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.

Machynlleth's Centre for Alternative Technology seeks to add trustees

The CAT Board of Trustees is seeking expressions of interest in becoming a trustee from people with experience of data protection/cyber security and digital strategy, education or education strategy, or fundraising.

Further details here.

Nicola Heywood-Thomas

 The untimely death of Nicola Heywood-Thomas, announced today, leaves a huge gap in arts broadcasting in Wales. She was not only the voice in Wales of arts in Wales, she was also the voice of Wales whenever Radio 3 broadcast a concert from the nation. A distinctive, warm voice it was, too, but also authoritative. My condolences to family and friends.

Glamorgan CCC: the season starts today

Is this the year in which the county at last achieves promotion to where it surely belongs, the County Championship proper?

More about today's opening fixture against an old enemy here.

Diversity and inclusion

 I like this, quoted by Anu Garg:

Diversity is being invited to the party; inclusion is being asked to dance. -Verna Myers, author and speaker (b. 5 Apr 1960)

Tax will have to be taxing

 For forty years, payers of income tax have profited from the Thatcher-Lawson revolution. The cost has been in the loss of control of basic utilities and the downgrading of social services and benefits. Chancellor Jeremy Hunt, HM Treasury and its advisors have now realised that the ideology that persisted through the Blair-Brown years and sadly those of the coalition, is unsustainable if the UK is to remain a first-world country. Former Labour adviser Andrew Fisher writes today in the i:

A confluence of demographic, ecological and political factors are slaughtering low-tax ideology on the altar of reality. [...] The biggest problem facing a likely incoming Labour government is that people want change. New research by the Fairness Foundation shows that people have growing expectations of what the state should deliver. A large majority of voters want government provision of a range of services, including social care, early years education and childcare, public transport and housing. More generous social security also has widescale backing. 

[...]

Tinkering around the edges will not be sufficient. Labour is likely to inherit significant backlogs in the NHS, courts and asylum system, massive staff shortages in the NHS and schools, [...] Taxes are going up and staying up. The real debate is: who bears the burden?

Nigel Lawson has died knowing that the tide has turned in his own party against the concept of low-tax, small-state government, even though the free-market wing of the Conservatives, exemplified by Liz Truss and Kwasi Kwarteng, is still very noisy. However, he will have been satisfied that there is unlikely to be any real action to curb the use of fossil fuels nor to replace the pseudo-market in energy which has proved so costly to ordinary consumers over the last year. Sir Keir seems to be following in the conservative tradition of Tony Blair. Nor is Sir Ed Davey likely to propose a radical change to the path he followed while in government.

It is ironic that the supposedly elephantine central control of electricity supply could be more flexible in its selection of sources and thus provide lower prices to consumers than the present system in which price is tied to the most expensive source, currently gas. It is clear that if we switched to an average price regime, the operators of gas-fired power stations would simply shut down leading to likely blackouts at time of peak demand. And the consumer has no more choice than under national control.

The energy emergency has led to the government pumping taxpayers' and borrowed money into the market in order to keep prices within reason. But this will eventually have to be paid for - out of tax.

 

Two illiberalities

 The success of two reactionary parties in yesterday's Finnish general election probably owes as much to a reaction against the sitting government in difficult times as it does to a reversion to ultra-conservatism. However, it is worrying that another authoritarian government will take its place alongside Poland and Hungary in the EU. The saving grace is that Finland will continue to stand alongside her new NATO partners against the Russian invasion of Ukraine. Danger signs are disenchantment with the EU and with green policies within the potential coalition parties.

There is a clearer illiberal trend in Israeli politics as the Netanyahu government approves the establishment of an equivalent to Iran's revolutionary guard corps. This will not only lead to increased violence in the region but also suffering by Israel's poorest as other state budgets are raided to provide funds for the new body.

Views of the Celtic Freeport

The British Ports Association has welcomed the announcement that the Celtic Freeport and Anglesey Freeport bids have been successfully awarded freeport status today by the UK and Welsh Governments, but it suggested that policy makers should look to grant other locations a similar status. 

