Three years ago I left the GP practice where I’d been a patient since my student days because Princes Park Health Centre, once the practice of the redoubtable socialist and councillor Cyril Taylor, was being privatised – handed over to a company called SSP Health which now runs more than 40 GP practices across Merseyside and Greater Manchester. Last month the Health Centre was placed in special measures after the Care Quality Commission ruled services were ‘inadequate’ – the worst possible rating. It was the fourth practice run by SSP Health to be rated ‘inadequate’ so far this year.
But surely the private sector is better and more efficient at managing things than the state? For anyone who still believes that – indeed, for every voter in the land – James Meek’s Private Island should be required reading.
Private Island devotes a chapter to each of six big privatisations: the postal service, the railways, water, social housing, electricity supply and the NHS, mixing personal observation and memory, reportage and interviews in a thoroughly-researched account that is both gripping and deeply alarming. Meek’s lesson is that privatisation has not ushered in the share-holding democracy promised by Margaret Thatcher, and has not led to greater competition or consumer choice. Nor has it produced lower prices, greater efficiency, or boosted the British economy.
Quite the opposite. Privatisation has produced monopolistic concerns that control the market in their own interests, not those of consumers, which siphon profits to shareholders and the fat cats at the top who pay themselves silly money on the basis of ‘performance indicators’, and which are now largely foreign-owned (ironically, often by state owned companies of other countries).
Meek documents the great shift from public to private ownership of Britain’s essential infrastructure taking both the broad view and zooming in on often unreported details that he encountered on travels around the country and talking to those involved.It was a process that gathered pace through the 1980s – telephones in 1984, gas in 1986, airports in 1987, water in 1989 – leading up to electricity and the railways in the 1990s.
But it’s not over yet. We tend to think of privatisation as simply the selling-off of public services. But Meek makes clear that the real change that has taken place involves more than the transfer of state-owned businesses into corporate hands. Take the NHS: it hasn’t been privatised in a literal sense; instead:
It has been commercialised and repeatedly reorganised, with competition introduced, in such a way as to create a kind of shadowing of an as-yet-unrealised private health insurance system.
This is exactly what has happened to my local health centre: the stealthy encroachment of profit into an institution that was set up to meet basic medical needs. The NHS being comprehensively marketised (to use the horrible jargon of the con-men and spivs). This, says Meek, is the true story of the past two decades: the re-engineering of public institutions on a model of market exchange. It’s a project driven by an ideology whose failure became evident in the crash of 2008, but which has enriched a small number of people. Of electricity privatisation Meek writes:
The reality is that the faceless state bureaucrats of the old electricity boards have been replaced by the faceless (and better paid) private bureaucrats of the electricity companies.
As Meek observes, Mrs Thatcher promised to turn Britain into a nation of small shareholders. The opposite has happened: before Thatcher came to power in 1979, individuals held almost 40% of shares in UK companies, by 1981, it was less than 30% and by the time she died in 2013, it had slumped to under 12%.
Defending her record in Parliament on the day she resigned in 1990, Thatcher spoke in patriotic tones of how, with millions of people buying shares in former state industries, privatisation was giving ‘power back to the people’, and how competition at home and open markets in Europe would free British enterprise to lead the world. Now it’s clear that the result of electricity privatisation was to take power away from the people. Small British shareholders have no influence over the overwhelmingly non-British owners of the firms that generate and distribute power in Britain.
It’s big business – and largely foreign-owned as well. From Meek’s book I learnt that when the Texan conglomerate Enron collapsed in 2001 it owned Wessex Water, which serves Dorset, Somerset and Wiltshire. The French state-owned energy company EDF is one of the big six suppliers of British electricity, owning a portfolio of power stations, including a fleet of nuclear plants. That means we have effectively renationalised the business – but on behalf of the French state. The same thing has happened with other parts of the infrastructure, so that, Meek writes:
The most absurd paradox of Britain’s privatisation is that it has actually led to the nationalisation of British infrastructure by foreign governments: with parts of former British state firms becoming the property of the governments of France, the Netherlands, Sweden, China, Singapore and Abu Dhabi.
Meek’s most interesting analysis of this scandal is that, when successive UK governments sold off the businesses behind essential services such as water and electricity, starting in the 1980s, they in effect outsourced some elements of tax collection to the private sector. This may have been deliberate, since it has enabled the UK to maintain low headline rates of personal taxation. Meanwhile, however, through our utility bills we pay for vital work in maintaining and modernising the nation’s infrastructure. Rather than funding this essential work through progressive general taxation, we do it through flat rate fees that hit the poor hardest.
