Privatisation: can anyone give me an example of where it's really worked well?

[WinkyWinkola]

I mean, the railways were privatised and the government still subsidises the railway companies so they can pay their shareholders their dividends. Consumers however pay soaring fares and suffer poor quality service.

The water companies were privatised and they make enormous profits without investing in infrastructure.

The hospitals outsource their cleaning staff and the incidences of disease rises and the standards of cleanliness decline.

There never seems to be state of true capitalist competition in these areas anyway.

I just don't see how privatisation benefits any one really. One cannot be proud of poor standards and a big profit, surely?

NG2.

Dont have a problem with private companies at all however I do have a problem with Public companies being sold far to cheap and becoming private monopolies (can I choose which water company I use?).

How about we pay the experts to run the Railways for the benefit of the public and not board members and shareholders.

How about we take greater care to stop price collusion in the energy market.

How about we set a maximum profit/return any privatised utility can make and do not allow price increases above the CPI.

How about we break up the banks so we cannot be held to ransom again.

How about we stop "private profit but public debt" (Banks and Railtrack)

How about we stop Tescos and others gaining a near monopoly share of the market.

How about worker representatives being a legal requirement in the boardroom so things cannot be hidden from the workforce.

agree with most of what newwave has said. MPs employ managers to run the NHS, they don't have to do it themselves.

They employ generals to run the army. Do you think it would be a good idea to privatise the army?

Some things are best done by the nation as a whole, and shouldn't be handed over to business, as Blair was so keen on doing.

There is no reason a nationalised industry cannot be as efficient and able to respond to the needs of the market/consumers. You can retain the skilled workforce, renumerate the CEO/Board, senior execs at a competitive level and make profit for re-investment in the business. All you are doing is removing the obligation to the shareholders (which, despite any mission statement of any company, are still the priority -read any annual report. And not fleece your customers at the same time unlike water/electricity/gas/railways/telecomms etc etc.

"So in this country privatisation = bad. Why? because evil companies make profits"

Aaaaaaaargh. Missing the point entirely again. And again. And again.

This article by Tim Harford (R4 More or Less presenter) makes interesting reading.

Why millions of the world?s poor still choose to go private.

The article considers why millions of the worlds poor choose private healthcare and education over publicly provided services.

Even where the "government healthcare and primary education are free; the private-sector doctors are ignorant quacks and the teachers are poorly qualified; the private schools are cramped and often illegal."

The reason being that ?under-qualified private-sector doctors, although they know less, provide better care on average than their better-qualified counterparts in the public sector?. Because private-sector doctors don?t get paid unless they convince their patients that they?re doing a decent job. Public-sector doctors are salaried and, if they are not nearly so accountable.

And with education - the outperformance of the private schools ? in spite of low budgets and teachers with sometimes doubtful qualifications ? is not a surprise when one looks at the weaknesses of state-run schools in some developing countries with salaried teachers sleeping in lessons in the public schools.

I am in no way comparing our NHS or state schools with those in developing countries. But this article does illustrate the value of accountability and motivation in delivering services.

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Cannot give you an example of where it works well WinkyWinkola, but can point out this myth.

The National Health service is improved because of private Finance. Is it Hell!

It cost Catalyst a private company 9 Million to build and run a hospital in Wandsworth, The Wandsworth Trust now have to pay back that at the rate of 10 Million a year up until 2034.These costs may go toward explaining why so many national health service beds have been lost in recent years. We have a UK deficit of 150 billion,which does not include the 200 billion debt repayment for private finance initiatives. These payments being mandatory explains why though The Coalition 'ring-fenced' the Health Service there are still cuts to Health services, to pay these hidden mandatory repayments.

LFN. Are you not worried, that those who shout the loudest, and know the system will receive care under their GP and others will not. The shouting the loudest will of course 'include me'. I'm worried that others may not get the services?

Also who chooses 'what to ration' your GP? How does it work? Say I live in a wealthy area, and people do not suffer so much from certain ailments. Another poorer area spends more on healthcare. Are all practices going to get the same amount of cash?

I'm the last one to disagree with the Coalition, as I feel they (Cameron) have
done some positive things but this new NHS policy, does not seem thought out.

Where will it benefit us as patients?

Interesting Link bit.ly/e4TfdW says it all really.

British Aerospace - BAE Systems was a successful privatisation. They are hugely successful.

BAE, some say BT and BA are successful privatisations.

So, why are they so successful and others not? It would be interesting to see why. And understand why.

I have to say it seems the successes are pretty thin on the ground.

Also, why do the two have to be completely separate? Why can't a state owned business be as competitive and efficiently run as a privately owned business? Can the two ethics not be combined?

Ahh newwave. You are what i like to call an idealist. Your ideas all would work in an ideal world. But in practice would never.

Some industries are best suited to near monopolies. Do you really want dozens of water companies all digging up the road to supply your house with water? Would that be efficient? Ok so they don't compete with each other like for example Tesco's & Asda would but they can't be very much out of step with other water companies in the UK. Plus thats what OFWAT is there for. Now you may argue OFWAT is ineffective but thats a different debate.

You start controlling prices and you take away the very freedom of the markets to set prices. Not only is it a slippery slope, who sets the price? A politician? You trust them do you? Are they experts in what it costs to supply you with water? Or would they base their decision on how many votes they'd get?

