The logic of privatisation meets the reality of greed

 One wonders whether the late Nigel Lawson was ever tackled on the performance of the public undertakings he and Margaret Thatcher so enthusiastically privatised in the 1980s. In one sense the utilities have prospered, giving their executives ever-rising safe incomes. An eminent example is that of water company bosses, who, i reports, "still managed to pick up generous incentives for ecological standards despite relying on discharges to keep their networks functioning". 

Lawson's reasoning was:

The decline that we are going into was one that we have been in for some time. This country has been in economic decline for a long time - I take no pleasure in saying that, but it is a fact and everybody knows it. It is essential that if we are going to get out of that decline, to hold back government expenditure and to allow the private sector to lead the way forward to higher levels of prosperity and that means cutting back on government spending, reducing income tax, liberating the energies of the private individual and going ahead on a basis that will bring a reduction in inflation and a soundly-based prosperity. [Quoted on Radio 4's "Last Word"]

It is difficult to find a speech in Lawson specifically applied this philosophy to utilities, but that other arch-privatiser Nicholas Ridley did so in the debate on the Water Bill 1988, which took away the duty on the statutory water companies to regulate their discharges and allowed them to become plcs:

privatisation must be right. If we are to enable our companies to innovate and diversify, they must have access to capital markets for the capital investment needed. Until this Government took office, nationalisation had constantly restricted and restrained that. Between 1974 and 1979, when the Labour Government gave up control of the economy to the International Monetary Fund, the water authorities suffered an overall reduction in capital Toggle showing location ofColumn 340spending of one third in real terms. Within that total, the Labour Government halved expenditure on sewerage and sewage treatment. Since then, we have conducted a considerable catching up exercise. Investment has increased by more than 50 per cent. in real terms since 1980. We have doubled the programme in cash terms to £1·2 billion this year, and will increase it to £1·43 billion next year.

The dirty man of Europe is indeed sitting on the Opposition Front Bench. To some extent, I exonerate Opposition Members. It was not deliberate—it was not because they meant to, as the hon. Member for Bootle (Mr. Roberts) admitted a few weeks ago—but because their financial incompetence prevented them from achieving even that basic water cleanliness that we all seek. The proof that public ownership cannot generate the necessary capital investment to protect the environment has been supplied in ample measure by the Labour party.

The promise of private finance being better for the environment than government funding was made more explicit by the then Welsh Secretary, Wyn Roberts, on the second day of the debate:

In general, the provisions of the Bill apply equally to both Wales and England. The Bill will create in Wales private-sector undertakers to provide clean, wholesome water and take away dirty water through the sewerage system. I am confident that the privatisation of the utility functions of the water authorities in Wales will allow the provision of a more efficient operation to the benefit of Welsh consumers.

In the event, the regulatory quangos have proved ineffectual. Investment, in one notorious example at least, that of Thames Water, went into reverse. At least Welsh Water/Dŵr Cymru is a not-for-profit company, but it still has enormous difficulties.

In his Desert Island Discs appearance, Lawson revealed that logic had appealed to him from a young age. If one believes in all people in public life acting with good will, then maybe the logic of improving public functions by applying the profit motive is supportable. Did Lawson ever truly believe in what he said publicly? If so, he must eventually have been disabused. He will have seen how chancers revelled in the opportunity to skim money from the funds which ordinary citizens on the grid are compelled to contribute to. As far as I know, he never apologised.