13 Comments

1. Luis Enrique on 08.07.2008 at 13:41 Permalink | Reply

   I think it’s possible to believe that the state ownership of, say, utilities is generally a bad idea, and hence decide to privatise your own ones, without making it actually illegal for foreign partially state-owned companies to then acquire them.

   Particularly if you think that state ownership is bad because the tax payer usually ends up paying too much via state subsidies, then I guess the UK might like the idea of the French tax payer subsidising our power generation. But perhaps the French just have some nuclear know-how, state owned or otherwise, that makes them better owners of our nuclear businesses than we’d be.

   I don’t know what the Thatcher consensus is, but for what it’s worth, I think there’s plenty of room for more nuanced positions that endorse state ownership in certain sectors, while still being pro free markets in others.

2. Tom (18 comments.) on 08.07.2008 at 14:15 Permalink | Reply

   On the railways, SNCF own sections of Eurostar (with the Belgian SNCB), London Midland and Southeastern, Deutsche Bahn own Chiltern, the freight company EWS and co-operate London Overground with the Hong Kong public transport operator. Since the latter deal dates from Ken Livingstone’s day, it’s hard to see where that fits in the Thatcherite consensus, either. In some ways, having more operators and particularly overseas ones means there’s less room for our own home-grown lovelies to divvy things up between them; competition cuts both ways. I don’t think anyone who routinely wonders why things are apparently better Over There is going to argue with them coming Over Here and running things.

   Tom’s latest blog post… The GLA Targets Empty Homes

3. Daniel Hoffmann-Gill (62 comments.) on 08.07.2008 at 15:19 Permalink | Reply

   Don’t start me on privatising utilities, still makes me seeth that profit can be found in water, trains and gas.

   Daniel Hoffmann-Gill’s latest blog post… Daniel the Confessor

4. john b (77 comments.) on 08.07.2008 at 15:26 Permalink | Reply

   Also NedRail (not the name of the Glasgow suburban operator, disappointingly, but the Dutch state rail operator) is JV operator of Merseyrail and Northern Rail.

   @ Daniel - while water is a bit different, surely trains and gas have always been for-profit industries, aside from a bizarre interlude between WWII and the 1980s?

   john b’s latest blog post… Well worth the license fee

5. Devil's Kitchen (27 comments.) on 08.07.2008 at 17:59 Permalink | Reply

   “Don’t start me on privatising utilities, still makes me seeth that profit can be found in water, trains and gas.”

   Yup, because running them at a loss has been so immensely successful, eh? I, personally, revel in the massive amounts of funding that went into the railways and water network under state control.

   The Beeching Axe was, of course, one of the single most successful railway modernisations of all time; and decades of investment by successive governments into the water and sewerage infrastructure has ensured that there are no leaks and that we are not still using Victorian sewerage systems.

   Oh, wait a second…

   CY, I don’t believe that we can actually stop EDF attempting to buy British Energy (under EU laws). However, if they do so, they absolutely must take on the decommissioning costs. At present, these costs (estimated at somewhere near £80billion over the next hundred years), are underwritten by the UK goverment, i.e. us.

   I have no problem with an experienced company taking on British Energy as long as they are taking on the full costs as well as the profit-making division. And Luis is right: the French have considerably more experience in this area than we do.

   And if the French taxpayer ends up subsidising EDF, our correct response is to say, “thank you very much.”

   DK

   P.S. No, I don’t believe in any governments running companies. But given the situation in which we find ourselves, I would rather the French foot the bill than us.

   P.P.S. As I recall, a French company already owns our National Grid.

   Devil’s Kitchen’s latest blog post… Fuck me: Dave said something good!

6. ejh (348 comments.) on 08.07.2008 at 18:09 Permalink | Reply

   Of course, the railways receive rather more state funding now than they did when they were nationalised, but as we know that Privatisation Is Always Right, what does it matter?

   ejh’s latest blog post… Village of the dreamed

7. Daniel Hoffmann-Gill (62 comments.) on 08.07.2008 at 18:23 Permalink | Reply

   We can’t go back.

   All I’m saying is that I didn’t agree and still don’t with the whole raft of privitisation that went on and honestly believe that it would’ve been better off in the hands of the state.

