It will be the biggest extension of state ownership in the UK for more than 50 years. We can all argue about the rights and wrongs of rail privatisation. It is not a naturally competitive market, and it was John Major instead of Margaret Thatcher, who was always suspicious of the idea, who pushed it through.
And yet, whether it should be state-owned or not, there is a bigger point that is now abundantly clear. This is likely to be just the beginning of a wave of nationalisation Labour will lead if, as it almost certainly will, it takes power later this year.
There are plenty of signs of what is about to happen. The trade unions are calling for the party to commit itself to renationalising the Royal Mail as it faces a potential takeover bid by the Czech tycoon Daniel Křetínský.
The electricity companies are already under so much government regulation, with little freedom even to set their own prices, that they might as well be controlled by the state.
The water companies are likely to run into more trouble as they try to finance repairs to the network, and the party’s instinct will surely be to bring them back under state control under the control of a new, independent body (Great British Water, presumably).
If any of the green energy suppliers run into financial headwinds, as they almost certainly will given that much of the technology doesn’t really work and costs far too much, they may well be brought under the control of Ed Miliband’s Great British Energy. And if there is a hostile bid for a major British company, we can expect that Labour’s inclination will be to step in and take a “golden share” for the state.
There are three reasons why Labour will be driven towards vastly extending state control over the economy.
To start with, the current Labour leadership, in common with the liberal-Left across the developed world, has convinced itself that the state can manage anything better than the private sector. The shadow chancellor Rachel Reeves has made that absolutely clear, arguing, for example, that the Government should decide which sectors of the economy deserve more investment as well as where our pension funds should put their money.
Next, it believes in an active industrial strategy, dressed up in the ugly phrase “securonomics”. Like the Biden team in the US, it will want to oversee the building of factories, warehouses, and distribution systems, based on the misguided belief that all the economy needs is a committee of civil servants running everything for investment to flourish. The culmination of such an approach could be a whole series of “national champions”, each with partial or even complete government ownership.
Finally, its electoral base, especially in the unions, is convinced that the state should fix every problem. The high street is closing down? Take over the retailers. Airports too expensive? Bring them under state control. Do drug companies charge the NHS too much? Take a strategic stake. The list will go on and on.
Those positions will drive the party towards a fresh wave of nationalisations. President Macron of France, a far more pro-business leader than anyone in the current Labour team, has set a template that the party could follow in government. He has sought to take effective control of Air France-KLM, and has now taken a stake in the failing IT contractor Atos.
Sure, it won’t work out any better than it did in the 1960s, when such “crucial” industries as sugar were nationalised, creating the little remembered British Sugar Corporation, as well as the nationalised car manufacturer British Leyland, and the nationalised ship-building conglomerate British Shipbuilders.
But the arguments that held sway in the 1960s and 1970s for taking such industries under state control are very similar to the arguments we hear today for Whitehall to control the railways, the energy suppliers, or the green industries.
In the end, all of those businesses were woefully mis-managed, racked up huge losses, came under effective trade union control, and, as it turned out, weren’t the “industries of the future” anyway.
And yet that is where the party is heading. It will be a long, painful lesson that the state is not always the answer to every problem – but it looks like the UK will have to learn it all over again, even if it does huge damage to the economy along the way.
