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Off to the Oxfam shop

18/10/2010
Harold Macmillan British Prime Minister, 1957-63.

Harold Macmillan

As the UK faces cuts on a hitherto unseen scale, it is worth looking back at the last time this happened: in the 1980s.

When, in 1985, former Tory Prime Minister, Harold Macmillan, accused PM Margaret Thatcher of flogging off the family silver, he was referring to her government’s firesale of government-owned industries.

These were assets owned by all of us that were sold off at a loss to the few who could afford them. It was, in effect, an attempt to cut costs and buy votes on a grand scale.

This did not benefit the companies involved: Cable & Wireless, BP, British Telecom, British Gas, British Steel, TSB and others. Most of these major British concerns have now been broken-up, gone overseas or have foreign owners.

Under a New Labour government, we saw further liberalisation of markets with ‘light touch regulation’ leading to the banking crisis and the record deficit we face today.

So, today, having sold off the family silver and lost the lot in the 3.30 at Newmarket, we are having to downsize drastically. On Wednesday, we will have to decide what we are going to keep and what we are going to take down to the Oxfam shop.

Clearly, there are some things that are natural monopolies – water supply and railways spring to mind. These are industries where the set-up infrastructure is simply too expensive to justify its duplication.

This is culturally determined, of course, and what’s right for India or the US is not necessarily right for the UK

But, it challenges the idea that all must be competitive and all must be privatised. We probably oughtn’t to have privatised electricity services in the UK and we definitely shouldn’t have sold off the water companies. These were absolutely clear cases of natural monopolies.

We have all been sold the ideology of the free market – flexible, even-handed and efficient. What’s not to like?

Yet, when it is operated as it is in the US and London, it is naturally inefficient. Those who argue for it are ignoring the extraction of profit for shareholders which, if re-invested, would make for greater long-term benefit for all concerned.

As the government prepares to close quangos and cut services, we should remember the lesson of light touch regulation. In an unfettered market – with stakes so incredibly high – a scheister in a nice suit is still a scheister. (Particularly in a nice suit…)

Do we really want American security companies running our military and prisons? Do we want the Tories to sell-off the best bits of the NHS and our schools?

Let’s face it, we got the car industry and the railways dismally wrong. Can we afford to screw-up policing, the prisons, health, education and the military?

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From → Communities, Policy

One Comment
  1. Not quite the firesale we feared – but there wasn’t so much left to sell, perhaps.
    Chancellor Osborne’s CSR mentioned sale of key assets in order to reduce the budget deficit, including “holding an auction in 2011-12 for 800MHz and 2.6GHz spectrum, suitable for delivering the next generation of mobile broadband.
    Still, not likely to be as big as Gordon Brown’s car-boot sale last year (http://news.bbc.co.uk/1/hi/8301927.stm) so Labour notably quiet in this respect.
    Interesting range of infrastructure projects announced. I wonder how many of these will be awarded to the various McAlpine construction businesses?

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