   And no, I’m not a Communist…

   Daniel Hoffmann-Gill’s latest blog post… Daniel the Confessor

8. Flying Rodent (40 comments.) on 09.07.2008 at 01:37 Permalink | Reply

   Naturally. My dog’s been giving me grief, barking all the time and costing me a fortune in vet bills, so I put it out to private tender.

   I wound up with a Chinese slave instead, but he’s very obedient and always on hand with the slippers when necessary. Costs me exactly the same and he’s less pleasant to pet, but when I think of the boost I’m giving to local business I get as stiff as a rolling pin, politically speaking.

   Flying Rodent’s latest blog post… Video Game Review

9. Justin on 09.07.2008 at 10:55 Permalink | Reply

   This is where I’m coming from and it ties in with a lot of comments here

   Taxpayers are being forced to indemnify the winner of the £7.5bn contract to decommission the highly toxic Sellafield nuclear site in Cumbria against an accident because the bidders are based overseas.

   It’s an ignorance on my part that I don’t see the difference between the public sector splurging these wodges of cash rather than the private sector. Particularly with the likes of nuclear energy industry where the private sector are bowel-shakingly incompetent and wasteful.

10. Luis Enrique on 09.07.2008 at 16:46 Permalink | Reply

    I’m ignorant about this too - so if the private bidder was UK based, they’d have to indemnify themselves? Why? Ignoring this strange difference between overseas and domestic bidders, I suppose indemnification against accident is a reality whether whoever is doing the decommissioning is private or public, so perhaps the right question is to look at the combination of risk and cost offered by private or public alternatives. You say the private sector are bowel shakingly incompetent and wasteful, I assume you think the public sector is less so, I have no idea myself.

    I took some classes once about whether private or public ownership is better, and the answer had to do with things like the importance of quality versus cost, how easy it was to observe and enforce quality standards, how effective competitive forces are, and so on and such like. In some sectors private owners will sacrifice quality, in others they won’t (because they’d lose custom). I get the impression that people think view of mainstream economists is that private is always best, but I think that’s a misconception. The nuclear industry strikes me as having many of the characteristics that might make it better in public hands.

11. Cloned Poster on 09.07.2008 at 21:54 Permalink | Reply

    Posted by this blogger, who I found on a simple google search:

    In essence, baa was the keeper for the United Kingdom’s air gates.

    Last year, another British airport operator, tbi, was purchased by an international consortium which included Aena, the Spanish state-owned airports group (Financial Times, June 7).

    And it is not just Britain’s air gates that are being sold.

    According to the Guardian, “Britain is being sold off at a rate unprecedented in modern times. If the foreign takeover bids announced or hinted at over the past few months all go through, airports, ships, banks, gas pipelines, stock exchanges, chemical plants and glass factories will fall into foreign ownership. Yet there is no debate; scarcely an eyebrow is raised. In any other country there would be uproar” (February 17, emphasis ours).

    The London Times says “[b]ig British companies are falling into foreign ownership almost daily,” with few protests (June 8). It calls the sell-offs a “mass asset-stripping of the UK’s corporate infrastructure” (ibid., March 3).

    “[W]ith this rate of takeover, within a generation most British workers outside the public sector will be working for foreign companies,” the Guardian reports. “The scale of what is happening is truly breathtaking compared with even five years ago” (op. cit.).

    As reported by the Economist, the value of British companies purchased by foreigners doubled to a record $91 billion last year from $41 billion in 2004 (March 4). The worry is that the current rate and scale of foreign takeovers is “a sign of weakness, not strength” (Guardian, op. cit.).

    A quick news search reveals a list of former British-owned corporate crown jewels that stands out like a treasure chest of sparkling gems atop a desert sand dune.

    Automotive sector: Once British manufacturers, Rolls-Royce, Aston Martin, Bentley, Jaguar, and mg Rover are now all foreign owned. American companies purchased Aston Martin and Jaguar; the Chinese, mg Rover; and in a cruel irony, Rolls-Royce and Bentley were bought by German companies (Independent, April 12). bmw purchased Rolls-Royce, the company that produced the engine that powered the World War ii Spitfire fighter that was so effective in combating the German bmw-built opposition.

    Gas and Electricity: Many of Britain’s largest conventional power utilities are already foreign owned. In 2002, German energy giant rwe Power bought Britain’s third-largest energy supplier, npower, which supplies electricity and gas to approximately 6 million customers. Another German energy giant, E.On, owns even more of Britain’s energy distribution system. Through its subsidiary Powergen, E.On provides power and gas to 9 million British customers, making it Britain’s second-largest electricity and gas provider. edf Energy, the French state-owned energy giant, is Britain’s fifth-largest electricity and gas provider.

