by benrmatthews on 7/11/23, 9:20 AM with 588 comments
by wolframhempel on 7/11/23, 9:45 AM
by tnel77 on 7/11/23, 9:40 AM
I get that the government can be annoying, but I feel like there are many services that we should aim to provide as a society where profit isn’t the goal. For example, you don’t need to price gouge people for electricity, but charging enough to cover expenses and future infrastructure upgrades is fine and to be expected. No costly CEO or shareholder overhead thrown in there.
by lhnz on 7/11/23, 10:45 AM
It's alarming to note the extent to which our resources have been sold off. The Conservative party, for instance, facilitated the sale of nearly 10% of Thames Water to China, and a further 10% to the Abu Dhabi Investment Authority.
Effectively, the country is being turned into a dividend machine for foreign capital, while our government debt continues to soar, now standing at over £110 billion and threatening to surpass our entire education budget [0]. This rampant exploitation of our national resources and the escalating debt crisis are alarming indicators of our economic vulnerability.
The country's economic situation is gravely concerning. Our mounting debt issues are additionally exacerbated by the looming crisis in our public services, which are showing signs of failure and are predicted to become significantly more costly. For example, we currently allocate 38p of every pound spent on public services to the NHS. However, projections show the number of Brits aged 85 and older doubling in the next 25 years [1]. Despite these alarming statistics, nobody in government or the media wants to have an honest conversation with the public about what this means.
There are also limits to how much more redistribution can be done. As per 2019/20 data, the top 1% of income taxpayers, earning above £180,000, received 13% of all income but contributed 29% of income tax receipts. The burden is even more evident when considering that the top 10% of income taxpayers were responsible for approximately 60% of all income tax receipts. In contrast, the lower half of income taxpayers, those earning less than £26,000, accounted for only 10% of income tax receipts, suggesting a significant tax skew towards higher-income earners.
It's really not looking good.
by oliwarner on 7/11/23, 11:05 AM
If you actually let public services take their gloves off, they'd shred most tender offers on sight. With few exceptions, hiring people to do things is ALWAYS going to be cheaper if done directly, and it's stupid to pretend that Serco, G4S, etc are delivering value.
There's still room for private providers, and even room for multiple providers (some public, some private) operating in constant competition. Central government should compete on centralised services. Does every hospital in the country need patient management software? Then write some centrally! Does every council need to send out letters and notifications? Then do it centrally!
It's all so stupidly simple. It's a travesty that the people making these decisions have been profiting from doing things the wrong way.
by spiralpolitik on 7/11/23, 9:46 AM
From the perspective of the British public it's been a complete disaster.
by chaosite on 7/11/23, 9:38 AM
by pharmakom on 7/11/23, 9:47 AM
by jmacd on 7/11/23, 1:39 PM
It is no longer possible for Canadian provinces or cities to make any effective use of infrastructure that we had built and maintained for over 100 years. My city had developed a plan for light rail, but required some access to CN tracking, and CN refused to even review a proposal. They also launched a major lawsuit against the city/town to try to get out of their commitment to maintain some safety infrastructure around their property. Their attitude seemed to be "we have deeper pockets than you".
In my own neighbourhood, there is a track that runs through a railway cut. A group came together and had built a beautiful multi use trail. They asked for an easement on a part of the CN right of way/property that was nowhere near the trackage and had been used as a path since time immemorial. What did CN do? Within weeks they erected a 6 foot fence around the entire property. They never even responded to the letters.
They freight business absolutely did benefit from private ownership. The workings of the capital markets have created an efficient machine.
The trackage they run on should never have been privatized. In return Canada will never have any decent passenger rail and no city pairing in Canada will ever be able to build a reliable or reasonably fast rail network.
Failure of privatization is in a lot of ways a failure of aptitude, or an exercise in grift. I'm not sure which exactly. It was either not well thought out, or very well thought out... depending on which side of the table you might have been sitting at.
by Wildgoose on 7/11/23, 9:55 AM
In many cases it can't even be described as "privatisation" because the resulting industries have been bought by other people's governments. It is literally the worst of all worlds.
by rob74 on 7/11/23, 9:41 AM
by Lockyy on 7/11/23, 9:46 AM
The generational wealth the UK had in the form of North Sea oil passed off to private interests for their own profit rather than used for the creation of a sovereign wealth fund like the ones Norway has is a perfect example of the sort of backwards situation you end up in. That oil could have been used for the benefit by every member of the UK public and instead is used only for the benefit of the few while the public suffers under outrageous energy and cost of living increases.
edit: added missing word, "has" after Norway
by efields on 7/11/23, 1:36 PM
My basic woke laymen POV is that the in last 150+/- years, we figured out 100% of how to sustain humanity at scale and even offer some perks like efficiently traveling huge distances. Greed/nationalism/willpower get in the way from time to time, mucking up the works, but creating opportunity for well-timed industrialists on borrowed wealth to come in and provide "solutions."
