The Thinking ‘Kat: Private or Public?
In a prior post, I wrote of where I sit on the political spectrum. In that post I referenced the privatisation of public services, and why I believe this to be a bad idea. In this post, I aim to expand upon my reasoning. I will be paying a particular focus on the United Kingdom, where governments have privatised a number of public services, with what I consider to be disastrous results.
The Railways
Back in the 1990s, the UK government of the time – John Major’s Tories – set about privatising the British railway network. British Rail became Railtrack, who were responsible for the tracks, signals and general infrastructure, whilst TOCs – train operating companies – took over the duties of scheduling, running and maintaining the trains themselves. Different companies bid for the right to run services, and it was expected that they would fight hard to perform to a high standard, lest they risk losing their franchise. Of course, what happened is that corporate greed inevitably reared its ugly head.
In 2002, a high speed train derailed near the town of Hatfield in Hertfordshire. I quite vividly remember this, for I was due to get on a train to London, via that section of track, the following day. The crash caused four deaths, injured many more, and it brought into sharp focus how poorly Railtrack had managed the railways. The derailment was the result of a cracked rail, and it was soon discovered that Railtrack had been aware of the problem. Poor management, and the excessive use of out-sourced contractors, along with poor communication, meant the tracks were not replaced, and Railtrack had no idea how many other weakened rails were out there. A hasty program of repairs was started, but this incident proved to be the end of Railtrack, and the government took back control of the railway infrastructure.
Successive TOCs have faced financial problems, and required the government to bail them out of trouble. In some cases, some TOCs have transferred back to public hands, due to woeful standards of performance. The cost of train fares has risen twice as fast as wages, services are inconsistent, the ticketing system is horribly complicated, and Britain’s railways are noted for their considerably inefficiency when compared to elsewhere. There is an excellent post on the subject here.
Water
The privatisation of this particular key service has not just been an example of cost-cutting corporate greed, it has also demonstrated that public health can be placed at risk. Whilst water companies pay out huge sums of money to shareholders, infrastructure is creaking, customer bills are rising, and untreated sewage is routinely making its way into Britain’s rivers, lakes and beaches. To add insult to injury, water companies were debt-free when privatised, yet have since taken on £60 billion worth of debt, whilst investors have withdrawn £85 billion in shareholder pay-outs.
It is absurd to think that the problems water companies face can only be dealt with by charging customers more. Ceasing these pay-outs and using that money to cover the costs of faulty infrastructure would be by far the best course of action. Once again, you can find a great article on this here.
Energy
In the 20/21 financial year, Britain’s top six energy companies recorded more than £1 billion of profit between them, right before Britain’s energy markets went into crisis mode. In 2022, BP alone recorded profits of £7 billion, at at time when consumers faced bill increases of up to 250%. As with water, energy infrastructure has lacked investment, shareholders are benefiting enormously, and it is left to the public to foot the bill. You can read more about this here.
Why Privatise?
The theory behind selling off public services – aside from the initial injection of cash it gives to public coffers – is that a competitive market in any given field will yield better results. A company that under-delivers or is over-priced will either have to improve, or it will fall by the wayside, with another business stepping in or taking over its share of the market. The grim reality is that these three key public services have all suffered, and consequently so has the British public. Corners get cut, shareholders take priority, and because a number of these companies have needed to be bailed out over the years, the cost to the public is actually even higher. There has been no tangible benefit to privatising these services, unless you happen to be an executive within them, or you are a shareholder.
The key element to remember is that public services are often crucial. A good transport network is pretty important to a country. Water and power are certainly vital. This is not like two rival companies that are both designing and selling computers, or TVs. If a water company fails to properly execute its duty of care, people can get sick, and potentially even die. If railway companies do not do their jobs properly, people can die. If energy companies do not discharge their responsibilities correctly, people can die. Placing profit ahead of public interest inevitably leads to cost-cutting, and corner-cutting. This has been demonstrated time and time again, so I hope, with this in mind, that key public services come back under public control, sooner rather than later.
Please read about Rick Parks who was the whistleblower on whistleblower.org
He worked on Three Mile Island nuclear power plant after the accident and talked about how the company which owned Three Mile Island contracted with another company Bechtel Corp to do some of the cleanup work. The Bechtel was only paid when a “task” had completed and if I understand correctly for a previously agreed money amount. What happens with this is until you start doing the work you will not know everything that needs to be done. Bechtel was being pushed to get as much done as quickly as possible so some VERY NECESSARY things within a task were not completed.
Rick Parks does not denounce nuclear power in general, but says it cannot be for profit because things will come up which no one thought about, and the profit motive pushes companies to turn a closed eye to these problems.
A potent warning on privatisation, thank you for sharing this Barbara.