British Steel is heading for nationalisation – against the will of the government. This is an important point, because it speaks to dogma colliding with practical reality. Here is a private company defeated by the “sink or swim” laws of the free market ideology that produced it, demanding instead that taxpayers come to its rescue – by threatening to make shortsighted business decisions with damaging consequences for the country’s future. What happened in Scunthorpe is not an outlier in the failed experiment of privatisation, and the government’s emergency takeover tells us that public ownership is a realistic solution if there is a political will.
Here’s another example: water. Even the City editor of the Financial Times – hardly a bastion of radical socialism – concluded that its privatisation looked like “little more than an organised rip-off”. Since privatisation in 1989, water companies have piled up more than £60bn in debt, while our water bills have continued to rise. Yet despite rivers and seas being blighted with raw sewage, and the loss of 1tn litres of water from leaky pipes in 2021 alone, shareholders raked in more than £85bn since this most basic of human necessities was flogged off.
On both British Steel and water, Nigel Farage outflanked Labour – from the left. That this Thatcherite former City trader demanded British Steel’s nationalisation as he posed with steelworkers, and called for Thames Water to go bust, is testament to how unpopular privatisation is. A poll last year found that 82% of Britons thought water should be publicly run – compared with 8% who believed in privatisation, which is half as many as those who think the moon landings were staged. Three-quarters believe rail and mail should be publicly run, with more than seven in 10 backing nationalised energy.
But as with the banks in 2008, nationalisation is treated as a reluctant emergency measure. Starmer backed nationalisation of the natural monopolies during his leadership campaign. Indeed, he told the BBC’s Andrew Neil in 2020 that nationalisation of those industries was a pledge that would appear in Labour’s next manifesto. But the following year, he told the BBC’s Laura Kuenssberg that he “never made a commitment to nationalisation”, itself testament to his pathological dishonesty. It’s true that Labour has committed to nationalising rail, but after the resignation of transport secretary, Louise Haigh – who genuinely believed in public ownership – what that will mean in practice is highly questionable, especially if an increasingly austerity-driven government starves it of investment.
Public ownership shouldn’t be a last resort. From the banks to the myriad private contractors feeding off state largesse – such as Serco, which was fined more than £19m after billing taxpayers for tagging prisoners who were dead – private ownership has repeatedly failed. What’s now missing is a positive vision of what public ownership could look like in the 21st century. A lot of the blame needs to be directed at Peter Mandelson’s grandfather – a chap named Herbert Morrison, who developed Labour’s form of nationalisation after the second world war. That model was top-down and undemocratic. Most of the board members of the newly nationalised industries were just brought over from their privately run predecessors. The first chair of the National Coal Board, for example, was a former coal baron named the 1st Viscount Hyndley. These industries were kept at arm’s length and run on a commercial basis.
In 1946, one Liberal politician had a point when he said that a miner who went to work in this newly nationalised industry “will see the same manager, the same deputy, the old roadway, the same coalface and, on Friday, he will probably be paid by the same man”. There was never any genuine public enthusiasm for privatisation, but this undemocratic system meant that Margaret Thatcher won passive acquiescence by arguing: “What earthly sense is it that families should have a millionth share in some nationalised industry which is indifferent to their needs and wishes?”
A democratic alternative is surely possible, where representatives of workers and consumers play a key role in running industries. In French cities such as Paris, for example, the water supply was privatised from the mid-1980s onwards, and prices soared. When it was taken back under public ownership, a board of directors was installed that included elected city councillors, trade union representatives and members of environmental non-government organisations. The Observatoire parisien de l’eau is an assembly representing civil society that oversees the board’s decisions. Not only have water bills fallen by 8% and leakage levels halved, but the city offers taps with sparkling water.
Rather than handing power to unaccountable bureaucrats, public ownership could be part of a new vision of democratising society – taking back control, if you will. The disillusionment with democracy, after all, has so much to do with governments hiving off their functions to markets, and then claiming impotence in the face of change. Privatisation never forged the popular capitalism promised by the “Tell Sid” British Gas advertising campaigns of the 1980s: by 2022, just 10.8% of UK shares were owned by individuals, down from 28.2% in 1981. Rather than handing wealth and power to the people, privatisation helped forge a model defined by low growth whose diminished proceeds disproportionately swell the bank accounts of a tiny few.
Handing power to the people away from the elites is a message that will resonate in an age of mass disillusionment. Alas, Labour has vacated so much space that even Farage can posture as an economic radical by comparison. That is a travesty. But as British Steel and flailing water profiteers underline, the old order is dying; its morbid symptoms are everywhere. What is needed now are politicians with the imagination and determination to build something else.
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