The recent controversy over train timetabling and the returning of East Coast to public ownership has thrown the entire concept of privatisation into doubt, with the majority of Britons now in favour of the renationalisation of a variety of industries from rail to water companies.
A series of scandals over rising prices and poor service has moved the Overton window on essential industries, with the British public no longer in support of the Thatcherite idea of privatisation, and instead behind Jeremy Corbyn’s Labour party’s plans for widescale renationalisation. Many voters believe the so-called “crown jewels” were sold off too cheaply and rich investors have run rings around the regulators to generate dividends for shareholders at the expense of the British taxpayer.
When the leading financial institutions that advised the government on the sale of Royal Mail undervalued it to such an extent that shares rose from 330p to over 500p immediately after the IPO, it looked to many that once again the financiers were extracting billions from what many consider to be critical British assets. And when the government let Virgin and Stagecoach walk away from their East Coast mainline franchise without forcing them to buy out the remainder of the contract, their fears were confirmed – privatisation was a scam.
The RMT general secretary, Mick Cash, spoke for many in the country when he explained: “Three private operators (GNER, NXEC, VTEC) have failed on East Coast with bids promising £1.3bn, £1.4bn and £3.3bn respectively. Privatisation has been a total failure.”
After 40 years, privatisation can now safely be described as a failure in function and form, as it has neither delivered improved and efficient services for lower costs or made Britain a nation of share-holders. Large-scale privatisation and financial deregulation defined the 1980s, but the result of those changes on share ownership are now clear – rather than Thatcher’s idea of “popular capitalism”, shares in UK companies have instead increasingly become owned by foreign entities, mostly based in the US.
As the effects of Brexit start to be felt across the share and fx trading markets, the British public have finally woken up to the fact that there is nothing else to sell to shore up the public finances when the option is most needed. The question now is whether this realisation has come too late?
