Reversing privatisation would save households £250 a year

Polls also show the majority of the public would support bringing services under public ownership.

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Polls also show the majority of the public would support bringing services under public ownership

Households would save around £250 a year if energy, water and rail were in public ownership.

New research by Corporate Watch and We Own It suggests that savings would be made both from shareholder profits not being paid as well as from the fact that the government could borrow more cheaply than private companies to raise the money needed to invest in services.

In 2013, private energy, water and rail companies paid out £12.7 billion to investors. If these services went public, there would be a total saving of £6.5 billion; £4.2 billion from energy, £2 billion from water and £352 million from rail services.

This would filter down to household savings of £160 on electricity and gas, £75 on water and £13 on railways.

This week is important in assessing the impact of privatisation. Monday marked the 28-year anniversary of gas privatisation while Thursday will mark 24 years since electricity privatisation. Friday is the 25th anniversary of water privatisation.

The research also comes just after the government’s decision to reprivatise the East Coast railway.

Prices of these services have been have been outstripping inflation for years. Between 2007 and 2013, household gas and electricity bills rose in real terms by around 41 per cent and 20 per cent respectively.

In real terms, water bills have increased by 50 per cent since privatisation, while rail fares are 23 per cent higher than they were in 1995. These companies are owned by some of the richest people in the world, including banks, investors and foreign governments.

Cat Hobbs, director of We Own It, said:

“Households are getting squeezed by ever rising train ticket prices, energy bills and water bills, while incomes can’t keep pace. Politicians talk about the cost of living, but it’s time to look at the cost of privatised living.

Privatisation is a failed experiment while public ownership could be a much more efficient alternative. We could run these services ourselves and save money, either for households or for government.”

According to polls, 66 per cent of the public want railways to be in public ownership, 68 per cent want energy to be in public ownership and 71 per cent want water to be in public ownership.

The authors of the research add that the actual savings of making these services public would probably be even higher than estimates, as the costs involved in regulating and outsourcing private services would be eliminated.

26 Responses to “Reversing privatisation would save households £250 a year”

  1. itdoesntaddup

    Fantasy economics. I assume you think that the assets of these operations can be financed at no cost? Or that “nationalisation” won’t in practice lead to a raft of expensive, badly negotiated PFI deals in a bid to try to keep the finances off the publicly acknowledged debt figures – as in the NHS?

    The reasons our utilities bills have soared relate to political interference and regulation. Pricing and investment is controlled by regulators and politicians and Whitehall, who decide that we must invest in egregiously expensive energy sources and fixes the prices they get for their output to guarantee profits, and disinvest in cheap ones; that we must observe the EU Water Directive that is designed to cope with Spanish drought problems, not the UK’s wetter climate. These industries are in effect already nationalised, with only a rump of competition based on trying to cut the cost of billing services to save a few pennies in headline prices at the expense of customer service.

    The Miliband price freeze idea has landed us with just that – locked in high prices – just when they should be falling in sympathy with international oil and gas prices, because his threat effectively forced the companies to lock in their prices forward.

    If you really want to lower prices to consumers, get rid of the stupid energy policy and excessive regulation and allow some proper competition back into supply: ditto for water. It worked before. It can work again.

    That leaves rail: a nineteenth century form of transport that simply can’t compete on a level playing field against road and air transport. It absorbed £6.8bn in subsidies in 2013: those won’t go away if the train operators are nationalised.

    All of this will require substantial sums to be paid in compensation for contract terminations, adding yet more to the national debt – plus of course the cost of the underlying assets.

    Got a few hundred billion pounds lying under the table to fund it all?

  2. swat

    It would, but Labour simply haven’t the b***ls to do it. Re-Nationaliastion would prevent wastage and duplication and inefficiencies in most Public Services. It would also meet the needs of most citizens too, and provide pride in a British owned Industry.

  3. madasafish

    So assets can be repurchased at nil cost?

    Moronic.

    I use the word advisedly because it is. And before anyone suggests compulsory nationalisation without compensation, the HRA will prevent it: apart of course from the Governments of the companies which own the assets.

    Really this is written for children and those who are unable to comprehend the world in which they live.

  4. Selohesra

    Polls also show the majority of public would support restoration of capital punishment for certain crimes – that does make it right though

  5. blarg1987

    Costs would be greatly reduced as government costs to borrow are lower then private (most private companies are actually borrowing of the money markets or themselves to finance existing services).

    We can reduce costs by waiting for rail franchises to expire and not re tender (free).

    We can also tell the energy companies we will no longer subsidise them and if they want government subsidies it is exchanged for a stake in their companies. If they really throw their toys out the pram we can say we want our money back.

  6. Leon Wolfeson

    You’re ranting.

    Water is a regional monopoly so there is no real bar to wholesale nationalisation, at low to no cost. Trains can be renationalised by not issuing new TOC’s.

    Gas and Electric can’t be directly renationalised without compensation, but their vertical monopolies can and should legally be broken up – other EU countries such as Ireland have done so and won the legal challenges thereunto.

