Privatisations: The aftermath.

by Feargus ORaghallaigh

At a time when even rightwing newspapers like ‘The Times’ and ‘The Daily Telegraph’ are lamenting the failures of the privatisation of public services and the Labour leadership is afraid to talk of returning them to public ownership, it is a good idea to remind ourselves of how this all began in earnest in 1986.

In 1986 the then British government launched an ad campaign, ‘Tell Sid’. It promoted the privatisation or sell-off of British Gas, then a nationalised (state-owned) industry. The point of the campaign was to stimulate ‘punter’ interest, the eponymous ‘Sid’. The pitch was the prospect of a quick turn on a bit of a flutter, ‘nudge, nudge, know what I mean?’ in Eric Idle’s famous Monty Python sketch. It appealed unashamedly to spiv culture, the flutter and the quick turn (and wink).

You could say ‘Sid’ changed Britain, made it the chaotic thing it is today, Borisonia, with its queues, shortages, business disruption, energy price hikes and empty shelves. You could also say that ‘Sid’ really tapped into something perhaps essential to the British way or psyche, a spiv essence that is culturally endemic and even classless, and that this was its genius. On such a view Thatcher with her sturdy, hand-bag belief in property, ownership, thrift and the long-term got it wrong while Idle’s Python character was culturally on the spot: England is deeply about the nudge and wink, the bit, the nod (you know!), the fragment of rumour and goes from one flutter to another. On such a view the chaotic is deeply ingrained. The thing is Idle’s character dissolves and disintegrates into quite a pathetic creature, far from being a knowing man of the world he is a foolish ingenue. And maybe that’s the Sid lesson.

Maybe had British culture cleaved sternly to a Wesleyian (Thatcherite) as opposed to the Sid way there would not today be the queues, shortages and price gouging, the nudges that currently characterise the place (know what I mean??)? But then again … Look at the importance of liquid financial markets (both in equities and debt) to the British way of business. Look also at Correlli Barnett’s histories of British nineteenth and twentieth century functioning and decline. And what of the rest of western Europe where much the same phenomena are (to a lesser extent) evident? What of the recent history of the US? What is happening? Here I think, the long view is essential.

From circa the mid to late 1970s into the 80s, both the UK economy and the ‘European project’ were seen, particularly in business (and political) establishments to have fallen on hard times and into some state of decay. In the UK the talk was of the ‘British disease’: a stop-go cycle of fiscal and monetary crises combined with continuing low growth, stagnant productivity, and an utterly incompetent industrial management class.

In the EEC the diagnosis was ‘Eurosclerosis’. Again it was a matter of political economy, the assessment was that a pattern of economic stagnation in Europe that may have resulted from government over-regulation and overly generous social benefits policies.. Add to this too big a role for public spending and the direct role of the state in national economies.

There is an American economic historian, Jefferson Cowie, author of a little book, The Great Exception, the New Deal & the Limits of American Politics. Cowie argues that essentially between the late 1940s and at some point (pick a year) in the 1970s, America’s New Deal, WWII and Johnson’s Great Society unravelled. A US economy built on big companies, big unions, and big federal government bucks based on ‘defence’ (Eisenhower’s ‘military-industrial complex’) buckled and the politics that underpinned it as an essential framework to life disintegrated. And where America went (‘Reaganomics’), the rest of the Western Hemisphere eventually followed while Eastern Europe, under the Warsaw Pact, stagnated and lost any political legitimacy that it enjoyed among its population.

On this view America was by the mid- to late-1970s in the slough of decline; the Brits were in long-run secular decline for perhaps a century; and Western Europe’s post-war reconstruction and renewal had run out of puff. In all cases it was argued it was all because of ruling class incompetence and decadence, socialism and unions. This decline wasn’t simply relative (although it was that), it was essentially decadence, the Decline of the core of the West. But what ho! Here came Maggie (1979). And Ronnie! (1980). And then came Sid!! And for Europe there was Maggie’s 1985 gift to Delors of Lord Cockfield and his ‘Single Market’. Decline was not inevitable. Society, politics, people had agency and markets offered renewal.

With Maggie, Ronnie and Sid and Lord Cockfield came salvation. Well, not quite.

There are two quite brilliant TV campaigns of the 1980s. One is the Reagan (1984) political commercial advocating a second term for the Gipper – ‘Morning in America’. The other is the aforementioned ‘Tell Sid’. Morning in America is in tone, patriotic, uplifting: prosperity is in prospect, it is a “new morning”, turnaround has been achieved (the musical background and the voice-over are stirringly and upliftingly suited to the message). “Tell Sid’ on the other hand is a message of spivery to a low comedic, slapstick culture: its tone is chaotic in the ‘Carry On’ tradition, but it gets a message through, there’s money to be made by everyone, “tell Sid”, nudge nudge, know what I mean!!!

