Public ownership is back in fashion

Public ownership is back in fashion after the market failures of rip off Britain. The left needs to tap into this trend to offer diverse delivery models suitable for the 21st century.

I was speaking at conference yesterday on public ownership. Fairly esoteric for a Sunday you might think, but actually much more mainstream politically these days. A UK public opinion poll for YouGov showed 61% in favour of common ownership of energy and only 26% against. There has been similar support for bringing the railways back into public ownership and against the privatisation of Royal Mail. This shows the public are way ahead of the policy makers, at least in part because they are fed up with the way many formerly nationalised industries are ripping us off.

A range of speakers identified the impact of privatisation in their own fields. Some themes included:
The need for a debate about ownership in the Scottish economy.
The workforce impact including pay, pensions and safety.
Contractors cutting corners with safety and service.
The failure of regulation with fines simply increasing charges to customers.
Promised investment not being delivered as in the rail and energy industry.
The environmental impact including the loss of freight to rail.

Looking forward speakers and workshop participants focused on what type of renationalisation we should support. This should include new forms of public ownership that doesn’t simply create new managerial elites and involves new forms of cooperative and democratic community ownership.

I was asked to focus on water and energy.

Water is the easy one as it remains a public service in Scotland, despite well funded privatisation campaigns supported by the multi-national water companies, the Water Industry Commission and more recently the Scottish Futures Trust. When they didn’t work other mechanisms were suggested including mutualisation and public interest companies. In the capital intensive water industry these would all lead to privatisation by the back door. I would recommend Tommy Kane’s chapter in the ‘Red Paper on Scotland 2014’ if you want to understand more about the efforts to privatise Scotland’s greatest asset.

Scottish Water also offers some lessons about public ownership. Managers constantly talk about the ‘company’ and the regulatory framework apes the English privatised structure. Instead we should be democratising Scottish Water as set out in the STUC publication, ‘It’s Scotland’s Water’.

The recent row over Ed Milband’s price freeze highlights the importance of moving the main political parties away from failed market mechanisms. Fergus Ewing was also very quick to parrot the energy company briefing in last week’s Holyrood exchanges.

Scotland’s energy trade unions have long argued for a planned energy policy that provides safe, secure and sustainable generation, which contributes to the economic future of Scotland and eliminates fuel poverty. While supporting the development of renewable energy, trade unions argue for a more balanced energy policy that will ensure that Scotland is not reliant on a few energy sources.

A different ownership strategy might also follow aspects of the Danish approach, most notably a more diverse generation ownership model. In Scotland, renewables are dominated by big business, whereas in Denmark small scale operators play a much bigger role. I set out some key features we might adopt in the energy chapter of the Red Paper including:

• A strong political vision over the long term, with commensurate policy and planning provisions.
• Favourable feed-in tariffs to create the incentive for new generation using different business models.
• A state owned grid that will usually connect up communities. The cost is repaid through a public service obligation payment in energy bills.
• A clear focus on energy efficiency with measures to tackle hard-to-heat homes.
• Strengthening the ability and willingness of local government to get involved – a utilities culture largely lost in the UK. Smaller local authorities to support real communities of place might also help.

The Reid Foundation energy paper published over the weekend picks up on some similar themes. I might disagree with their conclusions about what you might do with a different Scottish energy policy, but the focus on moving away from the failed faux market mechanisms and introducing new forms of public ownership, is clearly right.

A new focus on public ownership is the right response to the failure of privatisation. We now need to develop the practical delivery solutions that taps into renewed public support.

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