By Ian Taylor
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Private Island

This article is over 6 years, 7 months old
Issue 403

A £50 billion high-speed rail line built and run by private firms and the sale of — extension of “Right to Buy” to — 1.3 million social housing properties are key parts of the new Tory programme.

Barely anyone in parliament batted an eyelid when the plans were laid out at the end of May. The wholesale intrusion of profiteering into public service has long since engulfed Labour even when the leadership is up for grabs.

James Meek’s Private Island is a marvellous corrective. Labour candidates for leader should be SAT-tested on it. Blairite has-beens like Alan Milburn should be beaten senseless with the hardback.

The book comprises essays on the privatisation of our mail, rail, water, electricity, health and homes, revealing the madness of the market at every turn.

Meek exposes the trick accounting, mendacity and often sheer idiocy of ministers, policy advisers and former “public servants” who lined their pockets. He identifies clearly who has benefited and who paid as he meets workers, former managers, even the apostles of privatisation.

Examining the privatised mail system of the Netherlands, where sorting and delivery are outsourced to workers at home, Meek visits a €5 an hour post woman who he finds among 62 crates of mail.

Turning to rail, he details the break-up of the old, investment-starved system and the fantasy marketing collateral deployed to “make privatisation financially possible” — the West Coast Main Line upgrade.

The project would enable London to Manchester trains to run at 140 mph using a signalling system that did not exist at the time Railtrack proposed it (1996-97) and still does not.

Never mind that a downgraded “upgrade” came in six times over budget on a mere portion of the line: Railtrack was able to pay out almost £4 billion in dividends and interest payments in five years.

It promised a railway that would need no maintenance for years. Privatised rail boosters failed even to consider that the track would be used not just by the 120 “high speed” trains a day they envisaged, but by 2,000 slow trains, and be crossed by 4,000 more.

Labour declined to revoke the privatisation despite taking government with a landslide at the outset. Instead it hitched its caboose to the Tory locomotive and picked up the pieces when this came off the rails in the Paddington and Hatfield rail disasters.

Water privatisation went almost as well, flowing inexorably towards the 2007 floods when 350,000 homes around Tewkesbury were cut off while Severn Trent Water paid out £143 million in dividends but continued to charge those cut off for their supply.

Electricity privatisation followed a similar pattern using a model proposed by economist Stephen Littlechild, initial “regulator” of the privatised companies.

Littlechild oversaw a pricing system so complex that only those “whose interest it was for prices to be as high as possible” understood it. That was the power firms, who realised a situation “where the lights are always just about to go out” would hike prices.

The upshot is a system so shorn of investment that a government minister conceded in 2012 that the widely touted figure of £110 billion to bring Britain’s power supply up to scratch was “only the beginning”.

On health, Meek quotes a surgeon at a hospital which pioneered hip replacements and now struggles in the market-driven NHS despite performing 14,000 replacements a year. “We lost £1 million last year,” he says. “Our length of stay was six days. If we can get it down to five we break even. If it’s four, we make £1 million profit.”

Meek skewers Labour, providing ample evidence for the assertion, “The more closely you look at what has happened over the last 25 years, the more clearly you see a consistent programme for commercialising the NHS.”

He traces this programme back to US economist Alain Enthoven, who worked on the economics of annihilation at the Pentagon in the 1960s, and forward to the leading civil servant at the Department of Health under Labour, Mark Britnell, who joined consultant KPMG in 2009 and declared, “The NHS will be shown no mercy.”

Meek nails the nonsense of the market bringing choice and exposes “the great lie of the post-Thatcher era, that tax has fallen, when the tax burden has simply shifted from progressive taxes on income, where the wealthy pay more, to flat fees for private universal networks such as water, energy and transport”.

He quotes Martin Wolf, chief economics editor of the Financial Times, who marvelled that, “Investors have been able to buy companies, replace the equity with debt and enjoy a licence to print money.”

It is a model that has endured the banking crisis and we pay the debt.

Private Island won the Orwell Prize for Books last month and with reason. Read it and weep. Then get active.

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