How did they get away with privatising public services?

[Newname85]

Whoever thought it was a good idea to privatise rail services, airports etc - how exactly did they get away with it?

How did anyone believe that adding profits on the top will somehow result in better service/ ROI?

I returned yesterday from a short trip to visit family. At the airport, you are asked to throw water away for security check. But, you are forced to buy it at £3.50 for a small bottle. How is this fair?
Restaurants serve ridiculously expensive food, but no obligation to serve water. wtf ??

The other day, I saw an advertisement from SouthEastern. Why exactly do they need to advertise!??? SE trains are the only option I have !!

Housing built by councils and housing associations are at least double the cost of those built by the private sector. I agree that we need more social housing but it's unavoidable that the waste and mismanagement in the public sector needs to be addressed.

When each of the utilities were sold, the Tories sold at a discount to their true value. The public were encouraged to apply for an allocation of shares at each of the flotations, the shares would launch and immediately go up by 30% on the first day of trading to reflect this under valuation, the public would immediately sell their shares and use their gains to redo their kitchens, bathrooms etc. This happened utility after utility; BT, Water, Electricity, British Rail. Some infrastructure the Tories just sold in private deals such as the airports, Rover Group, British Aerospace, Sealink and the Isle of Wight Ferries. There were lots of companies that the UK Government owned or had a golden share. The 80's was a massive giveaway. The reasoning given was that these industries and sectors required huge amounts of investment going forward and private debt was a better way of funding this than national debt. We could have been French about this and taken the long view but that isn't what the Tories do, they know the price of everything and the value of nothing. With the exception of BT, what was created was a series of monopolies with no incentive to invest or perform.

"The public were encouraged to apply for an allocation of shares at each of the flotations, the shares would launch and immediately go up by 30% on the first day of trading to reflect this under valuation, the public would immediately sell their shares and use their gains to redo their kitchens, bathrooms etc."

But only those members of the public with money to spare could afford to buy the shares, and the allocations were so small that for most people the gains would not have been sufficient to pay for a new kitchen or bathroom. The sections of society that didn't have the money, and who who probably rented rather than owned their homes, and therefore would not be investing in any home improvements, did not benefit in any way.

The big trick was that people were being invited to purchase something that they essentially already owned. To cash in and claim their little windfall, the public then sold the shares to the asset-strippers and vultures, who acquired vital monopolies at a knock-down price. Don't tell Sid, but he was conned.

Housing built by councils and housing associations are at least double the cost of those built by the private sector. I agree that we need more social housing but it's unavoidable that the waste and mismanagement in the public sector needs to be addressed.

The houses built by conventional methods tended to be sturdier, they were better designed slightly larger rooms, coal store and pram shed etc.

@Havanananana We did use the savings for other things we wanted. You might need a bit of an economics lesson. Low taxes often stimulate the economy and that can stimulate growth. We did have high unemployment in the 80s but growth meant we got back to decent levels of employment. This is better for everyone. We used money from privatization to pay benefits and stimulate the economy by lower taxes. I cannot, even with the benefit of time, see much wrong with that. We now have a poorly performing economy and few are better off! We have a huge need to get productivity and growth moving and many people believe it’s not achieved via higher taxes. We need to boost business and we have got ourselves the biggest problem because of Brexit.

Some misinformation about building homes too. HA homes are mostly built by housing developers. For everyone’s information, there is a huge labour shortage. How can LAs get labour if it’s not available? Another Brexit issue. There are vast costs associated with planning applications and enquiries as well as providing money for services such as schools etc. These are devolved from the state to developers via developer contributions. Inevitably the house purchaser pays or the HA pays. Housing Associations raise money via borrowing to purchase the houses. There is no way on this earth that councils can now build the volume of houses we need. They are there to advise and regulate and hopefully, if we want more homes, regulate far less - eg planning and parking restrictions.

Private children's homes. Companies bid so the council can pay the least amount of money and the private company can make the most profit - on children in care.

See also NHS staff paying to park at work.

It’s not free press. It’s controlled narrative - news channels and papers are owned by people who have vested interests in privatisation or have family/friends who were going to benefit.

They "got away with it" in rather the same way that they got away with nationalising the private companies in the first place.

Watch a bit of Yes Prime Minister - there are advantages to having things removed from the government books

THIS IS SOO SAD! SICK !

profiting from children who were very unfortunate, profiting from their misery.

@TizerorFizz

You wrote; "We transferred public sector savings into benefits and the NHS." - an assertation that I disagreed with, as I believe that the savings were used to keep taxes low.

You now write; "We did use the savings for other things we wanted. You might need a bit of an economics lesson. Low taxes often stimulate the economy and that can stimulate growth. We did have high unemployment in the 80s but growth meant we got back to decent levels of employment. This is better for everyone. We used money from privatization to pay benefits and stimulate the economy by lower taxes."

There is no evidence that the savings made were invested in "other things" - and certainly not by the government. Any savings were used to reduce public sector debt and for tax cuts.... which is exactly what you've written.

As for a lesson in economics, lower taxes and lower levels of government investment, and allowing private companies to cream off the profits of their natural monopolies while underinvesting in the services they are supposed to be providing are some of the major reasons the UK is in the current economic and social mess. The Free Market does not provide anything other than profits for shareholders - vital but unprofitable services are ignored. "Trickle down" does not work - wealth creates more wealth, leaving those with no wealth even further behind. Taxes in the UK are already low when compared with other European and OECD economies - the UK levels of tax and social security deductions are some of the lowest amongst the OECD countries and well below the OECD average. Underinvestment in welfare, education, training, infrastructure (including housing) and healthcare has held back the UK for decades.

