I saw this headline in The Guardian this morning:
I did, of course, have just one thought, which is why couldn't the UK state have bought that company?
It could have done, of course.
We learned today that the UK state will issue £247 billion of bonds in the next year, which is a fall from the current year. The figure does, of course, include rolled-over debt as earlier issues are redeemed and then replaced.
So, the capacity to issue new bonds to buy assets exists. And the reality is that issuing such bonds is costless to the government. All they represent is a promise to pay in the future, which will, in practice, never be met because they will always be rolled over.
The current interest rate on government bonds in issue is below 4%. This company could more than cover the resulting interest cost from its profits, better than any third party could cover the cost. There would, as a result, have been no net cost to the UK Exchequer.
Buying this company would, therefore, have made economic sense. The government, the country, and its security would have improved; profits would not have been flowing abroad. Sterling would be protected as a result.
But it did not happen. Why, oh why, oh why?
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An obvious question to ask Farage et al…………..
Because the spirit – or, more accurately, the idiocy – of Thatcher remains. Privatisation of key services has been an unmitigated disaster. When they don’t recognise even that simple fact, they are never going to see the opportunity and benefit such a purchase would provide.
They would rather posture and offer sound bites on largely irrelevant topics than actually do some critical thinking or strategic positioning. The recent media coverage about the increased surplus demonstrates – as you made clear in your blog – that we have a Chancellor who is utterly clueless and, more generally, a government who are bereft of ideas (far less solutions) and are utterly incapable of strategic decision-making or taking action to achieve their sound bites about growth, etc. This is just another example. We are led by donkeys!
Why, indeed. One is inclined to think questions should be asked in the House of Commons (which by definition represents the ordinary people of this country), seeking to hold to account those who sell off state assets to foreign companies. But if course this is nothing new – I believe Scottish Power is already a private company owned in Spain.
Do we effectively have a privatised government now?
Might possible causes/purposes concerning this dumb decision include any or all of the following?
1) Tyranny of theory
2) Ditto unquestioning conformity to maintain socio-economic situation
3) Obsession with minimising the state
4) Later employment prospects
5) Lack of a questioning ethos
6) Rigidity of attitude and “thinking”
All of the above?
It appears that although “take back control” is the slogan of the decade, it doesn’t apply to our energy security, rail, bus, maritime and air transport, food security, water, sewage or health infrastructure, none of which are under effective UK national control.
A glance at either Ukraine, Gaza, the West Bank or East Jerusalem, will show how dangerous it is to a nation, to lose control of those assets to foreign states or invaders.
I hold our government responsible for this unforgiveable selfish corrupt folly.
UKPN: a profit-maximising monopoly (distribution network operator) that the regulator (Ofgem) can’t regulate because of information asymmetry (the DNO knows far far more than the regulator can ever know & can thus manipulate the regulator: evidence? 35 years of it).
The imbeciles in the UK gov (any gov’ they are ALL the same) thinks that cos it’s private it is some how efficient, it’s not. I have prima facie evidence that it is incapable of getting good value for money from projects (& for UKPN engineers reading this: the Leighton Buzzard storage project – you couldn’t even pick the right supplier – pathetic). & by the way, as for London’s power network and the slo-mo destruction of its meshed network I leave it to Scottish Power engineers: “they (UKPN engineers ) are to bloody thick to understand it – so they destroy it”. (Meshed networks are by far the most reliable power networks you can have – but are complex to understand and operate).
That is what 35 years of private monopolies gets you – imbeciles running the network and the money men squeezing UK serfs dry. I would not expect either Ofgem (a puppet) or the ciphers in what passes for UK govs of all stripes, to understand. (oh & bolt on the malign influence of London’s finance sector – sucking engineers into its maw).
Thanks Mike
I was watching Martin Lewis questioning Ofgem’s puppet about the standing charge on our energy bills, or standing charge energy poll tax as it should be called. The private energy companies and Ofgem have been talking for over a year.
By now, the energy companies were supposed to have come up with an alternative, offering lower, or no standing charge options to pay, but nothing. They now plan to pilot a study through four energy companies in certain areas. My guess is, this will take at least another 6 months, and then they will probably be talking for another 6 months after that (all expenses paid, of course). So, we may see something done after two years — I would say, nothing before April 2027.
They are a bunch of crooks. What the energy companies are desperate to do is shift the standing charge elsewhere, and not lose the billions they get from it. There is never any investigation as to how efficient, or value for money, the revenue raised from the standing charge is.
Here’s the YT video from yesterday. The Ofgem puppet tries to make out that it is taking time because they want to protect those who have to use a lot of electricity.
https://www.youtube.com/watch?v=l4cqWu6fqn0&t=1598s
What he fails to say is that these people need help anyway, under the current system.
Household energy debt doubles in three years to £5.5bn — predicted to be £7 billion by 2027.
And 3% of standard charges are unpaid bill debts, which apparently the energy companies are allowed to recover from the rest of us (Lewis covers that in the video above).
