Mark Goyder is a senior advisor to the Board Intelligence Think Tank. He’s the founder of Tomorrow’s Company and co-author with Ong Boon Hwee of Entrusted: Stewardship for Responsible Wealth Creation.
“I don’t think the passengers will notice any difference,” said Transport Minister Grant Shapps as he announced that South Eastern Railways would be taken back into state ownership.
This must have prompted a simple question in the minds of those passengers.
What have we been up to for the last 30 years? Privatising railway companies. Separating responsibility for track and train services. Creating Railtrack as a listed company. The Hatfield train crash tragedy. Abolishing Railtrack. Replacing it with Network Rail — a regulated public sector company. Countless staff and pointless effort spent in track and train operators to allocate blame for each delay. (Virgin Trains told a recent consultation that it dealt with 10,000 of these a year, 35% of which were disputed). The absurdity that train operators may actually make a profit out of delays because the compensation they can claim from the track provider exceeds the compensation that they have to pay out.
Meanwhile, the two largest parties continue the nationalisation-privatisation-renationalisation dance. At the Labour Party Conference this week, argument was raging about Sir Keir Starmer’s refusal to stick with his earlier pledge to take the energy companies back into “common ownership”. To many Labour loyalists, state ownership is the guarantor that decisions will be made “on behalf of the people” as the famous pitside posters promised in 1948.
At the Conservative Party Conference this week, we will hear the claim that privatisation and the return to market fundamentals is the answer because it gives consumers the chance to choose. Indeed, we may even hear that from a Prime Minister who likes to say to his own supporters that it is “because of greed my friends” that we have the vaccine.
In the last few decades, political debate has been dominated by an obsession with the rights of consumers and users of public services, and the importance of giving them a choice. This obsession was reinforced by New Labour.
This consumer preoccupation has come at a heavy price. The Covid crisis has surely taught us that that there are many things more important than the statutory right to choose which hospital or which consultant removes our tonsils. What matters most is that, as a whole, the system is well-resourced and functions properly. For individuals, the priority is that the right foundations for health are laid from the early years, and they learn to take responsibility for their health; decent nutrition; clean air; exercise; infection control; public health monitoring and decision-making.
Or take energy. In 1990 the generation and supply industry was privatised. Under the influence of a rather narrow school of competition economics, successive governments have focused on the rights of today’s consumers. The competition between the parties has been all about who will do most to keep prices down and create an “efficient market” in which consumers can switch between suppliers. Little thought has been given until recently to the weaknesses of our centralised approach, and the need to move to a whole-community approach to energy supply. As one energy supplier after another has collapsed over the last few weeks, the absurdity of this orthodox obsession with short-term price competition has been cruelly exposed.
In his recent Fabian pamphlet, Sir Keir had hinted that he wanted this dance to end. He called for:
“a new, common-sense, practical approach: one in which we don’t treat the economy as a battle for supremacy between public sector and private sector, but a joint effort. We need to drive innovation and change and drive up standards for employers and employees.”
And he went on:
“Business is a force for good in society, providing jobs, prosperity and wealth. But business has been let down by a Tory government that has failed to plan for the long term and provide the conditions in which long-term decisions can be made.”
There are hints — just hints — in those sentences of a more systematic approach to wealth creation. There is mention of the long term, of the need to plan.
Yet the focus is still too much on today, and the solutions offered by all the political parties are still too compartmentalised.
The UK desperately needs a comprehensive government approach to every aspect of wealth creation. This approach would be systemic. It would start with a clear vision of the kind of stewardship behaviours the state expects from private-sector companies. This would mean both rules and incentives for companies to find a better balance between the needs of tomorrow’s citizens and shareholders and those of today. Using the Trust Test., Government would ensure that public sector contracts were only granted to companies that could demonstrate the robustness of their culture. It would steer the whole system of savings and pensions so that it better connected citizens with the impact of the companies in which they had a financial stake.
Government would give more attention to the overall concerns and priorities of citizens and the community, rather than being obsessed by the rights of individual consumers. They would divert regulators away from their current focus on economic competition and towards a focus on the wellbeing of the next generation. They would remove barriers preventing local citizens from meeting their own health and energy needs.
Sir Keir, a new common-sense approach would certainly help. But it needs to be systemic, and determinedly devolutionary and next-generation focused. Whatever the details of their ownership, the new institutions created by a twenty-first-century government need to be able to claim not as those 1948 notices read:
“This site is managed . . . on behalf of the people.”
“This site is stewarded on behalf of the people of this generation, but also the next — to whom we are ultimately accountable.”
For as the old native American proverb puts it, we do not inherit the world from our ancestors. We borrow it from our children.
Image obtained from the BBC.