This is all viewed through glorious, rose-tinted hindsight, but what even are we doing here?
by jacquesm on 7/11/23, 10:00 AM
This is one of the big failures of the last 30 years and can't wait to see it rolled back.
by LatteLazy on 7/11/23, 9:54 AM
Should the government run coal mines at a loss which have no strategic value just to keep jobs? No.
Should the government run natural monopolies in strategic or socially important areas (like railways, water utilities, etc)? Yes.
But instead what started at privatising the former turned into an ideological push to privatise the later.
There is also the question of HOW these services should be run...
by asdajksah2123 on 7/11/23, 2:10 PM
Even then it can be a challenge to structure this correctly, but if a government and populace are willing to tolerate an iterative approach an optimal solution can be reached. I'm not entirely convinced it's better than the public alternative, especially since most of the public failures were prior to the internet and the increasing popularity of freedom of information acts, which have allowed the public to gain knowledge and influence the operations of public agencies in a way they, for better or worse, couldn't before. But at the very least such a solution could come functionally close enough to operating optimally.
But none of this is true in the way the UK privatized its water networks. The water privatization is an embarrassment of how to do privatization as wrong as possible. Alternatively, considering a primary goal of the Thatcher govt was to transfer public wealth to private purses, one could argue this privatization was done as efficiently to achieve that goal as possible.
by stoobs on 7/11/23, 10:39 AM
Power, Water, Road, Rail, and Healthcare should remain and have remained under public ownership - those are a public service and should not be run for profit. Telecoms is about the only one to have worked - ish, but it took decades and a lot of lobbying and regulation to make it happen.
by thanatropism on 7/11/23, 1:35 PM
More broadly and less strongly, the same is true of globalization. The fact that these haven't lived up to promise means we are frakked. The witch was right, there is no alternative.
by kome on 7/11/23, 10:03 AM
It's better to keep water, streets and telecommunications public. Privatizing them is a waste of resources.
by schnable on 7/11/23, 1:35 PM
by RagnarD on 7/11/23, 2:24 PM
by andy_ppp on 7/11/23, 10:27 AM
by lushy-typeable on 7/11/23, 10:05 AM
Unfortunately, this will take a lot of political capital to change. I can see there being a lot of debate about how the UK compensates private owners for nationalising the infrastructure again (likely at an inflated price). It will likely be another situation where the average person loses out, in favour of private owners, and will be made to pay the price by inflated water prices to offset the lack of maintenance and expansion that should have taken place, instead of extracting maximum funds to shareholders.
I wonder also how this will be spun - as a one off 'market failure' or as a systemic problem with extracting maximum profits at the expense of the users (i.e. enshittification).
by skrebbel on 7/11/23, 2:22 PM
I wonder why this isn’t a more common model. If a utility is effectively a regional monopoly, having said region’s governments be majority shareholders aligns pretty much all the incentives, no? And still helps keep stereotypical “civil servant” working culture out the door
by fennecfoxy on 7/14/23, 2:17 PM
When I moved in to where I am now in London (early 2020, whew), TW were already digging the road up literally every 2-6 weeks, as they'd fix a water leak, then a new leak would spring up down the road (because the newly repaired point was strong enough that other weaker points became exposed) and so on and so forth when what they really need to do is RIP ALL THE OLD PIPES OUT AND PUT NEW ONES IN.
The way that road repair seems to be done in the UK is that potholes are ignored until the road is full of them, then the entire road gets resurfaced. My road was resurfaced during this time, it was beautifully flat and new...and then FUCKING THAMES WATER CAME AND DUG IT UP TO FIX THEIR LEAKS. Newly surfaced road, now scarred with dozens and dozens of ugly patches where TW has not done their fucking job.
And now, apparently all of this obvious shit is coming to light and people are increasingly aware that water rates are bound to go up as TW finds a way to pay for all the pipes that are completely fucked because they haven't been doing their job this whole time.