Will Bramble CBE, Chief Executive of Pembrokeshire County Council, said: “The Celtic Freeport will unleash the full green industrial potential of Wales, accelerating the decarbonisation of our most carbon intensive industries and bringing new opportunities to our communities, major international investment and thousands of high skilled jobs to the region. [It] will produce significant investment in the region, particularly the focused areas of upskilling our workforce and ultimately creating job opportunities here in south west Wales. Fundamentally this will now put us at the leading edge of the green industrial revolution.”

Cllr Steve Hunt, Leader of Neath Port Talbot Council, said:
“Today’s announcement is an absolute game changer for Neath Port Talbot and for Wales. It will transform the fortunes of people in all our communities. It puts us at the forefront of the world’s green energy revolution and our residents will soon be working in the industry of the future, learning the skills for securing green, well paid jobs.

Karen Jones, Chief Executive of Neath Port Talbot Council, said:
“This great news is the first step towards a much brighter future here in our county borough. I look forward to working with our partners to make sure local people and businesses have the best possible benefit from what’s now in front of us.”

Tom Sawyer, Chief Executive of the Port of Milford Haven, said:
“As the UK’s Energy Port, the Port of Milford Haven welcomes this fantastic news which allows us to build on the significant multi-million pound investment we’ve already made in the renewables sector at Pembroke Port. But what really excites us about this announcement today is the positive impact it’s going to have on our coastal communities. Securing the jobs of today and creating fantastic opportunities for future generations.”

Welsh Government Economy Minister, Vaughan Gething said: “It was great to be in Port Talbot today to congratulate the Celtic Freeport team on their successful bid.

“From off-shore energy to advanced manufacturing, the Celtic Freeport will help create tens of thousands of new, high quality jobs in the green industries of the future. it will support our highly ambitious plans to reach net zero by 2050, while also supporting our young people to plan their futures here in Wales. All this will help us transform the economy of south west Wales, helping us create a stronger, fairer and greener future for local people and communities.”

South Wales West MS, Dr Altaf Hussain (Conservative), said: “This is fantastic news for my region and the whole of South Wales. I have been a firm supporter of the Celtic Freeport from the outset as it has the potential to transform our economy. From Port Talbot to the Port of Haven, this news will mean new jobs and new investment and a great example of what we can achieve when governments and industry work together. The Celtic Freeport has the potential to access £5.5bn of private and public investment and will bring thousands of well-paid, highly skilled jobs to the region whilst kickstarting the green energy revolution."

First Minister of Wales, Mark Drakeford said: “The Welsh Government has a clear economic mission to transform the Welsh economy, creating a stronger, fairer and greener future. The designation of these sites as Wales’ first freeports will reinforce that mission, building on the significant investments and partnerships we have made in these regions over many years. The joint working between governments on the freeport programme should serve as a blueprint for future intergovernmental work on a whole range of issues.”

Private Eye says: [They generally displace] investment from where it might have been better used. A couple of years ago, the Commons international trade committee heard from a string of experts about this absence of benefit - particularly given the low or zero tariff agreements such as the UK's with the EU, since the traditional appeal of freeports is the exemption from customs duties and checks. [...] They do come with government giveaways, however [and] they offer juicy opportunities for the trade consultants whose business is one of the few growth areas post-Brexit. 

Maritime union RMT has warned that new Freeports must not lead to attacks on working conditions and super exploitation of seafarers [and] cheap labour, [nor] deregulation and a reduction in safety standards. The union highlights examples in Teesside where freeport status has led to public concerns which have not been allayed by a Government report.

What is a freeport?

A Welsh freeport will be a special zone with the benefits of simplified customs procedures, relief on customs duties, tax benefits, and development flexibility. Goods entering freeports do not have to pay tariffs, import VAT or excise duty until they leave the freeport and enter the domestic UK market, with simplified customs procedures and declarations. Then all that focus on union recognition, net zero.

For more analysis, see https://www.walesonline.co.uk/news/wales-news/what-freeport-wales-getting-one-26538227

We shall see in a year or so's time how many people outside the Conservative party believe that the freeport has been a Good Thing.