised utility monopolies tend to demonstrate an inefficient and costly form of capitalism. It’s about much more than offensive bonuses and cronyism. These companies are not designed for a laser-like focus on core responsibilities. I do not need Yorkshire Water spending small fortunes on trying to sell me a plumbing maintenance contract or churning out a plethora of misleading press releases about their successful investment.
Mick Taylor – Yes Network Rail are publicly owned and are also the weakest part of the system, no better than Railtrack.
The problem with rail privatisation is the way it was done. Japan provides an example of an excellent privatised rail system and shows it can work.
If anyone thinks MMT is all about Govt printing as much money as it likes to solve whatever problems we might have, they might like to read Neil Wilson’s take on the energy crisis.
Neil has his own crisp style of prose which is always worth a read. I wouldn’t quite put it all the same way myself but I’d agree with the following:
“The problem the UK is suffering from at the moment is that there isn’t enough gas and there isn’t any available UK export capacity to exchange for more gas to meet the anticipated winter demand.
Even if there were, there’s no guarantee that there would be any gas available to buy or that winter shipments wouldn’t simply be halted by gas export nations to protect their local populations. Therefore if we don’t suppress demand, there’s a very good chance there simply won’t be the gas to supply into the UK market at any price. At which point we will be rationing by quantity whether we like it or not.”
Politicians and economists have their own priorities. There’s just no way the Govt can reduce demand except by putting up interest rates so high that the economy crashes. That may well happen anyway.
If we are lucky the next year or so will be bad. If we aren’t it will be economically disastrous.
https://new-wayland.com/blog/the-uk-energy-crisis-mmt-analysis/
There has been under-spending on water infrastructure for decades.
Complaints about levels of leaks and contamination of beaches did not begin last week.
Massive increases in infrastructure spending can be paid for by two groups:
1. Customers or 2. Taxpayers.
There are no other options: money doesn’t drop from the sky, in spite of some of the MMT hype sometimes seen on here.
1. The regulator should allow levels of profit to INCREASE, not decrease. Then there will be more money available for capital expenditure.
This is being realistic, unlike the populist escapism and multiple inaccuracy of the original article.
To stop this extra capital being paid out in dividends, dividend payments should be made conditional on improving indicators on leaks, beaches etc and should also be capped at a certain level of profit.
I hear someone say, companies can borrow the money! Yes, they can borrow, but massive borrowing on the scale required has to be paid for out of increased income. So water rates would need to go up.
2 Pay by taxation: first, blow a ginormous sum on nationalisation. Then huge sums on capital expenditure. Then send the bill to the tax payer.
Lots of lovely increased taxes. Or alternatively cut transfers to local government or the NHS or schools.
Or even better do both: raise taxes AND cut spending on health, weapons, local services.
Good luck with 2.
Chris (Perry), I much enjoyed the radicalism of your article here. It was good to read again in it also a reference to the visit of the UN Rapporteur for Extreme Poverty and Human Rights, Philip Alston. The sad fact is that Professor Alston did indeed highlight the poverty of 14 million people in this country, and nearly four years after his visit we know that just as many or even more are still poor now, in this time of cost-of-living hardship.
I think now as I thought then that we have to concentrate as a party, making it a priority, on proposals to reduce this poverty in our country. The Fairer Society Working Group, of which I was privileged to be a member, has now produced a policy paper on A Fairer Society and a motion for Conference, F17, which does indeed make tackling poverty a priority. It recognises that improvement and enhancement of welfare benefits is a key essential, whether we go for a UBI or GBI. I hope, Chris, that you may be going to Conference and will join the debate in this and other significant motions, such as the one on Caring, F30, which I think may also be of particular interest to you..
Privitisation was a radical response to a failed post-war experiment with nationalisation. The coal industry was a disaster for much of this period, worsened by head in the sand management and suicidal industrial relations.
