Labour pledges to re-nationalise railways - Is it time for utilities too?

In theory, yes, the government could establish a nationally owned company that competes with the existing utilities companies but what would be their competitive advantage? They don't own any power generating infrastructure- they would have to buy or build it (using money from taxes) - so it would take decades to become large enough to compete with existing generators, if ever. They would also likely be more expensive so why would people buy power from them?

@Startingagainandagain

Then I assume that if the government at least nationalised these British companies and then offered customers decent prices then it would be a case of customers voting with their feet and the remaining privately owned company would either go bust or have to offer more competitive tariffs too.

It wouldn't work unless the government also managed to leverage their way into the upstream business (generating electricity, sourcing gas). They are the ones that dictate the wholesale cost of energy (and the big players in this game are mostly French). The suppliers just pass that on. Plus, all of the tariffs are pretty the same because of the price cap set by Ofgem...the statutory body run by government (albeit class as a Non-Ministerial Government Department).

If you only nationalise those 3 companies, they still wouldn't be able to operate because of the competition laws in the UK - collectively they have too great a market share to be allowed to exist as one entity. All of the market needs to be nationalised together to not fall foul of this. Plus you'd be tanking the pension pots of millions of people, not just retired folk, but those still trying to build up money with the hope of being able to retire before dying.

Shareholders aren't all privileged white men in ivory towers sneering at the plebs. They're pension funds too. How will the government afford shoring up countless pension schemes going bust?

Like I said, the horse has firmly bolted. The UK does not have the finance or capability to re-nationalise energy utilities. It should never have happened in the first place. Labour could have reversed it all when Tony Blair came into power, the market was still new and largely British. But 1990 was eons ago in business terms - too much has changed hands since then and the coffers aren't big enough to buy all of the private companies out.

But could the gov create a utilities company or their own in essence bankrupting the private companies and encouraging the public to join it?

TonTonMacoute · Yesterday 20:50

Governments are crap at running businesses. The water utilities ran up massive debt when they were publicly run.

Have you got a link to support that?

I’m broadly in favour of nationalising as much as possible but I have a kind of creeping dread that nothing we do will make much difference at this point, there’s something intrinsic wrong with the country and until we work out what it is nothing will improve really ☹️

Given the indebtedness of most of the water companies, why would there be a cost at all? They’re worth about tuppence so they could be purchased very cheaply or just taken back for failure to perform. That’s the beauty of being in government, especially with a large majority - you can basically do what you want as we’ve seen recently.

Governments are crap at running businesses. The water utilities ran up massive debt when they were publicly run.

And now the water companies are making vast profits while overcharging us and polluting all our waters. Excellent.

I agree about the name too.

Utility companies make a profit by piling on misery and hardship on their customers.

Sorry but this sort of hyperbole is singularly unhelpful. Try and have a grown up conversation at least.

Governments are crap at running businesses. The water utilities ran up massive debt when they were publicly run. The government covered those debts (ie we, the taxpayer paid them) and sold them off to businesses to run.

As we know that hasn’t panned out that brilliantly either, but that’s another story.

I agree Op. It's one thing making a profit when you're properly funding maintenance and repairs. Although a huge profit would suggest overcharging for the service in a monopoly.

Franchising certainly isn't the natural order of things. It's a ridiculous and wasteful system. If you go to Switzerland you have several railway companies (SBB, BLS, RhB etc.) which are variously owned by the federal or cantonal governments. They're well funded, and importantly are integrated together. There's no "Oh this ticket is for Avanti, I'll have to charge you again", and the timetables work.

A European directive forced the accounting separation of infrastructure and operations, something which has been blamed for the current system. The Dutch found a way around it though - let their main passenger service concession to NS. Again the Dutch have a fully-integrated system, with contactless ticketing that works across all public transport and a takt timetable like the Swiss have.

I cannot believe that anyone with knowledge of the absolute sh*tshow that is HS2 would want the government anywhere near their railways.

Public sector is incapable of doing things cheaply. It will cost an incredible amount of money which will have to be printed. The people that use trains will have mildly cheaper tickets, along with higher taxes and more inflation for everyone.

