POLITICS
The staggering progress of privatisation
NOEL MALCOLM
In any normal week this melt-down of the Government's plans would have dominated the headlines for days on end. Last Thursday, however, they could have done anything — nationalised land, priva- tised the Church of England, you name it — and it would still have been pushed off the top of the front page.
This is becoming a habit where the electricity flotation is concerned: when Mr Parkinson announced the removal of the Magnox reactors from the sale, he slipped that one in on his last day at the Energy department, when the Cabinet reshuffle dominated the news. Heaven help us if the actual flotation is a flop — it'll take the restoration of the Romanovs to keep that off the front page.
Obviously, however, the sale of the electricity supply industry is much more likely to be a success now that the incubus of nuclear power has been lifted from it. The one thing — and it is an important thing — that can be salvaged from the wreckage of the Government's plans is the argument that markets do know best. The prospective discipline of the market (or, in the new buzz-phrase, 'the discipline of the prospectus') has forced into the open a set of figures for the long-term costs of nuclear power, figures which may be only guessti- mates, but which are far better guessti- mates than anything the CEGB bureaucra- cy has managed to produce in the past.
And the market really is impartial, bestowing its judgments without fear or favour. For what this exercise has demons- trated most clearly of all is that Mrs Thatcher's ,advocacy of nuclear power is a classic piece of ideologically motivated dirigisme. She is driven not by economic
logic here, but by the logic of her beliefs her determination to save Britain from Arthur Scargill, and the world from the greenhouse effect (in that order). The harsh spotlight of the market has shown up these concerns for what they are: as economically distorting as any Labour plans might be for saving uneconomic coal-mines on grounds of strategic interest, national employment or local sentiment. The true market method of achieving her first aim would be to sell off British Coal, and allow different employers to open new pits with different unions; that is still several years off. And the market way of protecting the atmosphere would be to impose such high environmental standards on the fossil fuel power stations that their product became as expensive as nuclear power. In the short run, that would be economically suicidal — though in the long run we may indeed wish that we had done it, once we start working out the cost of decommissioning the atmosphere.
The electricity flotation may be back on the right path now, but the general im- pression is that the Government has lost its way where the whole privatisation cam- paign is concerned. It has staggered on from one issue to another, picking up, en passant, a different justification for its actions each time. Today, with electricity, it is the discipline of the prospectus. Yesterday, with water, it was the separa- tion of ownership and regulation. Opinion polls suggest that, despite both of these eminently worthy theoretical arguments, the public remain deeply hostile to the sale of water and electricity. As it happens, the underlying reasons for this hostility are such that the Government will suffer very little political damage from it in the end. Electricity and water are 'invisible' services which people take for granted, and having taken them for granted as nationalised services they will take them for granted as privatised ones. 'Out of sight, out of mind' — which means that the Government will just have to wait until all those wretched advertising campaigns are over.
But that is a feeble consolation for a Government which thought, not so long ago, that its privatisation programme was changing the spirit of the nation. 'Privatisa- tion', wrote Mr Lawson two years ago, 'has contributed to what is nothing less than a transformation of society. Shareholding was seen as the province of the rich, which reinforced the conviction that Britain was permanently divided between "them and us". Wider share ownership has done much to break down that divide.' Recent figures indicate, however, that the number of shareholders is now actually decreasing, and that the great divide is between those who sell their privatisation issue shares and those who keep them on the mantelpiece because they can't work out how you get rid of them.
There has been a failure of public education where the whole rationale of privatising is concerned. Most people are not economists, and will have difficulty grasping even the justification for selling off the profitable parts of state-owned industries. Given the choice, they would feel happier draining off those profits into the loss-making parts, thereby starving the profitable ones of investment. The idea that state-owned industries are generically starved of investment strikes people as part of the natural order of things. So wedded are they to this principle that when midge larvae poured out of their cold-water taps last June, they blamed this, by some obscure process of reasoning, on the Gov- ernment's privatisation plans — instead of blaming it on the system which privatisa- tion will reform.
Similarly, when the results of the en- quiry into the Clapham train crash were announced last week, the shortcomings in BR working practices which it revealed were associated in many critics' minds with the pressures of the profit motive. 'The culture of safety' is the new slogan, and it is widely believed that this is in direct opposi- tion to the culture of profit. But what the report described bore all the hallmarks of an inefficient and almost Dostoievskian bureaucracy as opposed to a commercial type of management: no proper training, no proper job descriptions, no effective communication with the workforce, no vetting of overtime, no planning to ensure the presence of qualified staff and no effective project control. The remark of a BR official who prevented Miss Wendy Cope from boarding a train (as reported in these pages three weeks ago) sums up the spirit of the nationalised industries. 'We can do anything we like', he said, con- tentedly. The aim of privatisation should be to wipe that smile off his face.
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