How privatisation works – part I

There was a time in the UK, not so very long ago, that we had state owned monopolies running our gas, electricity, telecommunications, railways, roads, the postal service, the NHS and our police forces and so on. Through the 1960's and '70's we saw an era of political and societal unrest with trade unions exercising significant power and on several occasions brought the country to a near standstill. The late 70's and early '80's saw the rising of a new political power, a revitalised conservative party under Mrs. Thatcher. Now, Thatcher was an ardent capitalist, and with the backing of the Reagan era American Government she set about comprehensibly dismantling the trade unions through legislative changes and a more aggressive police approach to resolving picket line confrontation. Having castrated the Unions she took the next logical capitalist step and prepared the nation for the sale of the family silver in the form of the utility companies.

The story that was peddled through her pet media outlets was a simple one. Privatisation would improve service, lower prices and increase efficiency in the utility sector by introducing competition. The sweetner for the deal, not that we the public needed one as we were never consulted on this move, was that we could buy shares in the utility companies, and it became clear very quickly that they were heavily discounted, and many people made substantial profits on the deal, which was nice. But whatever profits people made were as nothing compared to the profits soon being made by the new competitive utility companies. European players entered the UK marketplace for the first time, advertising and marketing companies were on red alert and consumers could freely choose between competing providers. Rules were even set up so that private consumers couldn't be tied in to long contracts unless they wanted them to be.

But, there seemed to be a problem. The competition that we were all expecting turned out to be not so competitive after all. It turned out that, funnily enough, all of the utility providers offered roughly the same prices for the same products under the same contracts. Strange, that isn't it? So, now we have a market that isn't really competitive, and an ageing network of infrastructure that isn't really being properly maintained, and a bunch of companies who don't really care to much about anything but profit, and consumers paying more than ever, and it appears that there is nothing the UK government can do about it. We have more people now in fuel poverty than at any time since the Second World War, and more of our elderly having to make a choice between food and heating in winter.

It gets worse, the NHS is the next to go. Already we are seeing privately run GP consortia referring patients on a cost analysis basis rather than purely health grounds, prescribing medicines based on cost rather than need. MRI scanners are being operated by private companies, the results being analysed by least cost overseas providers with obvious consequences. Hospital volunteer coffee shops are being replaced by Costa and Starbucks, and hospitals themselves are so deeply indebted thanks to private finance deals that they have nowhere left to turn but to cut services. It will get worse of course. Our government has increased national debt to the point where it is not possible to fund anything much apart from the Olympics so it with be private finance from here on out, and that means more profit for business at the expense of benefit to the public.

And all of that is before the approved and vetted PFI providers start selling off their hospitals and power stations to less reputable, less public spirited companies. What we have seen so far is just the start of the greatest disaster in UK history.