As for Tesco's being a monopoly. They have a market share of about 30%. They are competing fiercely with Asda, Sainsbury, M&S, Amazon, Morrison, Aldi, Primark. Yes they are big. But that size enables them to bring you & I prices we like to see. If you don't like them go to a competitor. You can easily do it. Therefore they are not even close as a monopoly.

So let me ask you a simple question Newwave and I will use your example.

Who do you trust more to run Tesco? David Reid/Terry Leahy.....OR George Osbourne/Ed Balls?

I don't think the fact that OFWAT is ineffective is a different debate, actually.

It highlights the fact that given the opportunity, companies will rip people off left, right and centre in the name of free market economics. Even when it's not free market economics.

Therefore how can the market be setting the prices? I mean with examples like the water industry? The individual water companies are not being subject to market conditions to make them more competitive in any sense of the word.

Thus, to privatise them is a nonsense and very bad news for consumers.

The objection to privatisation conflates two issues. The first is that private businesses tend to operate far more efficintly and effectivley than a public sector organisation. That is good thing and a key objective of privatisation is to capture the benefit to society of that economic efficiency.

Unfortunately, there is no guarantee that society as a whole will capture the benefits of economic efficiency from privatisation. This especially happens where a privatised firm is a monopoly or near monopoly. In that case, without very strict and effective regulation, the private monopoly captures the benefits and feeds it to shareholders and senior employees by extracting higher prices and lowering service quality and raising manageent pay and bonuses.

Regulation is extremely hard to get right and to some extent regulation by Govt agencies is really no better than just having the reglated firm owned by the Govt. In extreme forms of regulation such as that which imposes hard price caps and overseas and mandates investment decisions the firm has no latitude and operates as if owned by Govt.

I think most people (even the last government) recognise that accountability and choice are two ingredients that give the private sector the edge over public sector delivery of services.

Much of public service design is an attempt to build these features into public service delivery. Target setting and league tables being the obvious examples.

The great thing about the free market is individuals can make their needs and preferences known by their willingness to pay.

With public services some central organisation has to estimate this demand and requirement, and control (and ration) the delivery by setting targets.

jackstarb, that argument only works if you actually get competition. Take the case of the railways. i no longer use British Rail. I use Network South East. I have no choice in the matter as no other company runs trains on my line. Much as I would live to take my money and use another, more efficient operator, I can't.

So...prices are higher, there's little or no accountability, the service is worse, my needs and preferences are ignored by a company that has a monopoly....I'm failing to see the advantages here.

agree with slug

Thanks claig, it's a pity about my spelling though.

I no longer use British Rail
Much as I would love to take my money

Jackstarb are you saying that someone needs to oversee demand in the public services, or gaps can occur in services that people rely on?

This is exactly the point, it doesn't matter if one day there isn't a particular brand of biscuit any more, but it does matter if the local hospital goes under.

This is why everyone is worrying about the government's health policy - consortia are too small to ensure stability in provision.

And in health stability matters - looking after the nation's health isn't a game.

Slug - I totally agree that competition is an essential requirement of the true free market. With privatised monopolies a regulator tries to simulate competition - with mixed results.

Jamtoday - did you read my earlier post and link as to why millions of poor people choose private health care over state provided health care.

It all comes down to choice and accountability. I think it is now widely recognised that public services need these features in order to drive up service levels.

I would say that health care is too important to be left to centralised bureaucrats far removed from the sharp end of provision.

jack, I read your link and I'm mystified by it.

What is 'better care'? Is this better medical outcomes, or providing a cup of coffee whilst the patient is waiting?

I have no interest in choice, none whatsoever.

Most people using the NHS are ill or elderly or both. You really think someone reeling from a cancer diagnosis or in the back of an ambulance with a heart attack has the wherewithal to start researching the pros and cons of various health providers?

good post wubblybubbly.

'What is 'better care'? Is this better medical outcomes, or providing a cup of coffee whilst the patient is waiting?'

classic. It would be funny, but sadly it is probably true.

I guess the question is - who is best to decide what better care is? Some central committe or the millions of individuals who actually experience the health care.

To be fair - the last government gave it it's best, if expensive, shot. And achieved some limited success - but not enough.

I'm not defending the latest proposals - mainly, to be honest, because I can't claim to understand them fully. But IMO - in it's current form the NHS is never going to come close to meeting the needs of it's patients. And I think the significant efforts of the last government proved that.

Wubbly - are you saying you don't understand why millions of the worlds poorest people choose to pay for private health care?

I thought the article was clearly written and it seems easy to understand and referenced plenty of research.

Jackstarb -the article you cite is a piece of off the cuff journalism and would not stand up to peer review. It cites one report (although not properly) and anecdotal evidence of a single teacher asleep in his classroom. Haqrdly a great sample. The author has departed from serious academic research into the world of media soundbites and immediacy.

Try and find some proper research to back up your opinions before passing off this piece of hack journalism as fact.

And comparing state provided healthcare in India and state education in Nigeria to that in the UK is ridiculous.

'And comparing state provided healthcare in India and state education in Nigeria to that in the UK is ridiculous.'

exactly, everybody knows they are far superior