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".
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