If a payment to an authority, public or private, is compulsory, it’s a tax. We can’t do without electricity; the electricity bill is a tax. We can’t do without water; the water bill is a tax. Meta-privatisation is the privatisation of the tax system itself; even, it could be said, the privatisation of us, the former citizens of Britain.
Moreover, much of that ‘taxation’ is creamed off before it even come within sight of investment: allocated as dividends to shareholders and grossly-inflated payments and bonuses to directors. It’s as if, Meek argues pointedly, we had been reduced to serfdom:
More than twenty years after the great electricity experiment was launched, it can be seen that although it was an act of privatisation – of taxation, principally – it was most significantly an act of alienation, lowering an impenetrable barrier of complexity, commercial secrecy and sheer geographical distance between the controlling interests of electricity companies and the customers they serve. It’s easy to switch suppliers. But behind that barrier citizens and small businesses have no way of knowing that they aren’t being fleeced as egregiously by the cheapest provider as they are by the most expensive. The consumer-peasants of Britain bring their tithes to the locked gates of the great electrical estates and wonder who lives in the big house now, and whether they are at home, or in one of their other estates around the world.
Thus Meek’s startling conclusion. Essentially what Margaret Thatcher, Tony Blair and now David Cameron have been selling off is not simply our power stations, trains, or hospitals: it’s the public – it’s us.
In an update to the first edition James Meek has appended a handy list of six lies told by defenders of privatisation. I summarise:
- Privately owned companies are more effective than publicly owned ones. ‘A belief more akin to religious faith than reality.’ The banks?
- Privatised companies compete in a free market. In reality, water and energy distribution are natural monopolies.
- The shrinking state means lower taxes. See above.
- Charges will fall and be affordable to everyone, so services will remain universal.
- Privatisation benefits British firms trying to compete abroad. See above!
- The cultural destruction involved in privatisation doesn’t matter. People don’t care. A national postal system? A hospital or health centre? The BBC?
Reviewing the book for the Guardian, Aditya Chakrabortty wrote:
One activity in which Britain leads the world is privatisation. From Thatcher to Cameron, prime minister after prime minister has flogged off our public assets at rock bottom prices to the private sector. The result has been massive returns for investors and middle men, poorer services for the public – and a downgrading of our entitlements as citizens. All this is detailed by James Meek in a book that stands as one of the most powerful critiques of the mess that is Britain’s economy.
Private Island brilliantly and grippingly reveals how Britain’s common wealth became private, and the impact it has had on us all: from the growing shortage of housing to spiralling energy bills. What Meek’s book does not do is promote an alternative, apart from a tantalising reference to the idea that public services should be ‘in the hands of commercially run, non-profit-making organisations, along the lines of traditional housing associations, through which all state subsidies are channelled’. I know that something along these lines is slowly emerging in Liverpool as the city council grapples with how to maintain crucial services – such as emptying the bins, running libraries and leisure centres – in the face of the huge spending cuts enforced by the Conservative government.
Meek hints at the idea that there needn’t be a return to the top-down, bureaucratic forms of nationalisation developed by the postwar Labour government. Instead, he suggests that any new wave of public ownership could rest not on one model, but many – ensuring democratic involvement on the part of both workers and service users or consumers.
Renationalisation? According to the mainstream neo-liberal thinking that has dominated both main parties for the last three decades, it’s a mad, impossible idea. But one of the interesting aspects of Jeremy Corbyn’s campaign for the Labour leadership is that public ownership and many other ideas have come in from the cold for the first time in a long time.
In his review in the New Statesman, Owen Jones wrote:
The question is whether the new dissidents can learn from the example of the neoliberals themselves: they, too, once languished on the ideological fringes but then they turned their polemics into policies. Economic crisis provided them with an opening, a moment when ‘the politically impossible becomes politically inevitable’, as Milton Friedman put it. Today’s crisis offers a similar opening. The neoliberal project has failed: but it will never be defeated until it can be replaced by something else.
Subscribers to the London Review of Books can read original articles that formed the basis of chapters in Private Island:
- Where will we live?: The Housing Disaster
- How We Happened to Sell Off Our Electricity
- It’s already happened: The NHS Goes Private
- In the Sorting Office
- When the Floods Came: England’s Water
- In Farageland