The Blair Years Part Three
by Michael Patrick O'Leary
This article appeared in Ceylon Today on Thursday, November 3 2016. The title given was Privatisation’s Disastrous Route.
We have seen in previous articles how Blair failed to put in place structures that would make a practical reality out of the grand visions he hoped would be his legacy. New Labour did nothing to reverse the disruption caused by Tory privatisation of public utilities and transport. Blair’s own lack of attention to detail led to failures in the areas of energy policy, transport and agriculture.
The New Labour manifesto for the 1997 election promised “an effective and integrated transport policy at national, regional and local level …” However, According to Cabinet Secretary Andrew Turnbull, “no-one ever really looked after transport. It was a very low priority in the first term.”
John Major is remembered fondly by some, but I will always remember him for doing to the British rail network what he did to Edwina Currie. Conscious of being in the shadow of Thatcher, he wanted his share of the privatisation glory. Rail was the only major area left so Major was determined to privatise it, even though it led to fragmentation, chaos and death. Operations were broken up and sold off, with regulatory functions transferred to the Rail Regulator. Railtrack took over the infrastructure and track maintenance became the responsibility of 13 different companies. Three rolling stock operating companies (ROSCOs) took over passenger trains with the stock being leased out to passenger train operating companies (TOCs) which were awarded contracts through rail franchising.
Nobody wanted rail privatisation except Tory ideologues and those who stood to make a fat profit at the taxpayers’ expense. After a series of rail disasters with many fatalities, there was a growing consensus that maintenance work was not being done properly and splitting of the railways into 25 different companies was a horrendous mistake. After the Paddington rail crash, in October 1999, a Guardian/ICM poll found that 73% of all voters would support re-nationalizing Railtrack. Blair did not accede to the people’s wishes.
Privatisation was meant to bring business savvy into public utilities, but, in reality, it allowed foreign governments and their state-owned operators to make vast profits out of the UK. In one two-year period, Dutch company Abellio took dividends of £20 million from their UK operations; French company Keolis made £37.9 million; German company Arriva made £15 million.
The Hatfield rail crash in 2000 led to severe financial difficulties for Railtrack which was put into a special kind of insolvency by the British High Court. On October 17 2000, four passengers died and dozens were injured because a faulty rail hadn’t been replaced: the rail crumbled under the friction of the 12.10 from King’s Cross to Leeds and threw the train from the tracks. Blair did not take the opportunity to re-nationalise the railways but nevertheless pumped in taxpayers’ money. In 2002 a new organisation, Network Rail, bought Railtrack PLC. Network Rail had no shareholders but was nominally in the private sector but its borrowing was guaranteed by the government. In 2004, Network Rail took back direct control of the maintenance of the track, signalling and overhead lines.
Instead of sorting out the chaos in the national rail network, the Blair government went ahead with plans to mess up the Tube. Although chancellor Gordon Brown was resolutely opposed to any hint of privatisation in the NHS (except in building hospitals) and banned use of the word ‘choice’, he was obsessed with using PFI (Private Finance Initiative) to revitalise the underground network. In practice, PFI is a bad deal for taxpayers and involves a hidden privatisation of public services. The UK Accounting Standards Board called PFI an “an off-balance-sheet fiddle” because the government can move the cost of public works out of the public sector borrowing requirement and by sleight of hand reduce the deficit. PFI can only be implemented through an anti-competitive process which inevitably leads to corruption. The big corporations would not be interested if it were otherwise. For a small investment, companies can be sure of long-term profit guaranteed by the taxpayer.
The government announced in February 2002 that it was going ahead with plans for part-privatisation of the London Underground despite wide-spread opposition. Opponents insisted that the plan was fundamentally flawed on both financial and safety grounds. Brown and Blair left the detail to deputy prime minister John Prescott who soon lost control to a group of businessmen, lawyers and consultants whose fees reached £1 billion. The final bill for the project was about £30 billion. Blair supported his chancellor’s hubristic scheme “as the only way to get massive investment into the ailing network”.
Energy and Fuel
Energy provides another example of Blair’s inability to maintain a consistent position and to trust his ministers to implement a policy. As a means of reducing energy costs and the incidence of fuel poverty, a new programme of grants for cavity wall and loft insulation and for draught proofing was quickly launched, with some 670,000 homes taking up the scheme. This scheme was later abandoned and the number of those suffering from the cold increased. Steep price rises and possible power blackouts, that we are so familiar with in Sri Lanka, were a grim possibility.
Germany was driving the EU to increase the proportion of energy supplied by renewables to 20%. Only 1.6 of Britain’s energy needs was being generated by renewables and Merkel’s policy would cost Britain’s consumers £7.9 billion extra every year and would wreck its energy market. Industry representatives doubted whether the prime minister and his advisers understood either the costs or the complications. When Alistair Darling told Blair that he was mad to agree to Merkel’s plans, Blair said “I got confused”. In Broken Vows, Tom Bower writes: “As so often, although their conversation lasted only a few seconds, his eyes wandered.” William Rickett, an energy expert working in the Cabinet Office, commented: “That’s not the sort of behaviour you expect from a prime minister. He’s wasted eighteen months of work and it’s delayed anything happening on the ground while we go back to the drawing board”.
An avoidable crisis brought the UK to the brink of anarchy and almost toppled the government. “The great petrol revolt of 2000” led to hospitals cancelling non-vital surgery and funeral directors warned that they would not be able to bury the dead. It reminded me of James Callaghan’s winter of discontent when I sat in a Manchester cinema with rats running over my feet because the local authority could not collect the garbage. By 2000, fuel prices in the UK had risen from being amongst the cheapest in Europe to being the most expensive. By 2000, tax accounted for 81.5% of the total cost of petrol, up from 72.8% in 1993. Because of demonstrations against increased fuel tax, a stage was reached where nine out of ten petrol stations had no fuel to sell. There was panic buying and supermarket shelves were empty. One minister warned: “There would be no food. The health service was going to collapse. We were twenty-four hours away from meltdown”.
After being initially slow to focus on the problem, Blair went energetically into action, working the phones to influential people in the oil and haulage businesses. He was not successful and shouted “For f***’s sake, they gave me assurances”. One of the oil executives resented Blair’s attitude. “We are not nationalised industries. We are globalised companies with, on the whole, more influence around the world than the British Government”. Blair said, “I have to show I am leading”. Sending in the army was considered but the generals were reluctant. Polls showed that as many as 94% supported the protesters. As Andrew Rawnsley put it: “The petrol shortages might be a pain, but the people seemed ready to endure them so long as the torture inflicted on the Prime Minister was greater”.
Foot in Mouth
The army was called upon to help in another crisis which Blair mishandled – the outbreak of foot and mouth disease in 2001. With up to 93,000 animals per week being slaughtered, Agriculture Ministry officials were assisted by units from the British Army. The bureaucracy failed abysmally, politicians were unfocused, then panicked and scientists and self-interested farmers issued confused predictions. Thousands of farmers faced financial devastation because the Rural Payments Agency had collapsed. The Secretary of State, Margaret Beckett, would be officially criticised for contributing to a blunder that cost over £1 billion in compensation but was rewarded with promotion to the Foreign Office. Blair admitted: “We were mired by scandal and controversy and then I did a reshuffle which was the worst of all worlds”.
Next week, Blair goes to war – in Kosovo, Sierra Leone, Afghanistan, Iraq – and with the Treasury.