@SkyBloo

We don't mind if the rolling stock is a bit older/less shiny, if it arrives on time.

It wasn't a choice. The health and safety laws required the old "slam door" stock to be replaced with electrically operated doors with safety mechanisms. Disability discrimination laws required larger more accessible toilets on EVERY train (so if the toilet is out of order, the train can't run!), it also required the destination screens within every carriage and the station/safety announcements systems. Also wider more accessible doorways and vestibules. The old carriages which "dropped" toilet waste onto the track were also banned and trains now require tanks to hold the waste until proper emptying/disposal. Health and safety laws also required coaches to be built with better safety for crash worthiness etc - the older stock was basically a metal/wooden frame that crumpled in a collision - the modern stock is more robust and designed to withstand accidents - look at how well that Pendolino survived the Lambrigg derailment.

The new trains, which we had to have by law, cost many millions of pounds per carriage.

Billions of pounds needed to be spent on replacing the old rolling stock and that couldn't be put on the government's credit card, so privatisation to use private finance was the only viable option to comply with the laws. Similar really to PFI which paid for all the shiny new hospitals and schools!

The prpblem with the private sector is when profit is your concern, you want to run a higher margin business. This typically means trying to offer more of a premium service - but at a very premium price, and accepting you price out the lower income consumer. But you can make more money.

It isn't what people want from public utilities. We want the basics. No frills, high volume, low margin. We don't mind if the rolling stock is a bit older/less shiny, if it arrives on time. We want the prices kept low because these are services that need to be affordable for everyone.

This as at odds with how the private sector want to run.

I don’t trust the government to be able to run anything tbh. Plus I don’t use trains that much so don’t care. You can’t tear me away from my car.

And I think government money could be put to better use than buying out private energy companies.

Really pleased to see this from Labour. Yes I’d rather they started with water, and I’d like to see more utilities nationalised (challenging though that’d be) but it’s finally a more bold policy from Labour, in the direction a lot of Labour voters would like to see them go, hoping it’s the start of a little turn in direction and a bit more ‘policy courage’.
(Yes British Rail wasn’t great in a lot of places, doesn’t mean it has to be that way again if this does happen, it works very well in many other countries so why not look to them for inspiration rather that what our government has done in the past. Possibly idealistic, but so what.)

They won't re-national utilities water or mail.

Overcharging and relying on government handouts isn't really profitable. In the last decade, the train companies have had £75.2 billion in subsidies, according to Hansard.

Lot of nonsense being talked on this thread. There's a bizarre assumption that it's somehow 'natural' for certain enterprises to be owned and operated by the government. Why?

The era of rail nationalisation lasted less than 5 decades (an aberration in the overall history of rail) and was an era of chronic failure. The service was abject and passenger numbers declined hugely.

What examples are there of the government being a model of efficiency (or even vague competence) when it comes to running anything? Most of the rhetoric is just kneejerk denunciation of anything that dares to be so successful as to make a profit.

Look how many councils are bringing buses & trams back under public control. It will mean that the stupid system where you can buy several single tickets for a journey cheaper than one for the whole trip will be got rid of & if they can stop the cancellations & late trains they will be onto a winner. Look at how railways are run in Europe, ds went interailing last year & said the trains right through were brilliant, everything ran to the minute, they were clean, fast, well run & modern. We could have a service to rival it.

Indeed, while its reputation during the 1970s was probably deserved, by the 1990s it was running as a competent, lean business. If it had been given the sort of funds available to the privatised railway, we'd have a much better system.

I think nationalising water should be the priority

A good move would be to stop foreign companies owning the utilities and making their profits from the UK to subsidise their local customers.

Yeah- in principle I'm not against nationalised power generation utilities (although I think it's a far less compelling argument if you assume generation will be close to 100% renewables in 20 yrs vs mainly FF now) but the cost and logistics of it make it a non-starter. I'm not sure how they would even start to, say, buy BG back from Centrica. Presumably Centrica can just say no.