Privatisation

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Using this image on "Conflicts of Interest" titles in MPs pages. Would it go better in Government Subsidies ?

ToDo: Combine this page with Privatisation Policy.
Privatisation has one goal: to make a profit for companies that use public money to deliver public services. There's never any difficulty in getting paid when you're sucking on the govt's tit. What's not to like?
Privatisation is always accompanied by a lack of accountability and transparency, so companies cheat, lie, distort their figures, and generally do whatever they can to maximise their profits. Why wouldn't they?

Privatisation is the sale of a state-owned enterprise to private investors.

  • Mar.03.2016: The great British sell-off. In its Spending review in Nov.2015, the govt encouraged departments to find land and property to vacate and sell, with the aim of raising around £5 bn up to 2020. Financial and corporate assets are also being flogged to the private sector: this financial year the Office for Budget Responsibility (OBR), the govt's independent forecaster, thinks the Treasury will raise £30 bn from selling assets like shares in Lloyds Banking Group plc and Royal Bank of Scotland — which were bought during the financial crisis in 2008 and 2009 — and Royal Mail, with an extra £47 bn expected over the next 5 years. These asset sales will provide cash that the chancellor George Osborne can use to pay down public debt, which swelled from 37% of GDP in 2007 to 83% this year. The Economist.

What is the main aim of a firm? To maximise shareholder wealth.
Why? Because shareholders vote with their wallets. If they don't get a good return (dividends), they will sell their shares and buy better-performing ones elsewhere. That means the share price goes down, which in turn means the value of the firm goes down.


Links

Why Privatise In The First Place?

The Thatcher government claimed that privatisation would increase efficiency and thus in turn the public and all those involved would benefit. It has also been argued that the government decided to privatise (water) in order to provide a mechanism through which new investment could be made in the (water) infrastructure without financing this investment through taxation or borrowing. There is little doubt that some of the Victorian infrastructure needed renewing. But this is only part of the story; privatisation can be seen as part of an effort by the state to disengage from investment while stimulating capital accumulation. We would argue that the stimulation of capital accumulation was the more forceful driver behind water (and other) privatisation. As a consequence of this, average household water bills have increased by almost 40% in real terms in the first decade under privatisation.

That's the standard technique of privatisation: defund, make sure things don't work, people get angry, you hand it over to private capital.

— Noam Chomsky

State-Owned Assets

Infrastructure

Buses

ToDo: Bus UK Forum, link (see list of council bus companies absorbed between 1968-1974 w/the intro of PTE's)
See main article: Transport Policy#Buses

British Rail

ToDo: Rail Forum, Freightliner Group, British Rail, link, link
  • In 2012, Minister for Transport Simon Burns admitted in Parliament that it had been Faithful+Gould who had been responsible for the franchising policy design for the InterCity West Coast franchise competition which was abandoned.ref The Laidlaw Inquiry made no criticism of the firm's conduct.ref link
  • Interfleet Technology: formed in 1994 through an MBO of British Rail’s former inter-city train engineering services business unit, Interfleet expanded significantly. As well as acquiring companies in Sweden and Germany, it opened offices as far apart as the USA, India, China and Australia. From an initial team of 90 people, the company currently (2011) had 600+ employees based at 22 international locations on 4 continents, including 300 staff in the UK where it has offices in Edinburgh and London as well as its traditional headquarters in Derby. Earlier this year the company launched a new business in the form of Interfleet Transport Advisory Services. SNC-Lavalin Group Inc acquired Interfleet Technology's rolling stock engineering and rail operations consultancy business in Oct.2011.ref interfleet.co.uk.arch, interfleet-technology.arch

Network Rail

Energy

ToDo: Currently parked in Privatisation_Policy#Electricity; needs a better home.