Both campaigns were brilliantly purposed and aimed at their respective audiences – and both were also calculated big lies. They each hid behind their messages, their true purpose, already by the early ’80s under way. The project really was nothing less than dismantling as thoroughly as possible (and however long it took) a Western Hemisphere socially-based political, and economic order based on social or Christian democracy depending on your viewpoint; national markets, social safety nets and sovereign governments. This model was to be (and has largely been) replaced by a new global order of money, debt and financialisation; the break-up of integrated businesses and sectors, whether public or private, in favour of the disintegrated competitive model operating on a global scale; the undermining of union power driving down pay and conditions; and the dilution of the sovereignty of governments. Energising it all is an underlying wealth casino system of mobile, yield-seeking investors. All of this is now well-entrenched in the political cultures of the Western Hemisphere and its offshoots (such as Australia and New Zealand), underpinned by competition law, with even the ‘mainstream’ centre-left so-called, signed up – as evidenced by Starmer during the Labour conference.

What we are currently seeing particularly in Britain but also in many EU countries in the energy (gas and electricity) sector and in fuel (petrol and diesel) especially illustrates the transformation.

Energy (gas and electricity)

Before Sid gas and electricity were separate industries in Britain, both state-owned and serving consumers (domestic and commercial). They each had a regional dimension to their organisation through Area Gas Boards (AGBs) and Area Electricity Boards (AEBs) with national overlays, for technology reasons very strong in the case of electricity with the Central Electricity Generating Board (CEGB) and the National Grid. The arrival of North Sea gas necessitated a higher than original degree of national integration to the gas business through the creation of the British Gas Corporation in 1973 (taking over the AGBs), the entity sold to private investors in 1986. In 1989 the AEBs were turned into companies and then sold off, again to investors with the CEGB and National Grid going the same way.

In private hands gas and electricity became joint products with companies constantly changing hands, merging and demerging with customer and transparency of service now subservient to the impulses and desires of the investors (some of them EU public utilities and private companies) and the daily price movements in wholesale energy markets. In the face of the chaos the May government introduced a form of price-capping while the competition authorities faced with growing concentration encouraged a new breed of ‘challenger companies’ to enter the fray to ‘disrupt’ the market through more competition.

Fuel (petrol and diesel)

In the fuel business the rule of the vertically integrated majors (BP, Shell and the like) from the oil field to the forecourt is over, gone. Take Stanlow refinery in Cheshire, one of Europe’s biggest and critical to UK supply. Who owns it? It was owned by Shell up until 2011 (having built it in 1924). It is now owned by Essar Oil, which used to be part of an Indian global conglomerate until the Indians sold their refining business to a consortium led by Russia’s Rosneft. Stanlow is reportedly on the brink of closure. Its owners availed of a UK Revenue covid-crisis VAT deferment scheme but they (whoever they now are) are reportedly threatening to hoof it rather than repay the VAT subsidy on time. The number of refiners has reduced to a handful with names like Shell and BP gone from the scene.

Refiners now sell via wholesale ‘markets’ and franchise deals to forecourts, in turn owned by big supermarket chains and private operators (competing profit centres). Much of the business is now based on brand franchising and own-label. Recently ASDA which is a major petrol retailer, was taken over by the Issa brothers (owners of the EG forecourt chain) and TDR Capital in a highly debt-fuelled  purchase from Walmart. Convenience retailing, including fast foods, has also become a central feature of the modern forecourt business model.

HGV tankers (the ‘supply chain’) is also now another disaggregated ‘business’ with many competing players organised as profit centres. Many drivers also are now required by their employers to be ‘self-employed’ (‘independent’ sole traders) although HMRC is now out to change this hiring policy.

Is it all about Brexit?

So is it about Brexit (and covid)? No it isn’t though what both have done is expose again the fragility today of a complex and large UK economy that is by now based on a competitive market model with business in the hands of a professional investor class in ruthless pursuit of profit and yield. The hard Brexit model chosen has perversely exposed how utterly integrated into the EU economy the UK had and has become. Whether one talks about labour markets (truck drivers, fruit harvesters and so on) or export markets or logistics or sub-supply chains or energy, by the Brexit moment Britain was fully integrated into the European economy. The French government’s EDF and Germany’s E.ON today dominate gas and electricity supply. German and French railway companies are critical to the operation of a shattered domestic rail industry. And so it goes. All of this has built up slowly over decades – especially (again ironically) since the Single Market, unknown and unappreciated by most Brits and for those who did know, kept a dirty little secret.

The ‘Sid’ message was a nudge and a wink and a whisper of another little flutter. Well what a little flutter it’s been. Where’s Sid?