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Privatisation doesn’t work — so why has Starmer abandoned common ownership?

Recent history is riddled with examples of public money going to private firms that mess up the services they were paid to provide — so why would Labour sideline itself from being able to call out these scandals? SOLOMON HUGHES explains

KEIR STARMER said he has abandoned his anti-privatisation pledge on “common ownership” when he was challenged about the issue during a recent speech in Liverpool.  

Starmer said his “approach here is pragmatic, not ideological.” But how pragmatic is it to accept privatisation, just as a new wave of privatisations and rip-offs wash over us all? It’s left Labour without a coherent approach to multiple crises.  

Starmer’s original pledge that he made as part of his leadership campaign was: “Public services should be in public hands, not making profits for shareholders,” and he would “support common ownership of rail, mail, energy and water; end outsourcing in our NHS, local government and justice system.”  

Starmer had a firm, direct position that he has replaced with a vague, hard to understand policy, where he may or may not support continued privatisation, according to rules from his shadow chancellor Rachel Reeves, which neither of them seem able to explain — or even understand themselves.  

Starmer has decided to accept the reputational hit of being beige and not sticking to pledges in return for the perceived gain of being seen as “pragmatic.”  

But continued privatisation is itself deeply ideological.  

We are not in “just doing what works” territory here. There has been a whole series of recent privatisations — particularly associated with the pandemic — which handed a load of public money to investors, then failed.  

In 2022 then-Tory education secretary Gavin Williamson gave Randstad, a Dutch employment agency, a £32 million a year contract to supply schools with tutors to help kids who missed schooling during the pandemic to catch up.   

Schools said the government should give them the money, because they knew more about education than some Dutch temp agency. This March, Nadhim Zahawi admitted Randstad’s education privatisation had failed and finally handed tutoring money to schools.  

This follows a series of privatisation scandals during Covid. The government gave in excess of £410m to Serco to run “contact tracing.” Breaking with international standards of good practice, instead of putting local health authorities at the centre of disease contact tracing, the government paid Serco to get unqualified staff on around the minimum wage to carry out the task like a call centre.  

There is no real evidence that this worked to stop the disease, although it clearly helped Serco.  

The government had an ideological urge to privatise its Covid response: it did not want to come out of the pandemic with an enhanced public sector, so it also gave £777m to private testing firm Randox for Covid testing instead of building up existing NHS labs.  

This continues to be a scandal — Owen Paterson MP, who had to resign from Parliament because of a lobbying scandal, which in turn destabilised Boris Johnson, beginning his fall from power, was a Randox lobbyist.  

The cross-party public accounts committee recently found the Department of Health played “fast and loose” when awarding Randox this contract.  

But because Starmer has abandoned opposing privatisation as one of his central themes, he can’t capitalise on these scandals: Starmer’s supposed “pragmatism” means he is not connecting the scandals that bite at the government.   

Other recent privatisations have been marked by failure and scandal too.  

Chris Grayling privatised probation for all but the most dangerous ex-offenders in 2014, handing £2.3 billion to corporations like Sodexo to run the service.   

It was a dismal failure. Despite repeated bailouts, the privatisation firms were much worse at guiding and monitoring ex-offenders than the public sector. In 2019 the Tory government admitted defeat and renationalised the service.  

Recent Tory privatisations are failing — but so too did New Labour’s: the private finance initiative (PFI) was one of the most widespread forms of public-sector privatising promoted during the Tony Blair years. The scheme has now collapsed, bringing down key PFI firm Carillion in a high-profile scandal in the process.  

New Labour specifically abandoned nationalisation to avoid nationalising Railtrack, the private rail network. But Railtrack’s poor maintenance caused a series of lethal rail crashes, followed by emergency speed limits making rail unworkable — so it had to nationalise it anyway.  

Those are the privatisations that failed. The ones that are “successful” and still going strong don’t look like they would get a thumbs up from any “pragmatist.”  

Water and energy remain privatised. The water firms have been found secretly and illegally pumping human waste into our rivers and sea, while pumping huge dividends into shareholder hands.  

In July, one water regulator, the Environment Agency, said: “Over the years the public have seen water company executives and investors rewarded handsomely while the environment pays the price. The water companies are behaving like this for a simple reason: because they can,” adding that until water bosses faced jail sentences, things would not improve.  

This does not sound like a privatised industry that will easily respond to some pragmatic regulation.  

And energy has become the key issue of our time: without energy nationalisation, any cushioning of rocketing prices involves effectively subsidising the energy firms.  

Attempts to push down prices by increased “market” methods — by encouraging new entrants like Bulb — ended in a failure which will dramatically increase energy bills. Even centrist French President Emmanuel Macron has fully nationalised France’s main energy firm EDF to try and control bills.  

By dropping opposition to privatisation, Starmer has stopped Labour having a coherent way of responding to multiple crises. Labour has put itself on the sidelines of many arguments.  

There are three reasons for Labour abandoning this ground. Firstly, Starmer hopes that by dropping nationalisation, he will reduce opposition to Labour from the City and the media; he might get less enthusiasm from below, but he will get less antagonism from above.  

Secondly, Starmer’s team is focused on controlling the Labour Party, not winning a battle in society. Dropping nationalisation is seen as a way of breaking the left in the party.  

Thirdly, Starmer’s team doesn’t believe in — and doesn’t want to do — major social reform if it gets into government. It’s hard work and it doesn’t support it. It just wants a turn in charge.

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