As the FT asks this morning:
It is entirely appropriate that the FT raises this question. For decades, neoliberalism has dictated that all economic activity be undertaken on a just-in-time basis, with every margin being restricted to the tightest possible degree to ensure that productivity is supposedly maximised.
What is now very apparent is that this is a wholly inappropriate approach to the management of infrastructure. This approach has been based on three ideas.
The first is that there should be no resilience built into infrastructure systems.
The second is that maintenance should be kept to the minimum possible.
Thirdly, it is suggested that this is efficient.
Taken together, these three assumptions are entirely false.
Firstly, there is such a thing as systems critical infrastructure. Resilience is absolutely essential in such cases, but neoliberalism has not recognised that.
Secondly, the idea that maintenance can be skimmed or deferred is absolutely wrong. All that this does is eventually increase costs. The perfect example is with regard to road maintenance. Waiting until potholes appear is the worst possible way to maintain a road. People are injured or killed as a result of potholes. Vehicles are damaged. The externalities of failing to maintain the road are, therefore, very high. And, eventually, the credibility of the road as a whole is prejudiced by a process of continual patching, requiring an overall increase in costs when the matter is finally addressed.
The fire in a substation that knocked out Heathrow for a day is the clearest possible indication that we now have economic thinking on infrastructure wrong.
When most infrastructure was state-managed, resilience was built into systems. The obvious question to ask is should the state should now be managing infrastructure again?
We would have saved ourselves the water debacle if that had been the case.
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Some years ago, a neighbour who worked in the electricity supply business told me of his concerns for reliable electricity supply.
“It’s going to end in tears with the new policy of F. W. F.!” (Fix when F—-ed)
Correct
I spent nearly 30 years of my working life maintaining telephone exchanges for GPO/PO Teles./BT .
In my early days, an old hand said to me “Yer peepers” he said pointing to his eyes, “Yer peepers are a maintenance man’s best tool. Just by looking round; by taking the lid off and having a look inside, you an often spot a problem before it becomes a fault.”
Wise words that I never forgot.
Correct
On my MBA in 2014, my class was tasked with looking at the then new Terminal 2
The other side of this is regulation. If you are going to outsource infrastructure, you need strong regulatory rules and enforcement. We have neither.
You are committing a category error in thinking that it is possible to have “strong regulatory rules and enforcement”.
Abby Innes “Late Soviet Britain” demonstrates conclusively that due to information assymetry between regulated (TSO & DNOs who have ALL the info) and regulator (who has limited info and technically knows little) it is not possible to enforce even weak rules. This has been tacitly admitted by the last gov (yes I know!) given the operations and control aspects of Nat Grid are now state owned (with a LINO minister named as director of the company – see Companies House).
Where does this leave us?
Well I wrote a report on Critical Infrasture and its Protection (In Europe) for the Japanese cabinet in the 2000s. Still have the report. Sadly some of the conclusions are sufficiently “sensitive” that apart from the client the only other mob I’d let read it are European security secvices – & I don’t keep it on my server.
Most of the elec network was designed for the situation 1950 through to +/- 2000. I think it did quite well overall. That said most of the DNOs built their networks down to a cost (MANWEB was/is the exception). Towns face a problem with Elec Vehicle charging loads and heat pumps. Rural areas face an unablanced phases (much more power on noe phases than another). Throw in the “where do we get well qualified elec engineers” and you can see that post 1979 (Thatcher) /1990 (privatisation) things were being set up for a big fail. Eelec power networks won’t go tit-ups in a big way, but their performance will gradually erode (Ofgem still loves CML “customer minutes lost” as a metric – giggle). There are short term, medium term and long term solutions. But LINO won’t can’t do em for a wide range of reasons.
You explain why my father quit early when electricity was privatised
Apparently a minister has commissioned an urgent investigation.
I’d like to hope that an investigation would have happened without ministerial intervention – otherwise what is the point of the police being involved – and this is just Milliband tying to look like he is in charge.
And this urgent investigation will report back with initial findings within … six weeks. Strewth. Good thing it does not involve a critical failure to national (indeed international) infrastructure, and was not put on the non-urgent pile.
Is that quicker or slower than the NHS deals worth “urgent” referrals?
Six weeks?
That is absurd
“to ensure that productivity is supposedly maximised.”
it is, of course, to maximise shareholder profit.
Because the private sector is out to maximise profits, it reduces costs to the bare minimum, which is less cost-effective in the long term. This is clearly a false economy, but works for the private sector’s bottom line, who does not care about future costs.
High profits and poor goods is at the expense of everything else: people, health, safety, and the environment, Everyone pays, except for those that turn a profit.
The state is not always good at this either. Recall that the Tories had let our Pandemic Preparedness Stock dwindle to uselessness by 2020. ‘Fingers crossed’ is now a British disease.
On my MBA in 2014, my class was tasked with looking at the disaster that was the implementation of the then new Terminal 2.
We found:
1. Hardly any real life testing of the troublesome luggage conveyor system was done under an operational test load before opening – it was one of the biggest failures in the new terminal. They just sent a few bags through to test it apparently.