What an absolute disgrace. As a Kiwi who's living here, the worst part of the UK is both sides of the useless government and the apathetic population here who doesn't outright demand more from it; I wish they were more like the French.
by Gareth321 on 7/11/23, 10:09 AM
by Vinnl on 7/11/23, 10:48 AM
One thing I don't understand here is: who's on point for that debt? Who's willing to lend that money, and why - are they just betting that there will be a bailout at some point?
by jmyeet on 7/11/23, 1:27 PM
Privatization for key services (eg public transit, health care, power generation, housing) has been an unmitigated disaster, almost without exception. It's mystifying why anyone still supports it for any reason other than self-interest.
by philjohn on 7/11/23, 2:16 PM
The main infrastructure company that operates country wide (OpenReach) are heavily regulated by how much they can charge for last mile termination. So that means there's a floor to how cheap services can be, but gives wiggle room for charging more in return for better customer service (e.g. Zen, AAISP). I pay £53 a month, with no yearly price increases, for 900/100 FTTP - which is still pretty pricey compared to other places in Europe, but from what I've seen of the likes of Comcast in the US, is pretty decent. No data caps either.
by kossTKR on 7/11/23, 1:38 PM
It's an incredible feat of psychological engineering spanning over a century, and now people love to believe in the absolute fairy tales of rags to riches, ideologically instead of realpolitically or resource driven geopolitics and meritocracy instead of the realities of an ever increasing gini coefficient.
by ricardo81 on 7/11/23, 10:33 AM
The current market cap of the company is around a 1/3rd of the value of its pension scheme. Any takeover would be under intense scrutiny from the regulator.
Thankfully when it comes to water, in Scotland we did not privatise, nor is our water metered. We also continued to build onshore wind farms, unlike in England where it was effectively banned.
by gonzo41 on 7/11/23, 10:28 AM
I know it seems simplistic, but generally the private market is full of corruption the poor can't really avoid. So they just end up victims to it.
by lumb63 on 7/11/23, 12:04 PM
The FDA and USDA are captured by Monsanto et. al. The FDA is captured by pharmaceutical companies. The FCC is run by telecom companies. The FTC is a toothless shell of itself which cannot stop any but the most blatant of anticompetitive measures (and often not even those).
What is the public to do? They can exercise choice in the market, but not when an oligopoly exists, which often only offers the illusion of choice under different brand names. The regulatory bodies have no elected positions and thus no accountability to the public. The public can elect new officials who hopefully appoint new officials to the regulatory entities, but the politicians put forth are only two flavors of the same pro-corporate regime. The media, which is deeply entangled with politicians and their will, degrades every third-party or outsider candidate at every chance they get to ensure the public never sees anything else. So even if the party at the top changes, it is still the party setting the tone, mostly, and they are funded to huge extents by all the largest corporations; and thus we have the inmates running the regulatory asylum.
Direct election of heads of regulatory bodies seems like a decent solution, but it could fall victim to the same issues as the major political parties. We could fight to get money out of politics, but with both sides benefiting from the current state of affairs, it seems impossible.
As far as I can tell, our hands are tied. I’d love for someone to tell me I’m wrong, and that it isn’t the world of multinational companies, which we just happen to live in.
by CrzyLngPwd on 7/11/23, 9:55 AM
by amai on 7/11/23, 9:17 PM
by smcl on 7/11/23, 9:41 AM
someone who is good at the economy please help me budget this. my family is dying
by roenxi on 7/11/23, 10:27 AM
Scenario 2 - Decisions are made by people shouting at each other.
Scenario 3 - Decisions involve a big review of some successful energy grids in other countries and starting with one that works really well as a baseline.
A big shouting match to decide what a successful energy grid looks like is a good idea. But fixed infrastructure is long-lasting and hard to replace - it would make sense to make the decision rationally rather than making political guesses at what might or might not work.
by refurb on 7/11/23, 10:16 AM
A good example is when people say "look how bad private healthcare is in the US!". Yeah, it's horrible because of the framework the government put around it. If you look at things like vision correction or plastic surgery, you have none of the problem you have in typical private health coverage - surprise billing, inflated costs, etc, etc.
by ehnto on 7/11/23, 12:31 PM
But my favourite example of trains done right is Japan, and to my surprise, their expansive rail network is dozens of private companies. It turned a lot of my assumptions upside down.
I still don't think we should privatise core rail infra, but obviously it can be done right. So we can at least try to do that.
by jarek83 on 7/11/23, 6:56 PM
by tibbydudeza on 7/11/23, 9:51 AM
State owned enterprises are fine if something needs massive capital investment to start off and nobody has the resources but there must be a plan for the state to disinvest.
