Tuesday, 12 April 2016

Time to look again at nationalisation

The threat posed to the British steel industry when Tata Steel announced it was pulling out of the UK has led to calls for re-nationalisation of the industry.
The Tata situation certainly put the issue of nationalisation back in the spotlight, with steel not the only sector that growing numbers would like to see taken back into public ownership.

The post war Labour government carried out the most comprehensive of nationalisation programmes, taking the Bank of England, the coal mines, railways, gas and electricity, iron and steel into public ownership.

Steel was later re-privatised by the Conservative government, before Harold Wilson’s Labour government re-nationalised it in 1967.Steel was re-privatised again in 1988 by Margaret Thatcher’s government, eventually becoming Corus.

Steel was just one part of the mixed economy terrain that had existed during the post war years. The mixed economy had seen government effectively holding the ring, via the public ownership of infrastructure areas like energy, transport, steel, water, post, telecommunications and airways. Private companies formed the other part of the mix.

Just as the Attlee government had created the rubric of nationalisation and a mixed economy, so in 1979, the Thatcher government oversaw the dismantling of this structure and a return to a total market economy. Thatcher began the process that has continued right up to the present day, with Royal Mail being one of the most recent victims of the dash to privatise.

In the RM case, the government was prepared to take over pensions and anything that could be considered a cost to potential private investors, in order to prepare the way. But what RM, and most recently the steel debacle, illustrate is the total lack of any industrial strategy on the part of government.

The privatisation virus has taken such a hold that the Cameron government now seeks to finish the job begun in 1979, selling off as it were to paraphrase former Conservative PM Harold Macmillan the last few remaining bits of the family silver.

In the case of steel, the interests of the 15,000 people who stand to lose their jobs seems to count for little. It has emerged since the crisis broke that the government stood in the way of the EU efforts to block Chinese dumping of steel on the market, thereby undermining European steel industries. The government has also refused to bring in any protective measures that would give the British industry a chance of surviving in world markets.

The steel crisis saw calls for temporary nationalisation voiced, however the voices are growing ever louder calling for more permanent re-nationalisation of a number of former publically owned industries.

Foremost, among the candidates has been the railways - with Labour leader Jeremy Corbyn recently declaring that a future Labour Government would look to renationalise.

The case for renationalisation of the railways is strong, with commuters paying astronomical fares for an at times unreliable service. The RMT has argued that since privatisation, more than £11 billion has been misspent. The union claims that fares could be substantially reduced if rail was taken back into public ownership.

There has even been a trial run of what a publically owned railway could look like, when the East Coast Mainline operated under public control between 2010 and 2015. The service increased turnover and profits, with customer satisfaction also up. Indeed, many believed the government was so keen to return the line to the private sector last year because it was proving just how much better a publically owned railway can operate.

Gas, electricity and water are other areas where there have been calls for public ownership to be re-established.

In all these areas, the logic of re-nationalisation is difficult to deny. The common feature of private ownership has been cut backs in staff, increased cost to the consumer and orbiting dividend payments to shareholders. If the money being paid out to shareholders was instead being reinvested in the industry, how can the system not work better?

The better pay, terms and conditions for workers can also only be for the common good of all.

It is also not as though governments, when pushed, will not nationalise failing industry – remember the banks. The reckless behaviour of the banking industry brought the whole world financial system to the brink of collapse in 2008.

In this country, it was only the swift action of the then Labour Government in taking a number of banks into public ownership that managed to save the day. There were no qualms about cost, with £1.2 trillion of government support provided to the financial sector.

The desire to return the banks to the private sector has been paramount with government since nationalisation. But think how much better things could have been if the banks taken into public ownership had been used to create a national bank which could have become a major part of creating a new industrial architecture. A bank that would lend readily and responsibly to those seeking to build businesses and create jobs. The potential was vast but unfortunately spurned.

So the story of the banks plays an important role in the whole rehabilitisation of the idea of nationalisation as a concept. They prove that nationalisation can take place but there needs to be a long term strategy, a strategy that goes beyond that of a holding process before the industry or service in question can be given back to the private sector - often at a discount.

The time for re-nationalisation of a whole swathe of sectors in society, including Royal Mail, energy utilities, steel and railways, has surely come. Moving forward, nationalisation can be put at the heart of a new industrial strategy that seeks to reward workers and citizens alike. It is certainly something that Jeremy Corbyn’s team must be looking at.

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