Business is delivering: re-nationalisation puts consumers at risk

How do you start your average morning? Have a shower, put the kettle on, go through your post and take a train to work, perhaps. It’s no exaggeration to say that many aspects of modern daily life rely upon the efficient and effective delivery of key parts of our infrastructure, by the companies that run them, from dawn to dusk.

Now it’s fair to say that this doesn’t work every time – anyone who regularly takes a train in and out of our major cities may have stories about delays, cancellations and crammed carriages. Firms rightly recognise that there have been issues with the delivery of some vital services across different industries, and that they must drive improvements for customers and businesses. But we would be foolish to take for granted the enormous improvements private companies have driven across the UK’s infrastructure.

In the rail sector, there are a quarter more carriages on the railways, services have increased by nearly a third, and the frequency of services on many key long-distance routes has doubled since the franchise system began.

In energy, the £100 billion invested since privatisation is making a real difference. The number of power cuts has fallen by half, and the length of power cuts has decreased by well over half since the start of the millennium. This improved resilience comes against a backdrop of more than halving emissions since 1990.

Investment in the water sector is double that of pre-privatisation levels. Leakages have been reduced by a third since the 1990s. Customers are five times less likely to suffer supply interruptions than they were pre-privatisation, while low water pressure is fast becoming a thing of the past.

While in just five years, Royal Mail has transformed its inefficient loss-making operations to financial sustainability, higher productivity and better pay for its staff.

These companies have improved because they are well-regulated – and this needs to continue. And it also makes obvious business common sense to keep striving for a better service for their customers.

Where there are genuine concerns, there are improvements on the way. Rail companies have committed to running 7,000 new carriages by 2021. Energy companies are continuing to reduce emissions as they transition to renewable sources. And domestic water bills are expected to fall by 4% in real terms from 2020 to 2025.

One political intervention that may appear as an easy-to-grasp comfort blanket – but would prove hugely damaging for consumers and the economy – would be to bring those industries back under Government ownership.

The 1970s was a decade notorious for chronic under-investment in the railways, poor labour relations and government interference. International investors were pulling out of the water network as untreated sewage flowed into rivers. And the energy industry was in dire straits, with strikes prompting the Government to implement the infamous three-day week.

If we look at the question of who pays for the nationalisation process itself, the truth is we cannot afford to don rose-tinted spectacles and return to the failing state-run services that brought such strife to the UK. The market value of energy companies is over £55 billion, water companies over £86 billion and Royal Mail £4.5 billion – a total of over £146 billion.

Pay market rate and that’s an awful lot of taxpayers' money that would have to be diverted from big spending departments such as health, education or defence. Or pay below market rate, and that’s a pretty nasty shock for pension funds and savers, as the value of a pension pot or savings could well decrease if the fund has invested in these industries as is common. And, of course, the Government would have to take on the massive future investments that are still needed.

Business recognises the need to do more and strives to deliver new innovations and better service, day in, day out.

But if we keep returning to failed solutions, we risk not only going back to a system that had serious flaws, but also getting trapped in an endless pendulum swing of squandered potential from generation to generation. It creates a cycle of wasted investment, time and talent, all the while failing to tackle the real concerns of customers.

Ultimately what most people want to know is “am I getting a fair deal?” Putting customers at the heart of decision-making and embracing new technology can help ensure this is the case.

The water sector is ahead of the game here, operating customer challenge groups, based in the areas where the firms are located, to hold companies to account and inform their future plans. In energy, technology is increasingly being used to support pro-active switching, helping to ensure customers are on the best tariff for them. And in the rail sector, when things go wrong, technology is helping to put things right as quickly as possible, through ‘one click’ automated claims systems.

With the eyes of the world on the United Kingdom, as we chart a new future for the country post-Brexit, we need to go above and beyond to make the country as attractive a destination as possible for the very best in global infrastructure investment. Giving investors a reason to head elsewhere and leave key projects on the drawing board is the last thing we can afford to do.

Businesses and politicians need to be honest. Honest about the challenges, but also honest about the many benefits that the private sector has brought to the nation’s infrastructure. Consumers will be the real winners if we have a debate based on evidence, not ideology.