2. An airport terminal is about the job of getting people through security and booking in process as smoothly and as safely as possible. T2 was built with an emphasis on retailing – indeed the luggage conveyor was too long in order that enough retail units could be built into the ‘customer journey’ through the airport. Ok, this created jobs – granted (but really?) – but really, the rentier and profit motive ended up with a sprawling facility that seems more like a marathon to get through. Enjoy it suckers.
It’s designed to take money – not to get you on the way safely on a journey, which apparently is what an airport terminal should be.
As an aside, I find going to airports fascinating but depressing. It never ceases to amaze me that there is this other form of life on the planet that seems totally divorced from the rest of life. It’s like being on another world.
The best airport I ever flew from was Coventry. It was small, compact, had hardly any shops and it was really quick to get through (I can count the amount of flights I’ve taken on two hands BTW). Give me the Chunnel any day.
Having been to far more than my fair share for work I hate them all
Given the talk about ‘Defence spending’ its worth pointing out that the first British hostile act against Germany at the opening of WW1 wasnt by The Royal Navy or the Brigade of Guards, it was the General Post Office cable ship CS Alert
https://en.wikipedia.org/wiki/CS_Alert_(1890)
cutting the German cables that ran through the Straits of Dover – cheered on by the crew of a French Destroyer.
During WW2 it was GPO Telephone engineers who kept the Fighter Command control room at Bentley Priory in contact with not only airbases and fighters but Radar and Royal Observer Corps stations while at the same time the National Grid kept emergency services in London running when the Thames side power stations were under attack.
We need more robust and reliable infrastructure for utilities and transport to guard against breakdowns natural hazards and intentional sabotage.
Agreed
To what extent, if any, is our (allegedly) democratic state/government independent from the influence and power of the big private sector?
Not at all
I’ve been following various commentators on events in the US and this quotation resonated, courtesy of MikeBrock@substack.com
“The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or by any controlling private power.” — Franklin D. Roosevelt, 1938
Agreed
See this morning’s post
The impression I am getting is that substation fires and explosions are increasingly common, and that the electricity infrastructure both local and national is cracking up due to a lack of preventative maintenance. All this happening at a time when we need growing capacity for electricity, not less (EVs, and new renewable generation capacity).
The press reports on Heathrow kept suggesting a terrorism link, no doubt to justify further repressive measures curtailing our civil liberties. This seemed to be based on zero actual evidence. Transformers cooled with oil do tend to go bang with a serious fire, but terrorism is much more exciting when you want to look prime ministerial… (I’m getting v cynical aren’t I?)
No doubt we will be told that once again the citizenry must cough up, because the poor utility shareholders can’t afford the investment. (Strange but I distinctly remember at the time of privatisation, being told that the problem it would solve, was “decades of underinvestment in the infrastructure from the public sector”.)
I remember that too
How wrong that claim was…..
Dear Richard, I think that this is probably not really on topic for this post, but I can’t think how else to make contact with you.
Yesterday I watched a program on Sky News about the impact of US tariffs on UK industries.
https://news.sky.com/video/sky-news-uncovers-the-real-impact-of-us-tariffs-on-uk-industries-13332880
Now down in Devon there’s the world’s second largest source of tungsten! The mine is currently closed.
https://www.tungstenwest.com/
Why doesn’t the UK government support that tungsten mine? Seems pretty stupid to me not to! But what do I know? I’m just a disabled woman typing from my bed.
Your guess is as good as mine.
David Powell (European Powell on Blue-sky) claims the the Plymouth Economic Zone (freeport) includes such resources, and the government map bears him out. Private enterprise will be gifted it!
I imagine that Starmer and co are planning to bundle it up in the Plymouth Freeport/SEZ zone for Blackrock.
On Devon tungsten, see Ed Conway yesterday https://edconway.substack.com/p/the-weird-and-wonderful-logic-of
someone is trying
Thank you very much for that link. Smile. I’ve spent all morning reading up on tungsten, steel and aluminium! Fascinating stuff.
The corporate vehicle that is Heathrow has debt of over £19bn.
Is the “worlds busiest airport” to big to fail?
Silly question but why do the banks lend such huge sums to such businesses?
Should there not a public list of UK banks lending to business concerns to enable the UK public to see what the banks are doing?
Of course it is too big to fail
That is why ministers went into a tailspin when it was out of action for a day
And they even approve its planning applications before it has made them (as Reeves has done re the third runway)
There is no way this belongs in the private sector
Another point one of the Any Answers ‘experts’ made, and which struck me as salient, is that now, responsibilities are so distributed between all kinds of private companies, many owned by international corporations in the electricity industry, there is no cohesion and proper planning across the various key operations to properly monitor and prevent these occurrences. It means no proper accountability, no overarching responsibility, so the buck passing can commence.
Absolutely correct
Systems failure by choice, in other words.
The fire service is inefficient because they’re not putting out fires all the time ; )
🙂
And they’re always at fires
Do they start them?
Correlation is not causation