Land and Forests

©Seppo Leinonen, 2011 link
  • Apr.2018: Will we stand by and watch the privatisation of our forests?. Plans have emerged of the Forestry Commission’s proposals for Mortimer Forest outside Ludlow. Forest Holidays wants to erect an estate of 70 luxury chalets in the forest. It is a "scattered" luxury hotel, serviced by car parks, toilets, recreation areas and “landscaped lookouts”. Forest Holidays was created in the 1960s by the Forestry Commission, which still holds a 14% share in the company. Under a bizarre 2012 "framework agreement", the company is given the right to develop as many as 30 sites across the forestry estate at any one time, with no eventual limit. In Dec.2017, Phoenix Equity acquired 42% of Forest Holidays for £110m. This valued the company at an extraordinary £262m. The reason was soon clear when Forest Holidays’ chief executive, Bruce McKendrick, justified the high price on the grounds that "the [forestry] commission has a million hectares of forest, so we’ve got plenty to keep us going for many years to come". That is equity-speak for “we struck a goldmine”. The govt has granted a private company exclusive access to exploit a public land bank. There will be no competitors, no rival bidders and no limit to its growth. Indeed, the company and the commission make planning applications jointly, as if they were one and the same. The agreement also promises that the sites cannot be opposed, provided they are not in a nature reserve or protected area. Should anyone object, such as an uppity planner, the Forestry Commission has “a duty to help bypass regulations”. This means that a body that exists to maintain Britain’s forests is party not just to their privatisation but to their complete exploitation – and for as long as 125 years. The Forestry Commission is selling off a public land bank already worth £262m, yet hardly a penny (other than 14%) is coming to the taxpayer. This is pure banana republic. Simon Jenkins, The Guardian.
  • Mar.17.2015: Forest Holidays: Forestry Commission Stake. Janet Royall asked "To ask Her Majesty’s Government what steps they are taking to protect the Forestry Commission’s stake in Forest Holidays and to ensure that in the event of a sale by the majority shareholder they would not lose all management control of any future development." Rupert Ponsonby (Lord de Mauley): "If the controlling interest is sold, the Forestry Commission may be required to sell its interest in the company by the buyer, including the Forestry Commission’s stake in the business." (Hansard) Mark Avery.
  • Dec.08.2014: Public forest estate sell-off – what next? In Jul.2013, the govt published a paper outlined the mission and objectives of its proposed new Public Forest Estate Management Organisation. The Parliamentary timetable "did not allow" for the bill to be accommodated. House of Commons Library.
  • Jan.31.2013: England's forests will be protected by new public body. England's public forests will be held in trust for future generations by a new and independent body, Owen Paterson said. Mary Creagh said ministers had quietly cut Forestry Commission funding from £45m a year in 2010 to £33m in 2014. "Handing our forests over to a trust is interesting but has no legislative timetable and no funding behind it." Did this ever happen? Damian Carrington, The Guardian.
  • 2012: At some point, a "Framework Agreement" between the Forestry Commission and Forest Holidays was drawn up. ref, ref
  • Jul.2012: Independent Panel on Forestry: Final report. The Panel recommended that the Public Forest Estate should remain in public ownership and that it should be run independently from govt under a charter, renewable every 10 years. It further recommended that its new management organisation should be "explicitly tasked ... to get as much value as possible from its assets and include within its main purposes to ... maximise the public value of the estate in terms of ... recreation; and to work in partnership with others to grow local woodland economies". This is privatisation by the back door. Gov.uk.
  • Mar.06.2012: Is the government planning a further U-turn on selling our forests?. There are many battles still to be won to protect our forest heritage and public pressure remains crucial. Jim Paice, Nov.24.2010: "Part of our policy is clearly established: we wish to proceed with ... very substantial disposal of public forest estate, which could go to the extent of all of it." Jim Paice, Jan.19.2012: "In fact, there never was any intention to dispose of the whole public forest estate." And the Tories wonder why they are not trusted? Caroline Lucas, The Guardian.
  • Oct.29.2010: UK government confirms forest sell-off plans. Defra says proposed sale of Forestry Commission land would create opportunities for private sector and civil society. The measures have already provoked a storm of controversy with opposition from the public and unions but guarded enthusiasm from many charities and conservation groups who expect to benefit from buying or managing the woodland that will become available. See also The Forestry Commission and the sale of public forests in England. John Vidal, The Guardian.
  • 1996: under the previous Conservative govt 209,956 hectares of Forestry Commission land were sold. What proportion of that retained public access, what proportion went to community trusts, and what proportion of the new sales will go to such trusts? Hugh Bayley, Feb.02.2011 ref
  • 1981: After introducing the Forestry Act 1981, the Tories sold off 72,500 hectares in 3 years. The forests that the Tories sold off in the 1980s and '90s have trebled or quadrupled in value. Where is the public benefit from those increased land values? The Forestry Commission costs each of us 30p a year. That is 30p to preserve our shared history, our cherished ancient oaks, ash and beech-sold for 30 pieces of silver! The Government's plans will destroy the funding model that has protected England's forests for nearly 100 years. If we sell the commercial timber lands, we starve the ancient woodlands. That is the simple equation and the fundamental fallacy at the heart of the Government's proposals. Mary Creagh, Feb.02.2011. ref

