Privatisation fails. That is the lesson from Britain’s experience giving profit-making companies’ ownership and control over our infrastructure and services.
The last New Labour government – that of Tony Blair – introduced Private Finance Initiatives (PFI) in which public bodies are tied into huge bills to big corporations to build and maintain buildings and infrastructure. After costing our public services billions of pounds, those deals are about to start reaching expiry. Crumbling buildings are to be dropped by PFI profiteers no longer obliged to offer the pretence of ‘maintenance’.
Starmer’s new New Labour government has learned nothing. His health secretary Wes Streeting said of the NHS: “I’m actually very sympathetic to the argument that we should try and leverage in private finance”. And the NHS Chief Executive: “I think we now must consider private capital investment in the NHS”.
We need public investment to meet the need, paid for by taking wealth and power out of the hands of the super-rich. That’s why the Socialist Party fights for nationalisation of our services and utilities under democratic workers’ control and management, and for a new mass party of the working class to fight for workers’ interests, not those of the profiteering bosses.
Thames Water: profiteering writ large
Callum Joyce, Southern regional Socialist Party organiser
Mountains of debt running into billions of pounds; crumbling, leaky infrastructure causing scandal after scandal; byzantine, multilayered corporate bureaucracies that make your head spin to read about – the water industry has become a symbol of everything rotten in Britain today.
Barely a month goes by without another news story exposing these issues – another rise in water bills, another town or suburb without access to clean water, another water boss receiving thousands of pounds in bonuses. It is clear to all that privatisation of the industry, carried out in 1989 by Margaret Thatcher, has been a complete and abject failure. Even the Financial Times editorial on 17 February had the headline: ‘Time to put Thames Water out of its misery’.
The ‘free market’ was supposed to deliver more investment leading to a better service. The water companies’ £5 billion worth of debts were even written off ahead of privatisation to help incentivise potential investors.
Since then however, they have managed to rack up over £74 billion worth of debts between them. For what purpose? Certainly not for maintaining and expanding infrastructure!
Instead, the water companies have paid out an eyewatering £83 billion in dividends to shareholders while sewage has flowed into our lakes and rivers and water bills for the average household have risen by over 40% – with further rises set for this year.
Most of the companies are now owned by foreign investment funds and asset managers whose primary motivation is to make maximum possible profit, in the shortest possible time. As public utilities, water companies make for attractive investments. The income from bills is seen as much more stable than in other sectors. This reliable stream of income is not seen as an obligation to provide a decent service, but rather as a lucrative asset to borrow against!
The private water companies have taken out billions of pounds in loans simply for handing money over to shareholders and paying bloated executive salaries. Why bother investing to maintain and upgrade infrastructure if you think people will always buy your water regardless? The system is completely broken. But on the basis of private ownership, how could it ever have been any different?
£19 billion debt
82% of people support renationalisation of the water companies – up from 59% in 2017, according to a 2024 YouGov poll. Renationalisation is posed sooner rather than later in the case of Thames Water, which is suffocating under a £19 billion debt pile. The company has now secured funding, without which it faced default on part of its debts next month.
Starmer’s government is unable to simply let the company, which provides water to over 16 million people, financially collapse. The most likely outcome will be that it is forced to put Thames Water into a form of temporary renationalisation that would allow it to oversee the restructuring of the company while it continues to function.
The plan is not for this to be nationalisation as any sort of pro-working class measure, but a way to try and make Thames Water more attractive to investors before it is later sold back into private ownership and the whole rotten cycle can begin again! Starmer’s fear is that once the seal is broken, pressure will grow for further nationalisations and on a lasting basis.
We need nationalisation that is permanent – for all the water companies – so that utilities can be run as part of a plan for providing high-quality, properly funded public services. This should not come with a penny of compensation for the fat-cats who have already pocketed billions from the industry. However, any worker who has their pension or personal savings invested in the industry should have those secured as part of a broader plan to nationalise the pensions and finance industry as well.
But fixing our public services cannot be achieved simply by nationalising and then leaving the water companies to be run by unelected government-appointed suits. Scottish Water is proof – unlike the English and Welsh water companies, it has remained in public ownership all this time, but is still responsible for numerous sewage leaks due to a lack of investment in infrastructure.
Nationalised water companies would have to be run by democratically elected and accountable committees of workers and service users who can properly allocate resources based on what people need, not profit or cost-cutting pressures. The huge wealth freed up by removing private profit interests and abolishing all debts – from the water industry and from the other key sectors of the economy as well – would provide more than enough resources to repair and massively expand infrastructure, bringing down bills, providing a high-quality service, and protecting our environment.
