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The privatisation of our public services has been national failure : it's time to take back control

16 Jul 2018, 13:31

https://www.independent.co.uk/voices/pr ... 6.html?amp

When water was privatised, the Government took on that sector's outstanding obligations to leave the new owners debt free. The private owners have taken advantage, ratcheting up a breathtaking £46bn of debt between them

The way our rail, energy and water industries have been run since they were sold off by the Conservatives is an absolute scandal. Labour's manifesto pledge to take back control of water and rail, and to step in to fix the broken energy markets, is radically exciting and will be truly transformative.

When these industries were privatised under Margaret Thatcher, we were promised it would increase efficiency, widen share ownership and generate investment. But the opposite happened. And rather than learning from their mistakes, the Conservative-led Coalition Government sold off Royal Mail for a fraction of its value, at the taxpayers’ expense, and extended the grip of private companies and finance further into day-to-day life.


Almost three decades after water was sold-off, share ownership is now largely in the hands of a small group of international investors – many of them based in tax havens. Meanwhile, prices have increased by 40 per cent and over a quarter of the amount consumers pay on bills goes towards servicing debt interest and paying out dividends.

New investment has been financed by borrowing rather than by shareholders. When water was privatised, the Government generously took on the outstanding debts of the sector – all £4.9bn of them – leaving the new owners debt free. The private owners have taken advantage, ratcheting up a breathtaking £46bn of debt between them by 2016.


John McDonnell on Labour's tax plans
While racking up debt at taxpayers’ expense, the water firms have paid out billions to shareholders in dividends. Out of a combined total post-tax profit of £18.8bn over the last 10 years, all but £700m of it was paid out in dividends to shareholders. That’s more than £18bn flowing into the pockets of shareholders instead of being used to bring down bills and improve services. Three companies even paid out more money in dividends than their total pre-tax profits. This is simply unsustainable.

The daylight robbery is also taking place in the energy sector. In 2016-17, National Grid made a £1.9bn profit on UK electricity and gas transmission. Around £660m in dividends were paid out on these operations, meaning a 12 per cent increase in hidden costs for consumers.

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