Water is a domestic resource and is appropriate for either public ownership or regulation, preferably at the regional or municipal level without undue interference by central government.
Oil and gas is dependent on world markets and does not lend itself easily to public ownership (outside of the North Sea). We need energy companies to be able to invest heavily in renewables and nuclear power to provide for a sustainable future. The high price of gas in International markets should spur this type of investment far more than any government coercion. Government’s role is to ensure that the domestic energy market is a competitive one and not dominated by monopoly or oligopoly pricing.
This winter we need a windfall tax on excess profits to subsidise lower income families heating bills. Going forwad and in the longer term we need to be able to incentivise the transition to renewables for domestic energy both for economic reasons and as part of the effort to tackle the climate change emergency.
Katharine Pindar 26th Aug ’22 – 3:15pm……….Chris (Perry), I much enjoyed the radicalism of your article here. It was good to read again in it also a reference to the visit of the UN Rapporteur for Extreme Poverty and Human Rights, Philip Alston…..
Let us hope that today’s response differs from that described by Phillip Alston. His conclusion that “policies of austerity introduced in 2010” have had “tragic social consequences” should remind us of who was in government at the time..
Joe Bourke 26th Aug ’22 – 3:40pm…..Privitisation was a radical response to a failed post-war experiment with nationalisation…….
Really..Because this thread is about energy let’s look at oil/gas….Thatcher sold off our North Sea reserves and, since 1986, the UK government has had effectively no direct equity participation in the North Sea and has had a fully private upstream sector, with taxation as the only source of government revenues.
Norway has taken a different approach, with over 50% of production coming through Statoil (of which the state owns a majority) and state ownership of assets via the State Direct Financial Interest (SDFI), held through Petoro (wholly owned by the state).
Because of this approach Norway generates more than double the revenue the UK does from each barrel it produces.
Regarding your assertion vis-a-vis Public vs Private there is no reason why a state cannot have both a relatively high tax burden on its industry, direct ownership of assets, attract investment and deliver more revenue for its citizens than any privatised industry..
Expats,
Norway’s statoil was privatised in 2001 listing on both the Oslo and New York Stock exchange. Norway’s sovereign wealth fund (SWF) is a state-owned investment fund that invests the state’s share of oil profit and has done so very successfully over the years becoming the world’s biggest Sovereign Wealth Fund. That fund allows Norway to finance its state pension provision quite comfortably.
The UK has collected Petroleum revenue tax over the years, on top of corporation tax from North Sea reserves, but this has never been segregated from the general tax pool. Petroleum Revenue Tax was cut to zero in 2016. This should be reinstated.
Post-war nationalisation in the UK was an utter failure and very few successful economies have attempted to emulate that approach. The countries that tried widespread public ownership of industry and enterprise (like Russia and China) abandoned those models in the face of increasing poverty and social unrest. There are straighforward solutions like Norway’s approach and Land Value Tax. Neither involves a centrally planned economy or nationalisation of productive assets (as opposed to natural resources) but rather a public private partnership or the state capitalism system of china. Even the Saudi National Oil company Aramco has begun the process of privitisation The privatisation of Saudi Aramco
A Liberal democracy seeks to allow aspiration and private enterprise to flourish while regulating for the public good and protecting its citizens.
“A Liberal democracy seeks to allow aspiration and private enterprise to flourish while regulating for the public good and protecting its citizens.”
So where’s the regulation protecting we the people..? Doesn’t seem to be much in evidence.
So where’s the regulation protecting we the people..? Doesn’t seem to be much in evidence.
Isn’t that the raison d’être for a Liberal Democrat government?
Joe Bourke 26th Aug ’22 – 7:29pm
Expats, Norway’s statoil was privatised in 2001 listing on both the Oslo and New York Stock exchange……………
Depends on what you mean by ‘privatised’ …. You omitted the bit about the ‘state’ keeping over 80% of the shares which, by any definition, makes it ‘state owned’… Today the ‘owner’ of Statoil (Equinor) is listed as the ‘Government of Norway’…
You also ignore the fact that, per barrel, the Norwegian system earns more than double that of the ‘private’ UK system..
