The Blog

Out of Ideas? Jump on the Privatisation Bandwagon

The state seems to now think of privatisation as the only solution to problems in a public sector organisation. This is incredibly fallacious.

I just read a blog from a Conservative party member, extolling the virtues of a recent blog by the Conservative chairman Grant Shapps. He argues that privatisation is good, and that this was the ultimate fulfilment of Milton Friedman's vision of a pure free market society. This seems to me to be just another example of someone jumping on the privatisation bandwagon. The state seems to now think of privatisation as the only solution to problems in a public sector organisation. This is incredibly fallacious.

Take Royal Mail, for example. Leaving national heritage aside, it has had a devastating impact on remote rural communities, the elderly and the poor. As competition rises between different providers, ordinary people are being rapidly priced out in favour of profits for corporate suits. Even Thatcher thought privatising Royal Mail was a step too far. And that's nothing to mention what the British public thought of it. An opinion poll in July revealed that 67% were against the privatization, with 36% 'strongly' opposed. Just 4% were 'strongly' in favor. 96% of Royal Mail employees were also against the sale. Yet, despite this public opposition, the government unashamedly and contemptuously steamed ahead with an incredibly flawed and economically unsound plan. And this is where is gets really interesting. Regardless of your opinion on whether privatisation was a good thing for RM, I think everyone can agree it was done in a shoddy way.

Getting into figures, RM was priced at 330p the night before the flotation. Shares opened at 450p, and by time markets closed the shares had risen to 490p, 50pc higher than they had been sold for. Looking at individual value of RM's constituent parts, we find even more fault. It's real-estate, which includes a £1bn depot in the heart of London, and many more locations around major cities, was only valued at £787m. As well as that, RM's pension fund liabilities have not been sold, and so the taxpayer has been given a burden of around £37.5bn. This makes it incredibly clear that the government was pandering to business - giving them the gold nuggets and keeping the old tin cans for ourselves. Everyone has now picked up on this, and the Business Select Committee will be meeting next week to assess why the price was so low. One of the banks giving evidence to this committee, JPMorgan Chase, presented a value spectrum to the government, before the sale, valuing RM at between £7.75bn and 9.95bn. All of this just provides evidence to the fact that the sale was an ill-thought-out quick-fix to RM's problems, and indeed became a corrupt deal making the government's corporate friends better off while leaving the british public high and dry.

This blogger, however, agrees totally with the privatisation of Royal Mail. And that's not all. His next target is the BBC. He calls it "a crumbling castle defending its shambolic, left-wing presentation of news" and a "Soviet-style Corporation". Anyone who looks beyond simplicity will know that this is rubbish, and the statistics will agree with them fully. Data shows that the Conservatives get a heck of a lot more airtime than Labour, and this is from before they were in government. Now the ratio is much more pronounced. For example, in 2012 David Cameron outnumbered Ed Miliband on airtime appearances by 53 to 15, a factor of nearly four to one. In the same year, cabinet members outnumbered shadow cabinet by 67 to 15, and Conservative politicians in general were features more than 50% more often than Labour ones, at 24 to 15.

This blogger shows quite clearly that the government, and indeed the Conservative party as a whole, have an inescapable predilection towards privatising rather than problem-solving. To benefiting business over britons. As long as we view privatisation as a quick fix to issues, shoddy messes like the RM affair will happen time and time again, and every time the public will be expected to suffer the costs of government cosying up to business. Privatisation is sometimes needed. I will not deny that. But, in the case of Royal Mail, the BBC, and others, the public deserve better.