LETTER : Privatisation was about service for us all, not profit for a few

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The Independent Online
Your leading article "Windfall tax that won't hit fat cats" (25 May) presents only half the issue. If one goes back to the origin and purpose of privatisation, the tax is fair and justified.

When the government privatised the utilities, including BT and BAA, there were two objectives: first to raise funds for the Treasury; second to supply a service to the nation at a reasonable level of profit with long-term programmes to re-invest in the infrastructure. The objective was not to provide substantial profits for re-distribution to the few shareholders who could afford to invest, nor to allow sitting executives to ride the incoming tide of profits and award themselves profit-related bonuses.

The first objective was achieved, though at a price set at a (low) level which would allow the new owners scope to re-invest. The second objective has clearly not been achieved. Shareholders have benefited rather than the whole nation, profits have been excessive and re-investment has been patchy - certainly not at the levels required.

The matter hinges on the question of "reasonableness". What is a reasonable level of profit? What is a reasonable level of earnings for a director of a national utility? What is a reasonable level of re-investment? The Government and the public (and I) appear to share the view that they have failed this test.

It is to be hoped that the utilities will take a new view of their profits that will lead to a re-assessment of the money available for the massive investments required versus "reasonable" executive earnings. If they can't, they will expose themselves to the sequel: "Windfall Tax 2".

Philip Edwardes-Ker

Weybridge, Surrey