As for your “Post-war nationalisation in the UK was an utter failure” You highlight the coal industry but ignore the fact that, pre-nationalisation it was beset by industrial action on an comparable scale.. The nature of the work?
Looking around, I can see little evidence of improvement (apart that achieved by technological advances) in any of the post Thatcher utilities/services…
Finally, if your only answer to efficiently regulated private utilities is a LibDem government then, judging from our last attempt (selling off Royal Mail*) we’ll make just as big a mess..
*National Audit Office (NAO) issued a scathing report arguing that the government’s desperation to sell Royal Mail cost taxpayers £750m in a single day.
Expats,
I take privatised in the context of this article to mean a business run for the benefit of shareholders and paying market level executive compensation, As with Private energy companies, the CEO of Norway’s oil company is well compensated earning over $2m last year Equinor CEO Anders Opedal received NOK 18 million in 2021
A countries natural resources (but not its licensed operators) should be held in public hands or subject to land value tax. Any monopoly provider needs pricing regulation to protect the public from cartel pricing. Nationalisation of commercial operators rarely proves successful or conducive to stable industrial relations. This is particularly the case with declining industries like fossil fuel or mail services. Venezuela virtually destroyed a flourishing economy through such misplaced ideology.
A Liberal Democrat government needs to be able to offer evidence based choices to an informed public and with Land Value Tax it has the basis for reinvigorating a struggling economic model on a more equitable and liberal basis.
Sometimes, I despair that many of our younger members have swallowed hook, line and sinker, the Tory story about nationalised industries. That they were inefficient, they were held to ransom by the Trades Unions, that they were heavily subsidised and employed too many people. The truth was somewhat different. The nationalised industries were deliberately starved of investment so they couldn’t improve or modernise, so was to make a case for privatisation, which would bring in lots of private capital. It is true that the newly privatised industries shed labour like leaves off a tree, but in the process got rid of many of the safety systems and ceased regular planned maintenance, especially on trains. Whereas ‘inefficient’ British Rail could clear up and reopen crash sites in days, ‘efficient’ private enterprise now takes weeks. Nationalised industry workers used to get proper pensions, now that is deemed an unaffordable luxury.
My advice to those Lib Dems who really believe the myths about nationalisation, is to do some proper research.
We live in a very unequal society. To solve it we must think long-term and comprehensively. One problem is that the Conservatives have been in power for too long. This has altered the culture so even Labour has challenges proposing truly radical solutions. Are we brave enough to do so? Taxes must be part of the solution so it’s not worth earning more than say half a million. Wealth inequalities also need to be addressed. Targetted help with energy costs will help the most in need at the lowest overall cost. If people suffer the indignity of accessing food banks, they should not mind declaring their income. Tax evasion also needs to be tackled.
Chris Moore: Clearly there are many interpretations, in a fast changing scenerio, and European comparisons are not really of relevance to my proposal but to quote “Euronews”: “Even before today’s (26th August) hike was announced, UK households faced some of the highest prices in Europe — nearly double France. Only the Czech Republic was higher than the UK, which was followed by Italy and Estonia. Norway, which has large reserves of oil and gas, has the cheapest electricity bills, ahead of Switzerland and Malta in second and third, respectively.” These figures pre-date August 26th, when OfGem raised the price cap by 80% to £3,549 from October
It should be remembered that most of the companies listed at the top of this article are “billing” companies: they do not produce any gas or lay or repair any pipes. Only 7% of our gas comes from the Ukraine and most of our electricity is generated in the UK.
Even if, against all the scientific advice, the government were to issue “fracking” licences it would not necessarily bring the price of gas down as it would be extracted by private companies who would sell to the highest bidder which may not even be in the UK.