  7. Leon Wolfeson

    The UK has regional water shortages. This is because we have regional monopolies which have no required mandate to use those newfangled “pipeline” things. You’re blaming the EU for that, when it’s entirely UK-domestic.

    Moreover, no, there was never any way power prices would fall, please don’t make silly statements like that. Previous falls have not been passed onto customers, period.

    You’re happy with skimming constantly off consumers for profit, always plenty for that.

  8. itdoesntaddup

    Read the Water Directive: it insists that water be managed river basin by river basin. Trade via pipelines is strongly discouraged, as is the building of additional reservoirs. Rationing by price is strongly encouraged.

  9. John Mangan

    Though the Tories are ideologically wedded to the idea of selling off industries that belong to the people without compensation the truth is that 65% of our railways are owned by NATIONALISED foreign train services, French and German. They know what our so-called leaders refuse to face ie railways that do not need to pay shareholders can put more into the service and infrastructure. It seems they are clever enough to exploit the economically illiterate Tories to subsidise their own and who can blame them? It’s Thatcher, Cameron and Co who are to blame for our railway mess. http://www.express.co.uk/news/uk/410039/The-great-train-robbery-How-we-subsidise-foreign-rail-fares

  10. madasafish

    Stop subsidies: so no more windmills, no more green energy , no more nuclear power and no more cheap insulation for the poor.

    Are you sure that is what you want?

    Because if that is what you get, we will surely run out of electricity generating capacity by 2020 and blackouts are inevitable..

    ( NOTE: I am NOT saying all energy subsidies are desirable.. Just pointing out the effects of removing subsidies as suggested..)

  11. Joe Bloggs.

    If you’re a customer of EDF Energy, you are giving money to the French government.
    Think on that.

  12. blarg1987

    I know what you are saying, I am suggesting we remove the subsidies given to the energy companies and that they should cough up the difference via share dividend payments instead.

    I doubt the energy companies would go that far but at least we would get free stakes in those companies.

  13. Leon Wolfeson

    So you’re arguing that the present UK system is illegal in the first place? I see.

    PS, you’re missing a few important parts from your reading there.

  14. Leon Wolfeson

    We’re headed that way anyway, hence “smart” meters to selectively black out areas, as cash has been going to profits, thus lowering investment in new generation.

  15. John Mangan

    Scientists have proven that apples are not oranges. You have made a false analogy that has no place in a serious discussion of nationalisation.

  16. Selohesra

    You are missing the point – the article trumpeted the alleged public support (although they were probably asked leading question) – I was merely pointing out that the public cannot always be relied on to get the right answer

  17. John Mangan

    I am not missing the point you are attempting to make. I’m telling you that your analogy is illogical and has no place in a serious discourse. On top of that you just made an assumption based on your own prejudice ie “although they were probably asked leading question” for which you have not one jot of evidence.

    The death penalty is a priori a bad solution to law and order problems. In addition it has been proven the death penalty costs the state more than life imprisonment. That SOME people still think it’s the right solution is only proof that there are a lot of unthinking sheep in our population.

    Renationalising infrastructures as large as the railways for example can be proven to be the RIGHT solution as was demonstrated by the success of the East Coast line when it was taken back into public hands after its failure in private hands.

    Hence oranges are not apples and arguing from emotion is worthless. Only facts matter.

    http://rationalwiki.org/wiki/False_analogy

  18. Selohesra

    You are still missing the point – whilst the article highlights public support it is relevant to highlight that public sometimes support bad things

  19. John Mangan

    Yes. Lots of Germans supported the Nazis and voted for them. Lots of morons vote Tory even though it’s against their interests.
    All that has absolutely nothing to do with nationallisation being demonstrably superior to privatisation in certain national and crucial industries. Oranges are not apples. If you lack the wit to understand how off topic you are I’m not wasting any more time attempting to educate you.

  20. Selohesra

    Still missing the pont – are you an alias of leon wofeson? – all I was pointing out is that populist measures are not automatiicly good ones. No more no less

  21. John Mangan

    The trouble with your “point” is that it is so bleeding obvious it isn’t a point at all. It’s a well-known fact. It isn’t up for debate. Whether renationalisation is desireable IS a debateable point. Stop wasting our time with points as obvious as “sometimes the sky isn’t blue” or “sometimes it rains when there are rain clouds but sometimes it doesn’t”.

  22. Selohesra

    I agree it was an obvious fact – but obviously struck a nerve with you 🙂

  23. John Mangan

    Yes you just go on comforting yourself that making obvious statements in discussions that are way above your head is a “contribution”.

  24. Selohesra

    So we both agree my comment was correct – but because you dont like it you resort to abuse. Can i help it that i dont have the benefit of your towering intellect? What an arrogant fool you are!

  25. John Mangan

    You are an utter waste of time. We agree on nothing except you argue like a five year old. Bye bye, sonny.

  26. Selohesra

    But you said my point was bleeding obvious – i assumed that meant obvious enough for you to undestand it

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