When a poll finds that almost half of Conservative voters favour taking the energy industry into public ownership, and a former adviser to Tory governments describes the privatisation model for energy and water as broken, it seems fair to surmise that a laissez-faire economic orthodoxy that has lasted more than 30 years is on the ropes.
The scale of the looming energy catastrophe, as bills rise to unaffordable levels for households and small businesses, has been primarily driven by the external shock of Russia’s war in Ukraine. But as Sir Dieter Helm, professor of economic policy at Oxford University, argued in an interview with the Financial Times on Monday, the crisis has exposed the deficiencies of a market that was not, in any case, fit for purpose. Energy and water, he said, are “too essential to be treated like another commodity, as some of the architects of the privatisation, liberalisation and competition paradigm believed”.
Prof Helm is an advocate of tougher and better-crafted regulation in both sectors, rather than nationalisation. But his critique of market fundamentalism succinctly reflects the national mood, after a torrid, anxious summer in which raw sewage has blighted rivers and the sea, trains have been cancelled and private rents have soared in a broken housing market. According to YouGov’s poll, a majority of “red wall” voters who backed Boris Johnson in 2019 support the renationalisation of the energy industry. Surveys have consistently reported majority backing for public ownership of the railways and the water industry. A majority of Conservative voters are in favour of allowing councils to buy up empty properties and provide more social housing.
The experience of the pandemic has undoubtedly played a part in changing the way many people think about state intervention, and the ethical responsibility of the government to act decisively in times of crisis. The immediate popularity of Sir Keir Starmer’s proposal for an energy price freeze until March testifies to this. But the public has also rumbled the ruses of privatisation models that took over natural monopolies and maximised bonuses and dividends, while underinvesting in assets and infrastructure. When England’s water and sewage companies were sold off in 1989, at a scandalously cheap price, the Thatcher government presented the move as a triumph of popular capitalism. “You could be an H2Owner”, said the ad campaign. This rightwing version of power to the people quickly gave way to a less romantic reality, as private equity and pension firms moved in. As with other privatisations, any sense of proper accountability was soon lost in complex ownership arrangements and a regulatory system gamed by industry lobbyists.
Ahead of the bleakest of winters, it is clear that voters across the political spectrum want a reset in the way public goods are managed and delivered. At a Labour party conference 10 years ago, the political philosopher Michael Sandel argued that the “question of markets is not really an economic question. It’s a question of how we want to live together. Do we want a society where everything is up for sale?” Beyond the environs of the surreally disconnected Tory leadership race, the answer to that question is now a resounding “no”. There is a palpable desire in the country at large to rebalance the public and private sectors, and rein in market excess. Slowly but surely, this is becoming the new common sense of British politics.