How do we avoid an expensive winter? Take energy back into public ownership | Cat Hobbs

Pressing ahead with a green new deal that reverses decades of privatisation is the key to better utilities

  • Cat Hobbs is the founder of We Own It, an organisation that campaigns for public ownership of public services

When Keir Starmer stood for election as Labour party leader, he pledged to continue the party’s support for public ownership. One of the 10 promises he set out was that “public services should be in public hands, not making profits for shareholders. Support common ownership of rail, mail, energy and water; end outsourcing in our NHS, local government and justice system”.

The privatisation of public services is a 40-year failed experiment that voters have had enough of. Recent polling shows that 74% of potential Labour voters now support a greater commitment to public ownership. Evidence suggests that Labour’s public ownership policies were always popular with the general public, and became even more so from 2017 to 2019. Brexit and the party leadership were the stated factors that stopped people from voting Labour. Even Conservative voters support public ownership of railways and water utilities. That’s because in general, people want to see profits reinvested into better services rather than leaking out to shareholders.

On Sunday, Labour conference delegates voted for a green new deal motion that included support for public ownership of energy and public transport. They were backed by shadow energy secretary Ed Miliband, who has repeatedly confirmed Labour’s support for public ownership, as has shadow transport secretary Jim McMahon.

And yet, Starmer and shadow chancellor Rachel Reeves now seem to be having second thoughts about public ownership altogether; clearly putting themselves at odds with voters, party members, and several shadow ministers on this issue.

On Sunday, Starmer gave Andrew Marr a clear “no” to the question of whether to nationalise the energy companies. Reeves confirmed she agreed with Starmer that “now is not the moment”. Starmer said he doesn’t want to be “ideological” on the issue, and Reeves suggested they should have a “pragmatic” focus on the “day-to-day issues” of energy bills and collapsing companies. Their backing away from public ownership at this moment makes little political sense.

First, there’s never been a better time to create a publicly-owned energy supply company. In normal times, it’s a challenge because people rarely switch providers in the energy market. But the recent energy market crisis means that the government may end up having no choice but to create one, as bigger energy suppliers can’t necessarily take on the customers of companies that are going bust. A publicly owned default energy supplier is already the norm in the US, Italy, France and Germany. Italy’s supplier provides 27 million households with energy at prices 6-16% lower than its competitors.

And public ownership – in energy as with other sectors – could be used as a lever to improve people’s everyday lives. In the short-term, public ownership could reduce the chaos in the energy market and save people from an expensive winter. In the long-term, the state could acquire an ownership stake rather than simply oversee a bailout. Instead of propping up the “big six” companies and their shareholders with loans, the government could build up a new public supply company that it can use to lead the way towards green, affordable energy into the future.

Finally, Reeves has committed to £28bn of spending on a green transition, yet it is hard to see how this will be achieved without some form of public ownership. People won’t have an easy alternative to driving and flying until public transport systems are well integrated and high quality, and that simply won’t happen while privatisation continues.

In Greater Manchester, the mayor, Andy Burnham, is improving the buses by taking them into public control. Scotland and Wales are bringing their railways into public hands. Switzerland has the best railway in Europe and a regular bus timetable for every village – all delivered by public ownership and control.

Reeves says that “what matters is that essential services are delivering for consumers”. Yet privatisation has never delivered the lower prices and better services promised in Thatcher’s day, and it has no efficiency benefits. Instead of allowing for a genuinely mixed economy, this radical, extreme ideology has created so-called markets in what are often natural monopolies. Since privatisation, rail fares, bus fares, water and energy bills have all become far more expensive in real terms. And we get a shoddy service – rail and bus cuts, rivers polluted with sewage, creaking infrastructure.

Buying back public assets makes economic sense because it pays for itself, within about seven years. Public services spend less money on shareholder profits, and the higher cost of private sector borrowing. We’re currently wasting £13bn on privatisation every year. That’s £250m every single week.

In his recent essay outlining his roadmap for the future, Starmer promised more offshore wind turbines to deliver clean energy to people’s homes. Bringing the National Grid and distribution into public ownership would save £3.7bn a year – enough to buy 222 new offshore wind turbines.

I’ve pointed out many other successful, profitable examples of public ownership Starmer could learn from. These include: Scottish Water, Reading Buses, Channel 4, Ordnance Survey, the Land Registry, the Met Office, the Royal Mint. Public or “common” ownership in the future can build on these models and get even better. Public ownership could be our path to a more efficient, accountable, and green future. What’s really ideological is to insist that privatisation must continue after decades of failure. On moral and economic grounds, it’s time to take back our public services.

  • Cat Hobbs is the founder of We Own It, an organisation that campaigns for public ownership of public services

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Cat Hobbs

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