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Privatisation Is the Real Rip-off

Shadow Chancellor Rachel Reeves recently argued that bringing utilities into public ownership wasn’t 'good value for money' – but for millions of people, privatisation has led to higher bills and worse services.

Shadow Chancellor Rachel Reeves stands with Labour leader Keir Starmer after delivering her keynote speech during day three of the Labour Party conference on 27 September 2021 in Brighton, England. (Dan Kitwood / Getty Images)

He wouldn’t have been able to win the Labour leadership had he been honest about his intentions, but the party’s rightward trajectory under Keir Starmer—both when it comes to policy and internal party democracy—now looks firmly locked in, with only fitful and ineffectual attempts at resistance coming from the left. But there’s one thing that epitomises this shift better than anything else: the speed with which Starmer and his acolytes have backpedalled away from public ownership.

Shadow chancellor Rachel Reeves, in a recent online Q&A discussion, again made a point of distancing herself from the idea that a future Labour government might take privatised utilities back into public ownership—as a clear majority of the public would want it to. Insisting, somewhat disingenuously, that she was ‘not particularly ideological about this’, Reeves nevertheless questioned whether ‘spending taxpayers’ money on a big swathe of nationalisation is good value for money’.

It says a lot about the intellectual torpor of latter-day Blairism that its adherents are no longer prepared to argue for privatisation on principle. Their arguments, of course, were never convincing—think back to all the old Blairite claptrap about modernisation, innovation, and so on—but they were at least delivered with conviction and a certain panache. Now all they can say is that they don’t particularly believe in private ownership of utilities, but they’ll keep them in private hands anyway as it’s too much trouble to do anything else.

This retreat from public ownership is presented as mere sensible pragmatism, but is deeply ideological. The Labour right remains very firmly attached to private ownership, but the general failure of privatised utilities and services to deliver on anything that was promised—investment, value for money, service standards—and their unpopularity with the public now prevents them from saying as much openly. Needless to say, the prospect of securing post-politics sinecures from private utilities firms is doubtless another factor for some.

There are also Labour’s financial woes to consider. A huge exodus of dismayed grassroots members—apparently around 150,000 of them—has streamed out of the party. Their departure is unmourned by Starmer, but they have taken their membership subs with them—and, at the same time, Unite has all but pulled the plug. With the Labour leadership going cap in hand to rich donors, it’s pretty hard to be anything other than pro-privatisation when—as reports suggest—you’re begging former Capita bigwigs for cash to pay the bills.

Some people point out the apparent inconsistency between Starmer’s backpedalling from public ownership and the promises of his leadership campaign—which, as the man himself has basically admitted, weren’t worth the hot air that carried them. But in any case, those pledges—particularly the one on ‘common ownership’—were very carefully drafted from the outset, being sufficiently vague and leaving him just enough wiggle room to avoid actually committing himself to full public ownership of utilities and transport.

Under Starmer’s leadership, there’s been a concerted effort to rehabilitate Tony Blair—rightly reviled by most of the public, though revered by the establishment he served so loyally—in Labour circles. Even ardent Blairites these days make little effort to defend his murderous foreign policy, that argument having long since been lost, but instead focus on the domestic welfarist achievements of his government—most notably the reduction in child poverty, investment in public services, and the establishment of programmes such as Sure Start.

To be sure, these were real achievements and are not to be sniffed at. But, for the most part, they didn’t survive longer than the New Labour government itself: the progress on child poverty, in particular, was swiftly undone by the Tory-Lib Dem coalition government. Part of the explanation for New Labour’s failure to deliver longer-lasting social change is its refusal to challenge the structural distribution of power and wealth in the economy—and, more specifically, its fetishism of the market and giddy embrace of untrammelled privatisation.

As Tony Blair himself has said, New Labour’s leading architects saw their job as being to build on the core tenets of Thatcherism, not to demolish them. As a result, many of the social reforms the Blair and Brown governments did achieve were erased after the global financial crisis, or bulldozed by the cuts of the coalition years. New Labour might have softened some of the sharper edges of neoliberalism for a time, but even this proved to be built on sand—and, in any case, the economic conditions of the Blair years cannot be replicated today.

With Labour under Starmer having rapidly abandoned its commitments to renationalisation, it appears that this lesson has not been learned. Indeed, we’re still none the wiser as to what any Starmer-led Labour government would actually do to tackle the major crises facing us, and to eliminate the entirely unnecessary hardships inflicted on the poorest. Instead, the strategy seems to be to sit back, say little, and leave the Tories to blow themselves up; something which, admittedly, they’ve been trying their hardest to do in recent weeks.

This play-it-safe strategy might even work, with Boris Johnson seemingly badly damaged by the string of recent revelations. But the Labour frontbench’s aversion to public ownership leaves it with nothing meaningful to say about the sharp increase in energy bills currently hanging over millions of people. With households threatened by the prospect of £2,000-a-year energy bills, the shadow cabinet’s limp response—calling for a temporary suspension of VAT on energy, which is only levied at 5%—doesn’t even scratch the surface.

Moreover, public ownership remains indispensable both for any lasting redistribution of wealth and power, and for any rapid and just decarbonisation. Still, the Labour frontbench is happy as long as it gets to flaunt its ‘pro-business’ credentials in the press—and, as Rachel Reeves did recently, to brag about how many demoralised members it’s driven away. These members, she crowed, ‘should never have joined the Labour Party’ and ‘never shared our values’. To which it is only too tempting to reply: too right, we don’t.