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Nationalisation and Tory profiteering

I was interested to read Newbury MP Richard Benyon’s comment piece in this week’s Reading Chronicle. It would appear Mr Benyon is not a fan of nationalising industries. I won’t bore you with graphs, talk of natural monopolies, dynamic efficiency and elasticities. Instead I will just point out some facts and inaccuracies Mr Benyon appears to have missed. Mr Benyon says that “Nationalised industries were a shambolic drain on public finances”. I wonder if he includes in this the subsidies that are provided to our current “Privatised” system of railways. Whereby in 2015-16 the railways received £4.8bn in net Government support, double the level from 1985 under the oh so terrible British Rail. (Figures from the ONS). This of course has not stopped these private firms paying out dividends to shareholders. So, overall UK tax burden has gone up (we are paying more to the exchequer), Rail subsidies have risen and dividends paid to shareholders have risen. Or more simply, Robin Hood in reverse. The poor are paying more in tax to subsidise rail shareholders.

Mr Benyon goes on to say “If the national debt increased by this much we would have to spend at least £7bn more on debt repayments every single year”. This from a man in the Government that has increased the national debt to 88% of GDP, the highest level since 1996 and lest we never forget, the Tories in the last 7 years have increased national debt more than all Labour Governments put together, ever! Not finished there, Mr Benyon compares this figure to what we could spend it on. “The equivalent of 81,000 nurses, 69,000 teachers and 66,000 police officers”. Its so nice that he now cares. Nurse numbers have fallen by nearly 2000 between March 2016 and March 2017, 50,000 teachers left the profession in 2015, up from 10% in 2011 and police numbers have fallen by 20,000 since 2009 according to the home office. So we better not nationalise things otherwise what, the Tories will cut more public servants!? And he proudly proclaims “And that’s according to the Office for budget responsibility by the way”, yes, the same OBR that this week said there will be a huge whole in the public finances thanks to the UK’s poor productivity.

But it is the water industry where Mr Benyon proclaims the greatest expertise, he says that “around £120bn has been invested in water and sewerage infrastructure”. A very impressive figure although he doesn’t say what it was before so we have no idea if this is an increase or decrease. What I do know however is that when the water industry was privatised back in the 90’s, nearly £5bn of debt was written off. It’s easy to invest if the Government have picked up the debt tab. I also know that in the first 8 years of privatisation, profits went up by 142%. This could be due to huge efficiency increases of course. But I also know that the average water bill in 1995 was £315 per year (at current prices) but in 2015 it was £340 a year. So investment has gone up but so have prices. Or in other words, you are paying for the investment.

Benyon goes on to say “Since privatisation, Investment has been financed by an inflow of cash from around the world”. But prices have gone up? And this is one way of looking at it, the other way of looking at it is that these tax payer subsidised industries are paying out dividends to go abroad! My water company Thames water is part owned by the China Investment Corporation and the Abu Dhabi Investment authority. Why is it ok that foreign Governments can own and run our railways but not our own Government?

But maybe, just maybe Mr Benyon has his own agenda? I say maybe, a quick glance at the register of members interests tells me that he is director of UK Water partnership which is a not for profit company set up to promote the interests of the UK water sector. Not for profit for some but Mr Benyon is paid £15,000 a year for 12-14 days of work to do this job. So much like the railways, Governments are not to profit from it but fine for shareholders and individuals.

This article originally appeared here

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