If foreign state-owned companies can make enormous profits in the UK, why isn’t our Government competing?

 

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There can be no question that privatisation has brought much good to Britain – and in more than just financial terms. It seems strange to think that it was only a few decades ago that taxpayers owned a sizeable proportion of the country’s grandest hotels, its cross-Channel ferries and British Airways. Not to mention our dockyards and steel and car industries. The sale of these assets brought billions of pounds into the Exchequer and relieved Britain of the risks involved in playing the global capital game.

However, as privatisation has progressed since the Thatcher administration, it has become ever more clear that, while we have been happy to open our services to international incomers, many countries have been less willing to let us compete in theirs. 

This is not just the obvious nations in Europe. Even that beacon of freewheeling capitalism – the United States – restricts foreign ownership in many areas. Britain’s openness, by contrast, has won it many hundreds of billions of pounds of inward investment, an influx which has rescued its motor industry and will fund the next generation of nuclear power.

 

Yet, in the process, we have failed to give our homegrown services enough of a chance to compete with the incomers. As a result, we have to look on as our transport and utilities are scooped up by overseas, mostly state-controlled, champions. Today The Independent can reveal that taxpayers in foreign countries have, over the past two years alone, received dividends totalling close to £1bn from the stakes their governments have purchased in companies that make their profits here. Within one day last month, Dutch-state owned Abellio won the ScotRail franchise, French state-owned EDF won approval to run the huge Hinkley Point nuclear power station and SNCF, France’s state-run railway, put in a bid to buy Britain’s stake in Eurostar – which is up for sale.

It is true that foreign taxpayers thus absorb the risks in running these services. But they also enjoy enormous profits when things go right.

British industries did not run well under state control in the 1970s. But the foreign taxpayer-funded champions now operating much of Britain are a far cry from British Leyland-style rustbuckets. They possess strong executive boards led by the best business brains.

This country should follow suit. Witness the smooth operation of the East Coast Main Line since its private owners National Express threw in the towel. The service has improved, investment has been generous, and the taxpayer has enjoyed a healthy surplus.

It would be relatively simple to create new UK champions after this fashion. The Netherlands moved a long way down the road of privatising its rail network before realising it was a bad idea and reverting to an arms-length but state-owned business. Germany went through a similar process.

We need not slam the privatisation express into reverse as dramatically as the Dutch did. But we could at least change the law to allow British state-controlled transport groups to try bidding for our new contracts. European rules prevent national favouritism in such tenders and our team may not win. But at least they’d be in with a chance.

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