Council housing was not nationalised. Corporation-owned buses, electricity and gas supply were not nationalised. Mutually-owned water and sewerage utilities were not nationalised. Railways were nationalised because they were run down, almost bankrupt and at the time were vital to the economy. The postal service and telecoms services (GPO telephones) were not nationalised - they were already government run. Schools and council-run care homes were not nationalised, but they have been neglected or closed and their services taken out of public control and handed over to Academies or private providers.

What is it that private companies do that the state cannot? Solid leadership and administration. Corporates hold people accountable. They expect people to do their jobs or face consequences of slacking.

@user243245346 "Housing built by councils and housing associations are at least double the cost of those built by the private sector. I agree that we need more social housing but it's unavoidable that the waste and mismanagement in the public sector needs to be addressed."

Please share with us the source of this cost comparison.

The private sector builds cheaply in order to maximise short-term profits. Council housing used to be built to last as the houses were intended to provide affordable housing for the tenants and a long-term, low-maintenence income stream for the councils.

The council houses from the 1950s and 1960s were often of far better quality than many of the current, developer-built new builds that I've seen.

Lol. I have seen plenty of corporates that don't manage that. I have known plenty of people working in corporates who are wildly lazy/incompetent but kept there because of jobs for the boys or similar.

It's not a binary. There are some brilliant people in the public sector (I have worked in both )

Are you old enough to remember when things were nationalised in the 70s? British Rail? The service was shocking and product was crap.

People are unable to hold corporates accountable. If Thames Water floods your back garden with sewage, you have no alternative supplier. If the train company keeps cancelling departures because they won't invest in trains, or in drivers and other staff, customers often have no alternatives.

Natural monopolies should never be in the hands of private companies - it's an open invitation to maximise profits at the expense of service levels and to load the service with debt in order to pay excessive dividends to shareholders.

It is also a mistake to believe that there are only two ownership options - State or private. In many other countries, there is a third, mutual option. For example, the utility companies are "owned" by the customers, and run as businesses but on a profit-neutral basis (i.e. there are no shareholders to cream off dividends) and all profits are put back into the service.

As for providing "solid leadership and administration" there is no reason why this cannot be provided within public utilities, transport, infrastructure etc. Across Europe this is the norm in many countries. You probably realise that many UK utilities and services are actually State-owned - but the State concerned is the French, Italian or German State (and increasingly the Chinese State) rather than the UK State.

The upshot is that most of our essential services - water, energy etc - are now in the hands of private equity/overseas investors who have no vested interest in improving the services for the user, only on delivering for their shareholders. And by delivering - I just mean in monetary terms. Despite all the uproar about sewage spills, the water companies are still leveraging debt to pay their shareholders, and they will continue to do so until the services break down irrevocably, at which point they'll be returned to the government/tax payers with enormous debts attached, which we'll also have to pay off. It's an absolute joke.

Yes there's wastage in the public sector, and it's easy to be a bit lazy if you feel your job is totally safe and secure, but outsourcing essential services just doesn't work. My local (Tory) council pays over £70,000 per child per year for kids in care to a private equity firm. More than half of that is pure profit. I very much doubt that those kids are receiving anything like exceptional care for that. Insourcing is needed if we're ever going to have a functional and affordable social care (and NHS) again, and we need to start taking utilities back from foreign investors and private equity before they can do even more damage.

Yep - China is getting into just about everything in the UK. It's pretty ironic that the UK voted for Brexit yet people seem utterly blind to the fact that the government sold most of our utilities to foreign powers.

Yes, and Rachel Reeves visited China very recently to discuss trade and investment opportunities.

You don't have to throw away the bottle at the airport, you tip away the water and take the empty bottle through, been the same for 20 years!

And every airport has free drinking water on the other side I should have added

International trade is generally a good thing but losing ownership and control of our infrastructure is a national security issue.

All very well to blame Thatcher, but that misses the context of why all those originally private companies were nationalised in the first place! None of them started out as public corporations.

Under public ownership, they were bywords for appalling inefficiency and militant unionist activity. Nearly all of the promise of their original nationalisation under the Attlee government hadn't been realised. And they cost the government a lot in running costs which many people considered to be poor value for the taxpayer.

It's not a failure of private enterprise, it's really a failure of government to regulate them effectively. Given that much of the failure rests with governments (of all parties) - what makes you think that a government can run them better? There's no evidence to support that.

Two things:

1. it was after the miners strikes and dissolution of any local council that disagreed with Thatcher. If you look at archive footage of the miners strikes, look out for the vastly increased police force performing military manoeuvres. The miner’s strikes were when the working classes took on the elites and lost. Lost badly, in a way that minimised all working class issues for generations and ensured their inability to hit back ever again. We’ve been lied to ever since and kept off edge.

2.The baby boomer generation were paid off. Shares in the privatised industries, council homes bought for cheap sold off or rented out, buy to let enabled and encouraged so they could fleece every generation that came after. No one cared about the future, that generation was huge and it’s only now that we have the numbers to oppose them no matter how much the media pushed the troubles of the millennial class. No one listened to or cared for the initial alarm calls from the bottom of the pyramid because they were too busy living it up. As Blair and many of the middle classes said at the time, “we are all middle class now”. No we were not, and here I still am.

People were sold the line that allowing more companies to operate would mean more competition and hence competitive pricing, which was perhaps initially true. The electricity situation was shocking at one point, all sorts of dodgy companies offering unrealistic prices. When they failed we all ended up paying for it, even those of us who didn't touch them!