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
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?