Why privatisation hasn't gone far enough

Scottish Power sent me a tempting letter offering me cheap gas and a double deal of bargains if I signed up for electricity too. As I am 20 miles from the nearest gas pipe, I knew they were only teasing. What gave me a quiet glow of pleasure was the fact that I had switched my domestic power to Independent Energy who promise to knock 15% off my bill. I can do this as a competitive market is opening up at last.

All but a few with Stalinist souls think privatisation has not been a success. The price of those services brought back to the marketplace has continued to fall, so we are all getting better bargains by the simple criterion of price. The quality and nature of service is more difficult to judge but seems to me to be uniformly better. The sandwiches on the GNER hurtle to Kings Cross are in a different league from British Rail's limp offerings. BT actively seeks my custom where the poor old GPO system was shy of customers and only offered bakelite black sets if you waited nine months.

Yet, as the experience of running industries outside civil service control loses its novelty, we can see a landscape with many reforms still needed.

Privatisation was a leap in the dark. If you exclude Henry VIII selling off the monasteries, and Edward Heath a few pubs in Carlisle, our leaders were not sure how to do it. The devil was in the detail and the detail was shrouded in technical jargon or lawyers' dialect.

I worked for the sainted Keith Joseph when he was first tempted to liberate the telecoms industry. Not only has his creation of a lively telephone market enhanced everyone's life in the UK but the infection has spread around the world.

With hindsight he was far too tentative. BT still has 95% of "the local loop", to specific wiring in each community. It would have been wiser to have created a Railtrack-like entity to run the common service elements and force BT to bid as an equal for the phone traffic.

Railtrack itself can be seen as a valiant attempt to provide a nationwide continuity for the train franchises but we did not need a monopoly. Let rivals run different tracks and different experiences would have enriched the experiment.

BAA, which runs all the major British airports - Glasgow and Edinburgh as well as Heathrow, Gatwick and Stanstead - is a model of how privatisation was flawed. BAA was structured to offer a juicy morsel to the City. The institutions loved it. It had near total control of all civil aviation traffic. How can we know how diligent or innovative BAA are when there is no competition?

Civil servants courtiers often deplete the originality of privatisation. Contracting out prisons, for example, was meant to incorporate rewards for prisons that had low rates of recidivism. State prisons train criminals to go out and be more expert crooks.

Private prisons would teach tradeable skills and civic virtues. No wonder the Home Office moved quickly to crush such ideas. The Scottish Office dared not dissent. Private prisons may run the laundries and kitchens better but many of their graduates are still worse than when they went in.

To criticise the great adventure of privatisation may seem priggish. Britain leads the world in de-regulation and liberalisation but now the dust has settled on Mrs Thatcher's inadvertent counter- revolution we can see the more evangelical Mr Blair has much more to reform.

Where the Tories funked selling off the air traffic controllers New Labour seems willing to be more bold. Converting air traffic from men with screens into digitised sharing of airspace without any near- misses will also shorten flying time by making routes straight.

Peter Clarke was formerly PA to Sir Keith Joseph.

Copyright 1999
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