    Until recently, very few have even questioned the wisdom of putting the nation’s heat and electricity in the hands of foreign corporations. In commenting upon the recent proposed takeover of British utility Centrica by Russian state-owned Gazprom, Britain’s Chancellor of the Exchequer Gordon Brown warned it could raise political issues. Gazprom is the company that cut off the gas supply to Ukraine and consequently much of Europe early this year in what was seen as a political spat between the two governments. Centrica is Britain’s largest gas utility, supplying gas to 13 million homes.

    Nuclear Power Generation: On February 6, British Nuclear Fuels (bnfl), the British state-owned nuclear power manufacturer, announced it had sold its power station construction arm, Westinghouse, to Japan’s Toshiba corporation. The Prospect union, which represents several thousand engineers, scientists and managers at 22 sites, attacked the sell-off for “robbing Britain of new-build expertise” (Morning Star, February 7). The government is also considering selling its stake in the nuclear power firm British Energy, which manages eight of the UK’s nuclear power stations and is the nation’s largest electricity generator.

    Water: Britain’s largest water utility, Thames Water, is foreign owned, though it is up for sale once again by its German owners. Thames Water supplies water and wastewater services to millions of Britons and other customers around the globe. French-owned Veolia Water also owns and operates several UK utilities.

    Telecommunications: Communications providers have also been gobbled up. Last year, O2 plc, a mobile-phone company, was sold to Spain’s Telefonica for $31.7 billion. On January 23, Marconi Corporation plc, the last remaining British telecom manufacturer of any size, was purchased by Sweden’s Ericsson. Marconi was a British institution whose roots could be traced back to 1897. It was also considered a heavyweight in the British defense industry.

    Industrial manufacturers: Founded in 1886, British-owned boc Group, the world’s second-largest industrial gases group, is in the process of being purchased by a smaller German rival, Linde. This deal will make Linde the world’s foremost producer of industrial gases.

    Another old imperial UK company that built parts for the Spitfire, Pilkington, was also recently taken over. The 180-year-old glass company manufactured the windows that fighter pilots used to peer through. The company has been bought by Nippon Sheet Glass, a comparatively smaller Japanese company. The merger creates the world’s largest glass manufacturer.

    Shipping and Trade: Once the dominant global power in trade, today many of Britain’s ports and shipping companies no longer belong to the British. P&O (Peninsular and Oriental Steam Navigation Company), a company founded 169 years ago during Britain’s superpower days and one of the world’s largest shipping companies, having an unparalleled infrastructure of container ports and ships, was purchased in March by the United Arab Emirates state-owned company Dubai Ports World for $6.8 billion.

    Finance: British banks have also been targets. In 2004, Abbey National, Britain’s sixth-largest bank and second-largest mortgage lender, was purchased by Spain’s Banco Santander for ?9 billion (us$16.7 billion). This past May, France’s Credit Agricole sa confirmed that it was looking at another British bank, Alliance & Leicester plc, as a possible takeover target.

    Even the London Stock Exchange is currently fighting off a hostile takeover attempt by Nasdaq.

    Sports: It might be surprising to some, but Britain’s probably most well known, if not most adored, soccer team, Manchester United, is also foreign owned.

    When it comes to protecting their own nation’s goal, are British politicians running down the field in the wrong direction?

    OK, it was dated in 2006. I suppose the new carrier group will get it all back.

12. Cloned Poster on 09.07.2008 at 22:02 Permalink | Reply

    PS: I just checked the homepage of the link above, but that is irrevelant to some of the substantive issues above, ie., business selling the privatised assets that they got a huge bung for, to oversea’s politicians for another bung.

13. Alex (6 comments.) on 10.07.2008 at 17:49 Permalink | Reply

    It was also considered a heavyweight in the British defense industry.

    Not in 2005, six years after it sold all its defence assets to BAE, it wasn’t. It was a second or third rate network vendor that bet the farm on the .com boom going on forever, IMS taking off, and BT always buying their stuff ‘cos of it had a union jack on it.

    Also, what is the guy’s obsession with whether or not they supplied bits of the Spitfire? I mean, why not the Hurricane?

    Alex’s latest blog post… Aaaand….we’re operational

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