By Mike Newland.
One of the advantages of party meetings, at which anything can be advanced for discussion, is that it will often throw up questions which needed to be thought about but which have received little attention. Not something the big parties incline to with their stage managed ‘conferences’ now largely abandoned by ordinary members in favour of becoming lobbyist fairs.
When the question of the energy industry was raised at the BDP’s recent AGM it provoked furious debate which continued for days afterwards. A surprise to those present! Opinion divided strongly between those seeing the dangers of letting the state take over anything and a general feeling of ‘had enough of the private energy companies’.
Would it be practical for government to re-nationalise energy? Would it be beneficial? Is there any place in the nationalist outlook for the state to run any part of the economy. ‘Communistic confiscation’ was one view at our meeting.
Why is there such a strong feeling of opposition to private energy supply? We don’t hear such views much expressed about other industries supplying necessities – food for example – except among the extreme-left who would like a state owned economy period.
The energy companies seem to have a rare gift in their ability to upset customers. Every week brings new stories about people being overcharged or mistreated in other way (cold calling a speciality) while they are sent on a glorious run round between endless telephone lines and letters are ignored. One feisty lady successfully sued British Gas for harassment.
Large price rises for energy are also a source of irritation. Here customers are on weaker ground. Global development is raising energy costs, and bills are also being bumped by politicians’ vanity schemes involving alternative energy produced at vast cost.
Easy to get angry and say take the beast back into public ownership. Most did not experience the glory days of the nationalised industries when you waited months for a telephone to be installed. The attitude to customers was that they were receiving a bounty from the state and should be grateful rather than their paying for a service.
There are two major difficulties when the state runs anything. They may not be insurmountable but it’s perilous to ignore them. The temptation to use nationalised areas of the economy for short-term political advantage is huge. Pack them with your client voters on salary is an obvious temptation.
The Coop was not state-owned yet even its relationship with the Labour party was sufficient to assist its downfall. The celebrated ‘Crystal Methodist’ would probably have never been made up to boss if he’d not been a Labour apparatchik and the fact that the Coop lent money to the Labour party. Beware involvement with politicians!
You also face the fact that anything run by a state bureaucracy tends to become paralysed by civil servants covering their backs and enlarging their paperwork labyrinth to empire build their own departments.
On the other hand, private firms now are generally run on the basis of short-run profit and bonuses based on it rather than their long-term viability and investment. That is what happened to the banks. We still live with the cataclysmic results. There is no simple answer as to whether private or state is overwhelmingly best under all circumstances.
The strength of feeling against the energy companies may be partly rooted in an unarticulated unease about loss of vital national sovereignty. Often foreign companies and interests own and control our access to the hearth. Chinese firms are now involved in plans to build new nuclear power stations.
The future planned for us by our major political parties is clear. We are to have no real control over our economy which will be mainly foreign owned. Our population will have no clear national or cultural or racial identity being composed of transient workers. In short, no social system.
In such a world, whether to state run parts of your economy may be subject to other than purely an economic calculus. One can see people saying that it might not be most efficient to state-own industries but at least it’s ours! Those running them might be bastards but at least they are our bastards… Our place at the hearth is a very primal force for humans.
In such a world, nationalisation could become very much a nationalist or conservative idea rather than the socialist one it’s mainly perceived as due to Labour‘s nationalisation programme during the 1940s. Karl Polanyi famously said that free market systems don’t last long since they are socially intolerable.
But it’s certainly not the case that nationalisation has been exclusively something historically associated with socialism. As our Chairman pointed out, the ‘well-known Marxist’ Joseph Chamberlain municipalised water and gas in Birmingham during the latter part of the 19th century. Councils frequently took over local electricity supply around the time of the First World War. My own ancient supply bears a plaque saying ‘property of the borough council‘.
The second half of the 19th century in Britain saw a huge rowing back from free markets. Factories legislation began to control workplace conditions. The free market no longer supplied poison anonymously to those wishing to bump off their relatives for the insurance money. From 1868, you had to sign a poison book at the chemists.
What is it in particular about utilities – gas, water and electricity and telephones – which propelled them into public ownership for a very long period? It’s because they are natural oligopolies or monopolies.
It would hardly be efficient to have power cables laid separately for umpteen companies in the same street using different voltages and so on. And separate appliances for each one. Yet right up to the end of the last century there were still curious pockets of non-standardisation of electricity supply in Britain.
The same does not apply to food supply or most other industries. You can have a very large number of competitors without great difficulty.
Natural oligopolies and monopolies in private hands lend themselves to profiteering and poor customer service. 98% of UK energy is supplied by the big six firms. So energy is something of an unusual case.
Suppose we decided to renationalise energy. Could it practically be done? Where is the money to come from is an obvious question.
Funding re-nationalisation is actually not quite the problem it might appear to be. I think we can rule out simple confiscation from the private sector. Too many vital interests like pension funds are involved and it would create a very nasty precedent for investing in anything. It would also not be fair.
We can leave simple confiscation to communists. The Mafia lost their stake in Cuban gambling casinos when Castro seized the country. You may say ’serve them right’ but where do you stop once state seizure is accepted?
The Government is borrowing huge sums and the national debt is exploding. Could it really borrow the vast sum needed to buy the energy companies? A constant complaint is that the borrowed money is not being employed for capital investment. That would provide a return enabling the money to be repaid. It’s largely being spent on current consumption.
But borrowing to buy firms making a profit would not be so unattractive especially when government debt yields such low returns. It would be even more attractive if the funds were raised specifically for the purpose – maybe a National Energy Bond. A lot of people might be willing to participate in ‘owning our own power’. All that would really be happening is a change of ownership with one group receiving money and another paying it.
This article is not intended to provide an answer as to whether the energy industry should be nationalised. There are pluses and minuses. But the way the wind blows it’s certainly not an issue for a political party to ignore.