Then again I prefer subsidies like the US does for semiconductor plants.
by avar on 7/11/23, 12:10 PM
I'm not in the UK, but searching for what those is Britain and Scotland pay for combined water and sewage annually I found claims of an average of around £410 and £320, respectively.
by SilverBirch on 7/11/23, 9:56 AM
If you look around at the British state it's very clear to see, the issue isn't whether X Y Z is private, the issue is the state spent 2010-2020 systematically ensuring the state was incapable of acheiving anything. And then decided in 2016 that they were going to repatriate a tonne of regulatory power from the EU. The result is a state that's got a lot to do, and no way of actually doing any of it.
by zouhair on 7/11/23, 12:22 PM
by notpushkin on 7/11/23, 12:38 PM
by everdrive on 7/11/23, 1:05 PM
by jcarrano on 7/11/23, 1:47 PM
Also, according to Wikipedia, the largest shareholder for Thames Water is a Canadian public pension fund, so it is at least partially public, just owned by another country.
by devjab on 7/11/23, 9:58 AM
One of the things it made sense to privatise was transportation. If you have some sort of disability you can apply for public help for various things. This can be the elderly going to play bingo, it can be parents of a disabled child getting a taxi service to and from school, and a range of other things. The financial “issue” is that it’s rather expensive to have a car park and drivers on staff, and it’s an area where some years you’ll need a lot of drivers and cars and other years you’ll need almost none. There is also a “scheduling” thing where you’re most likely going to need a lot of drivers/cars in “rush hours” and then none the rest of the time. For a range of reasons, the public needs mix very well with the private needs for taxi services. You and I will need a taxi on weekend evenings and the city will need a taxi when you and I are at work. On paper this is a very nice match. Especially in the rural cities where you can also help subsidise the taxi companies.
Here is where it gets expensive. Because taxi companies come and go. It’s hard to make money in that business, and it’s also sort of “easy” to get into it because at its most basic all you need is 1 car and 1 driver. Yes, it’s much more complicated with the various licensing and so on, but you get the point. What the city would do is to buy yearly contracts from companies. Sometimes many different companies, which would add a little to the bureaucratic “burden” but not much, and if things ran smoothly then it would be a massive win for everyone. But things don’t run smoothly. Sometimes a taxi company is going to bankrupt, and sometimes this can happen with very little warning. But you still have to get your citizens to where they need to go. In the perfect world, you would call a different taxi company and have them take over. But in the real world, there isn’t a different taxi company with available rides, because why would there be? In our bigger cities, sure, you can do this, but in around 90 of our 98 municipalities you can’t. So now you’re looking to have a 100 citizens driven around to things they can’t miss. Some things like the weekly bingo can be cancelled, but doctors appointments can’t. And the only option you’re left with is often going to be to reach out to one of the larger taxi companies in one of those 8 municipalities that don’t have your issues. Which is expensive. Sometimes it’s so expensive that a whole decades worth of savings and local investments go up in smoke compared to having just run a public car fleet.
Like I said in the beginning, it’s a hard nut to crack. Because politics aren’t going to operate on a modus where it expects things that look good to fail. Maybe someone can argue that it should, but it won’t. Because we don’t. You and I are going to look at the business case and want our cities to work with the taxi companies. Not only to be able to use public funding smarter but also because we will want to have a taxi service. We may even know a person who runs or works in the local taxi service and will want to support them. So the fix isn’t going to be to stop privatisation. At least not in all cases. I’m personally still not sold on why our waterworks should ever be privatised. But for some things, it’s just always going to make sense. So what can we do? You can’t buy insurance, and unless the companies in your area happen to be well managed and capable of producing stable profits, then you’re likely always going to sit with a situation where the best intentions turned out to be part of the road to hell?
by dave333 on 7/13/23, 11:24 AM
The bondholders/lenders lose 100% and shareholders lose 100% of equity, but have likely received huge dividends already.
Entity goes back to being public.
Lesson learned.
by noonething on 7/11/23, 12:43 PM
by fallingfrog on 7/11/23, 2:49 PM
by phemartin on 7/11/23, 1:30 PM
by FL33TW00D on 7/11/23, 11:36 AM
by chanana on 7/11/23, 2:55 PM
by JohnFen on 7/11/23, 3:16 PM
by Claude_Shannon on 7/11/23, 12:13 PM
by randomcarbloke on 7/11/23, 2:36 PM
by dusted on 7/11/23, 5:35 PM
by sgt101 on 7/11/23, 10:55 AM
They have allowed the balance sheets to become untenable, now they lose their capital. PE has sold to the next fool - but more fool them.
The debt holders are going to have to take a haircut as well, again this is a hard but fair lesson from the pages of capitalism.
by narven on 7/11/23, 9:47 AM
Privatisation means, "you that don't give a fc... take care of that problem for me"
by pipes on 7/11/23, 8:14 PM
Railways were privatised because government couldn't afford the investment required. But because of rail unions I'm currently subsidising rail travel I don't use.
Energy market competition has been destroyed by price controls (thanks Mrs May).
I can't read all the article because of the paywall. Nothing on archive.org yet. Maybe these points have already been addressed.
by jollyllama on 7/11/23, 12:16 PM
by snthpy on 7/12/23, 6:21 AM