Water

Health Care

"In a totally free market health care system, you must be willing to let some patients die." --emergency room physician Farzon Nahvi CommonDreams.org

  • Which PR companies are actively promoting image of a failing NHS to facilitate privatisation? (long list of Tory MPs with links to private health companies, mostly US) link May.10.2013

Education

Housing

x

Land Registry

See articles in Land Enclosure

Companies House

x

Agriculture

Milk Marketing Board

National Archives, National Archives, Milk Marketing Boards, Milk Marketing Boards, The history of the Milk Marketing Board, 1933–1994, The abolition of the Milk Marketing Board did not help us dairy farmers, Dairies alarmed by free market for their product, DDG Pics: /Images/Saved-Pics/Milk-Marketing-Board/

  • 1994: MMB broken up.[1]
  • Breeding & Production division established. Post-privatisation, this was acquired by ?? Was this the "root" of Dalgety plc's Pig Improvement Company?
  • 1933: Milk Marketing Board was established.

Articles

  • Oct.17.2018: Britain fell for a neoliberal con trick – even the IMF says so. For much of my life, and probably yours, the political class has made this pledge: that the best way to run an economy is to hack back the public realm as far as possible and let the private sector run free. That way, services operate better, businesses get the resources they need, and our national finances are healthier. David Cameron slashed public spending, to stop it “crowding out” private money. It’s why water bills are so high and train services can never be counted on. From the debacle of universal credit to the forced conversion of state schools into corporate-run academies, the ideology of the small state – defined by no less a body than the International Monetary Fund as neoliberalism – is all pervasive. I want to address the most stubborn belief of all: that running a small state is the soundest financial arrangement for governments and voters alike. Because 40 years on from the Thatcher revolution, more and more evidence is coming in to the contrary. Last week the IMF published a report ... that reframes the entire debate over austerity. It totted up both the public debt and the publicly owned assets of 31 countries, from the US to Australia, Finland to France, and found that the UK had among the weakest public finances of the lot. With less than £3 trn of assets against £5tn in pensions and other liabilities, the UK is more than £2tn in the red. The IMF’s reasons all come back to neoliberalism. Thatcher loosed finance from its shackles and used our North Sea oil money to pay for swingeing tax cuts. The result is an overfinancialised economy and a government that is £1tn worse off since the banking crash. The other big reason for the UK’s financial precarity is its privatisation programme, described by the IMF as no less than a “fiscal illusion”. British governments have flogged nearly everything in the cupboard, from airports to the Royal Mail – often at giveaway prices – to friends in the City. Such privatisations, judge the fund, “increase revenues and lower deficits but also reduce the government’s asset holdings”. What this IMF research shows is that the Westminster classes have been asset-stripping Britain for decades – and storing up financial trouble for future generations. more Aditua Chakrabortty, The Guardian. See also We let finance rip and flogged our assets. Austerity was bound to follow
  • Jan.20.2018: Our wasted billions on failed Carillions. Once again a major failure of Britain’s construction industry, banks and govt threatens the provision of public services and thousands of jobs because of the insatiable greed of big business. (tags: HS1, Channel Tunnel, modernising the London Underground, East Coast Line) John Prescott, The Mirror.