The system is a con and crazy.
https://www.independent.co.uk/money/energy-uk-ofgem-government-simon-francis-b2927943.html
And what are the Labour government doing? Taking a little off bills in April.
Meanwhile, the climate deniers at Reform, Farage and Tice say that gas is the future, with fracking required all over Britain to find it. They don’t get that reliance on gas is the problem.
There is only one answer — like water, it needs to be in the public sector as a vital need. We need to move towards self-sufficiency in green energy sources, and away from those overseas who dictate the price of fossil fuels. Only government can do this.
The UK is not able to take back control because it ” can’t afford to it, there’s no money”!
Why?
Because ownership is too onerous for a society that has become obsessed with extracting value rather than putting it in? It is pleonexia again.
(1) If you own in to run it properly, that’s a lot of returns and profits out the window – plus pay rises for managers. Nah – run it down and pocket the savings instead.
(2) Letting it go abroad means that you can get a bunch of foreigners to strip it down so that the people affected can’t write to their MP and stop it – accountability for it is ‘offshored’. ‘Nothing to do with me guv, it’s just globalisation’.
Does that help?
Another thing to mention is the slow degradation of employee’s pension rights. A few years ago I helped a man claim his pensions – he had spent his entire life as a ‘bin man’ in Somerset collecting rubbish and recycling in all weathers. When he started out he was employed by his local authority and accrued benefits in the excellent Local Government Pension Scheme. Then this vital service was “outsourced”. At first he was given a similar DB scheme, but not for very long. The service changed ownership three times and he ended up in a DC scheme. In other words, the risk of accruing pension benefits had been transferred to him rather than his employer. “Benefit Dilution”, I call it.
There is a happy end in this particular case as the combination of state pension, two DB, and three DC schemes gave him almost exactly the same income in retirement as when he was working. That will not be the position for younger privatised employees.
So true…
It’s basic economics – when people worked for 40 years and lived for 5-10 in retirement, a DB pension was affordable.
Now people are expecting to live for 15-20 years in retirement but understandably employees don’t want to more than double their contributions and employers can’t afford to.
And so your answer is?
When I wonder will our electricity (gas etc) go the same way as water?
There is no escaping the conclusion that this Labour Government (I hate having to call them a “government” as clearly the are incapable of the enacting such a process) is actively demolishing the UK. I keep plugging away trying to embarrass my MP (a LINO drone) by pointing out the massive shortcomings of the so called “private enterprise” approach to strategic industries, only to be met with “but the Government has no plans to nationalise” in reply. The truth is that LINO has no shame, they DO NOT CARE and are more than happy to oh so slowly watch over our decline and along the way help line the pockets of its passed leader the disgraced war criminal T Blair by roping in his so called “think tank” to help AI spread through public services. LINO will not and should not be forgiven. Can they not see that they are their own grave diggers! I shall keep on pointing out the errors of their ways and broadcasting their total ineptitude to all that will hear. They must be held to account for being a non entity.
Richard
Thank you for all your and your son’s hard work producing your blog, not forgetting the wild life interludes. Birding being a favourite pastime for me also.
All very interesting and thought provoking. As are many of the regular commentators and their responses. However,
The Financial entities in the city of London make their money out of the fees and commissions organising deals such as this.
In this case the combination of fees etc may well be worth close to a £ billion for them and God forbid the politician who stands in the way of that sort of money. Hence the continued privatisation to what is a French company with 23.4% of the capital owned by Gov. France who also have 33.84 % of the voting rights
So yet another ‘privatised’ company effectively run by a foreign entity as per many of our utility suppliers, water, electricity supply for example, as well as a couple of rail companies that are ‘owned’ and managed by foreign governments
Depressing isn’t the word!
Agreed
And thanks
Everyone of course will recall that the UK’s power network companies, like UK Power Networks (UKPN), were once state-owned as part of the Central Electricity Generating Board (CEGB).
During the privatisation of the electricity sector in the 1990s, these assets became part of National Grid.
In 2010, National Grid sold UKPN to the Hong Kong-based company Cheung Kong Infrastructure (CKI), which is part of Li Ka-shing’s conglomerate.
So it’s been foreign owned since 2010 and arguably foreign influenced through foreign based shareholders of National Grid before that.
The French state holds a 23% stake in ENGIE, the new owners of UKPN.
You may be interested to know that State Grid Corporation of China owns a 61% majority stake in Western Power Distribution (WPD), which operates electricity networks across parts of the UK, including the Midlands, South Wales, and the South West.
The rhetoric around “taking back control” seemed focused on borders, giving the impression that the little people were regaining sovereignty, while in reality, control over key infrastructure and many other aspects was quietly being handed to foreign powers.
Much to agree with
I’ve just been talking to a postman about how the new owners of Royal Mail, EP Group based in Prague, are apparently circumventing the undertakings given to Government and unions through tactics like two-tier workforce, enabling salary reductions, and also not replacing staff who leave, requiring those that remain to work much harder. Mail delivery issues are of course already in the news.