GB Energy is not nationalisation
Heather Rawling, Socialist Party National Committee
Over the last ten years, a shocking quarter of a million older people in the UK have died from the cold. During the same period, energy prices have risen by around 150%. Last year, Centrica released figures showing that British Gas profits jumped to £751 million in 2023, up from £72 million a year earlier, and that £144 million was paid to shareholders.
While we shiver this winter, some may hope that the Labour government’s plan for a state-owned energy company will provide some comfort.
Not a bit of it! The government-imposed energy price cap keeps rising together with the bosses’ profits.
Labour is giving £8.3 billion of public money to Great British Energy, in the dim hope of stimulating private investment into green energy.
GB Energy’s board will be chaired by Jurgen Maier, a former boss of Siemens. It will operate just like a capitalist enterprise with the working class being left out of decision making.
The Labour Party conference symbolically voted in favour of renationalising energy in 2023. But that doesn’t make it party policy. And this is not nationalisation, not by a million miles!
In the aftermath of World War Two, many industries were nationalised including: water, gas, electricity, railways, buses, steel, telecoms, British Petroleum, British Airways, Rolls-Royce and Rover, before successive Tory and Labour governments sold them off cheap to private investors.
Sound familiar?
They were nationalised as the existing private owners had failed to invest. Sound familiar? Capitalism had a need to rebuild infrastructure devastated by war. It also acted under pressure of the working class.
Unfortunately, the previous owners were paid massive amounts of compensation and interest. Unbelievably, the previous managers were left in charge! In some nationalised industries, trade union leaders were invited onto boards of management. But their influence was limited. It was a trap enticing union leaders to side with managers rather than their members. This is not what we mean by nationalisation!
If we had a genuine nationalised energy industry, owned fully by us, we would pay back compensation only on the basis of proven need. Super-rich shareholders would not receive a penny.
We also demand genuine workers’ control and management. A body made up of elected trade unionists from the industry, elected representatives from communities of service users and some elected from the national trade union movement could manage and plan energy in the interests of the working class.
That would give workers real control over working conditions and hours, production methods and initiatives. And workers elected from wider society could be involved in making decisions based on what is needed by people and to limit and reverse climate change. We could invest in green energy and keep energy prices down, without having to pay greedy shareholders.
Telecoms: technology hamstrung by profit and competition
Clive Walder, retired BT worker and Communication Workers Union activist
Telecommunications are more important to the vast majority of humanity now than at any time in history. If the telecoms system collapsed it would severely impact lives. It is vital that it is both accessible and affordable.
The big telecoms companies don’t quite see it the same way, however. To them, profit is the sole driver. Because of that, there are still some remote parts of the country where broadband is patchy or non-existent.
The whole development of telecommunications has been closely bound to the profitability of providing new services. This decided if and to what extent the network was developed. Telephone services were initially provided by small local companies or local councils and worked under the umbrella of the National Telephone Company. It proved impossible to develop an integrated telephone network under private ownership, so responsibility was passed to the Post Office in 1912.
Public ownership and billions of pounds of investment made the industry enormously profitable, and it became an early target for privatisation under Margaret Thatcher’s Tory government in 1984. While the old state operator had, and its descendant BT still has, an obligation to provide services anywhere in the country for a uniform cost, the new private companies could pick and choose where they provide services, decisions based purely on profits.
Growing pressure
This led to growing pressure on BT to scale back on socially useful but loss-making services. In order to maintain profitability and secure investment for the future, BT began to attack the relatively high pay and good working conditions of its staff, including axing jobs. The other effect of privatisation and competition was the building of duplicate networks in the most profitable areas, leading to a huge and unnecessary overcapacity of cables.
The introduction of cable TV saw an explosion in the number of telephone companies, many just local franchises covering one or two towns. One by one they were bought up by bigger companies and now most customers just have a choice of BT or Virgin Media. This proves that telecoms, like other utilities, is a natural monopoly. Takeovers and mergers are a natural feature of capitalism and can never be eradicated from its working. Broadband is another example of how capitalism is unable to develop the full potential of new technology. While broadband only became available to the mass of the population at the turn of this century, the technology itself was available much earlier.
In the early 1980s, the Post Office Engineering Union (part of today’s Communication Workers Union) saw the potential of using broadband technology to carry out repetitive tasks and things like remote health screening and working from home, using the time saved to share work out and shorten the working week. This became union policy. But broadband wasn’t developed then because the capitalists could not see a profitable application. This only changed with the introduction of home computing and the internet.
Telecoms companies make huge profits exploiting our need and desire to communicate, and have managed to connect us as never before. Capitalism is a system driven by the blind pursuit of profit and will always put profits above our needs. That’s why, to provide the maximum benefit modern telecommunications can provide, the infrastructure and operating companies need to be publicly owned and democratically planned on a global basis.
