I need to be honest from the start and state that I believe in Capitalism, however recent events have caused me to temper my belief in an unfettered free market economy. What has brought about this change of opinion after a lifetime believing that socialism, state ownership and of course nationalisation are an evil to be avoided at all costs?
I was brought up in Wales, a country where the Tory party and all it stands for are detested. My father once explained that if the Labour Party presented a donkey as a prospective MP, it would be accepted and at the next election would receive a significant majority of the vote before taking its place in parliament. I argued that socialist dogma has damaged Wales so badly that it might have been better if actual donkeys were representing the interests of the Welsh people. So how did my beliefs diverge so greatly from those around me and even my own family?
I left home aged 16, went to College in Cardiff and joined the merchant navy. When I returned to stay with my parents after six months on my first ship, I was already earning more than my father and embracing the concept that the world outside socialist Wales was full of opportunities if you were brave enough to take them. These opportunities were certainly not available living in a valley and working for one of the many state owned companies.
At that time, the majority of critical services and many major industries were state owned and despised for their inefficiency and lack of accountability to the public. It may seem strange stating that they were not accountable because in theory they were owned by the pubic and run for the public. One good example is the General Post Office. They were not particularly good at delivering mail, but why should they be when they were protected from all competition. If the GPO was bad at delivering letters they were even worse at running the telephone system. Yes the inefficient, ailing, failing post delivery state owned company was also put in charge of the telephone network. Those, considerably younger than me who would love all such services to be back under state control should note that whilst many parts of the world enjoyed the freedom to choose a telephone line provider and buy a modern telephone to suit their tastes, we in the UK had to wait up to six months to get a party line i.e. shared with a neighbour and an old fashioned bakelite dial phone. It was actually illegal to connect any phone or other attachment that did not come from the GPO. Privatisation was in my mind a huge success and spawned a large number of companies competing for our custom with differing packages, handsets that could be bought and plugged in etc. So my argument appears to be that Capitalism and the free market economy is always for the good but sadly I have discovered that this could not be further from the truth.
What has brought about this change of heart? Let's take a look at Thames Water because even if you do not live in the area and are not directly affected, their abysmal performance, pollution of our rivers, leaking pipes and repeated hose pipe bans are well publicised. So how did privatisation of the old Water Board go so badly wrong? Well, in the ideal world, Thames Water would have to compete with other companies but in fact they have a monopoly in the London area. One would hope that Thames Water would work diligently to provide water at reasonable price, without interruptions and treat the sewage properly before discharging it into the rivers. This would require them to make sufficient profit to invest for the future and of course pay reasonable dividends to the share holders. Unfortunately the idea of a caring management, planning for the future and responding to the wishes of their customers could not be further from the truth. For ten years from 2006 to 2017 an Australian Institutional Investor (Macquarie) ran Thames Water, failed to invest in the future and stripped it bare with massive dividends to their share holders, leaving it with £19 billion of borrowings. What sort of failure (Ofwat) could have led to Londoners money being taken by an Australian company, resulting in the potential bankruptcy of Thames Water. The Government is likely to need to step in and spend countless billions of public money to keep the water flowing and at least some degree of sewage treatment in place. Meanwhie the Thames has turned into a large open sewer and fish are killed in smaller rivers and streams. On a personal note, I am amazed at the lack of accountability. I had no water meter so paid a standard charge but on one particular occasion we had a hose pipe ban at the same time that our house was flooded by the River Thames bursting its banks due to incredible rainfall. I paid for water I could not now use and I paid for sewage treatment that was not taking place and my money was taken by an Australian company to line shareholders pockets. How can this be right? Macquarie have half a trillion pounds of assets worldwide so of course they did not care about the service provided or the future of Thames Water but they did care about removing large sums of money that poor householders had been paid for a substandard service.
If the above was an isolated case then my faith in Capitalism would only be slightly dented but lets have a look at Heathrow Airport. The lost luggage, delayed flights, cancelled flights, ridiculously slow recovery from the COVID shut down, lack of investment in infrastructure and tendency to blame everybody else, especially the airlines for its woes is nothing short of a scandal. Londons primary airport, provides the first impression for travellers arriving to see the great city of London and travel throughout the country. I have travelled through the airport very frequently and the service is abysmal. I have lost count of the number of times the plane had landed only for there to be no stand available or the plane is parked in the back of beyond but there is a lack of staff so no stairs available. How could a British company and the government allow visitors to be so badly treated on arrival in the UK. But of course, it is not owned by a British company it is owned by Spanish company Ferrovial and since they took over in 2006 borrowing has increased to £17 billion and I would argue that the service has declined. There is however both good news and bad news regarding the future of our primary gateway airport. The good news is that Ferrovial are planning to sell their shares but the bad news is that Macquarie are forming a consortium with the intent of achieving a majority stake in Heathrow. This is he same Macquarie that caused the damage to Thames Water that either the government ill have to nationalise or the poor consumers will have to pay 40% more for water and sewage in order to shore up their finances.
I should not really blame Capitalism I should blame the utter stupidity of a government that allows critical services to be foreign owned and stripped of assets on a recurring basis.
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