  • Jan.09.2018: We can undo privatisation, and it won’t cost us a penny. 75% of British voters want our rail, gas and water renationalised but it’s expensive – there is a business model that offers the best of both worlds. The trouble is, it’s expensive: at least £170bn on most estimates. What voters want is the best of both worlds. Public services run as public services, but with all the dynamism and autonomy of being in the private sector, not least being able to borrow for vital investment. Building on the proposals of the Big Innovation Centre's Purposeful Company Taskforce,[1] there is a way to pull off these apparently irreconcilable objectives – and without spending any money. (Thames Water, BT, Stagecoach, Virgin) Read the comments section. Will Hutton, The Guardian.
  • Jul.2015: State-owned asset sale will set new record, as Osborne plans to sell off stakes worth £32bn this year to bring down debt, the highest figure ever. The plethora of privatisations will include holdings in RBS, Lloyds, UK Asset Resolution, which houses the loan books of Northern Rock and Bradford & Bingley, and Royal Mail. George Osborne: "We can make faster progress in returning our banks to where they belong – the private sector. Indeed, the sale of govt assets this year will deliver the largest privatisation proceeds of all time, higher than the previous record in 1987". Robert Chote, chairman of the Office for Budget Responsibility, said: "The govt is planning to sell financial assets worth £32 bn, which reduces public sector net debt straight away but forfeits the flow of income that these assets would generate in the future". Peter Campbell, This is Money (Daily Mail).
  • Jun.28.2015: "Shrinking The State"" Privatisation in the UK. (pros + cons + timeline) Privatisation is the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. It is also used by some to describe the outsourcing of public services or functions to private firms, eg. revenue collection, law enforcement, and prison management. (Pros vs. Cons) AlienInTheAttic, A View from the Attic.
  • Jan.13.2014: Sale of the century. Emerging countries have led the march on privatisation in recent years. The govts of rich countries with lots of debt have plenty they could also sell, say our correspondents. The Economist, '
  • Oct.13.2014: The Great British sell-off. Who's in? A stake in Eurostar is up for grabs and will herald a privatisation jamboree to tackle the nation's debts and fix the economy. But not everyone is keen. The Independent, Jim Armitage
  • Apr.11.2013: Privatisations of the 1980s attest to the success of Thatcher's revolution. Of all Margaret Thatcher's many, many achievements, it is easy to forget just how revolutionary and successful was her programme of privatisation. Every single privatisation was opposed by Labour – and by many nominally on her own side. Former Conservative Prime Minister Harold MacMillan lamented that it was tantamount to "selling off the family silver". Yet this precious metal analogy was wrong: privatisation was a goose that continued to lay golden eggs throughout Thatcher's term in office, and beyond. This was a policy, originally developed at thinks tanks like the Centre for Policy Studies (CPS) and the Institute of Economic Affairs, which broke a ratchet that since 1945 had seen more and more industries taken under state control. (This arsehole is director of the CPS) City AM, Tim Knox
  • Aug.05.2011: First public property map - councils could save billions (not avail. since Jan.11.2013). A 'demo' map published today locates over 180,000 assets owned by almost 600 public sector bodies, including central govt and 87 councils. Eric Pickles Gov.uk, Ministry of Housing, Communities & Local Govt
  • Aug.31.2000: From State to Market" a Surve of Empirical Studies on Privatisation. The political and economic policy of privatization, broadly defined as the deliberate sale by a govt of state-owned enterprises (SOEs) or assets to private economic agents, is now in use worldwide. Since its introduction by Britain's Thatcher govt in the early 1980s to a then-skeptical public (that included many economists), privatization now appears to be accepted as a legitimate – often a core — tool of statecraft by govts of more than 100 countries. Privatization is one of the most important elements of the continuing global phenomenon of the increasing use of markets to allocate resources. University of Georgia, W.L. Megginson, J.M. Netter

References

  1. ^ Cite error: Invalid <ref> tag; no text was provided for refs named big-inno