If nothing else, the spectacular failure of G4S, the world's largest security firm, to get even close to meeting its Olympics contract should at least bury the fantasy that private companies are more efficient than the public sector. While G4S staff have failed in their thousands to turn up at one Games location after another, the police and the army have had to sort out the corporate chaos.
You can read the whole of Seumas Milne's Guardian piece on the terrible price we have all had to pay for privatisation and outsourcing, here.
Showing posts with label ripping off the taxpayer. Show all posts
Showing posts with label ripping off the taxpayer. Show all posts
Wednesday, July 18, 2012
Friday, July 13, 2012
Neil Clark: G4S's Olympic struggles should derail the drive towards more privatisation
This article, by CPO co-founder Neil Clark, appears on The Guardian's Comment is Free website.
Private companies have one aim: profit maximisation. So expect cuts in staffing levels and everything done on the cheap
The next time you meet one of those free-market ideologues who tells you private companies are always more efficient than the public sector, don't bother to get involved in a lengthy argument. Instead just use the example of G4S.
You can read the whole article here.
Thursday, June 28, 2012
Railway bosses give themselves average salaries of £1million as passengers face fare hikes
The Daily Mail reports:
Bosses of the five main companies that run the nation’s railways have paid themselves average salaries of £1million.
Critics say the rises are ‘scandalous’ at a time when passengers face inflation-busting fare hikes.
Millions had to cope with fare rises of up to 11 per cent this year and more increases are in the pipeline for next year.
The pay rises, before bonuses, pension contributions and share-options, come as taxpayer subsidies to rail top £4billion a year.
You can read the whole article here.
Thursday, November 17, 2011
CPO Press Release on the sale of Northern Rock to Virgin Money
The Campaign for Public Ownership strongly condemns the government’s decision to sell the publicly-owned Northern Rock bank to Virgin Money for £747m, meaning an effective loss of between £400m and £650m to the British taxpayer.
The history of privatisation is littered with examples of the government short-changing the taxpayer and this is yet another one.
The government could have kept the bank in public ownership. Failing that, it could have returned Northern Rock to the mutual sector, but only at a time when the transaction would have made taxpayers a profit. While the profitable part of Northern Rock is being sold off, the taxpayer is left holding Northern Rock (Asset Management), into which was placed the company‘s bad debt. It is a classic case of privatising the profits, while nationalising the losses.
The history of privatisation is littered with examples of the government short-changing the taxpayer and this is yet another one.
The government could have kept the bank in public ownership. Failing that, it could have returned Northern Rock to the mutual sector, but only at a time when the transaction would have made taxpayers a profit. While the profitable part of Northern Rock is being sold off, the taxpayer is left holding Northern Rock (Asset Management), into which was placed the company‘s bad debt. It is a classic case of privatising the profits, while nationalising the losses.
Friday, May 8, 2009
Greed's still good
This article on public ownership by CPO co-founder Neil Clark appears in the Morning Star.
With the Conservative Party riding high in the opinion polls, the fanatically neoliberal "there is no such thing as society" brigade are becoming less reticent about voicing their obnoxious opinions in public.
Take Fraser Nelson, writing in the latest edition of the Spectator magazine.
Nelson argues that, while the 1980s mantra "greed is good" has become unfashionable, it is still true. We have, it seems, forgotten that wealth generates revenue, while high taxes - Nelson, like fellow neoliberals is incensed by the new 50 per cent top rate of tax for high earners - "crush prosperity and pauperise nations."
Instead of being regarded as a villain, Gordon Gekko, the ultra-selfish trader played by Michael Douglas in the 1987 film Wall Street, should be regarded as a wealth-creating hero.
What utter claptrap.
Nothing has done more to destroy British society and its economy than the naked greed and cult of selfishness unleashed by the Thatcherites in the '80s. To argue that the solution to our current ills is even more greed is like a politician in the devastated and defeated Germany of 1945 calling for more nazism.
As for the claim that high taxes crush prosperity and pauperise nations, Nelson has clearly never visited Norway.
The northern European country did exactly the opposite to what Thatcherites like Nelson were advocating in the 1980s.
Instead of privatising its oil industry, it nationalised it and set up a State Petroleum Fund. And it used high taxes in order to redistribute wealth and extend a welfare state where all citizens are cared for from the cradle to the grave. The result of these socialist policies is that Norway is now the third richest country in the world.
Aren't we lucky in Britain that we were rescued from going down the same path by Margaret Thatcher.
One cut they won't make
THE next Conservative government will, according to David Cameron, be a "government of thrift."
I've no doubt that spending on the NHS, state education and welfare provision will be slashed if the strong neoliberal faction within the party gets its way. But there's one cost-saving measure I'm fairly sure Dave and his chums won't introduce.
Renationalising British transport would save the country a fortune. Britain's railways companies receive over four times more in taxpayers subsidy than the much-maligned British Rail did in the last years of its existence. It's a similar story of government extravagance when it comes to subsiding private bus companies, which received £2.5bn from the public purse last year.
So, when a Tory or, indeed, a Labour or Lib Dem canvasser next comes to your door asking for your support, ask them why, if the public finances really are in such a bad shape, their parties refuse to advocate such a sensible, cost-saving measure.
A ticket to profits
THE year 1969. A man landed on the moon, Swindon stunned Arsenal in the League Cup final and Charles de Gaulle stepped down as president of France. It was also the year that Harold Wilson's Labour government set up the National Bus Company.
Established by the Transport Act a year earlier, the National Bus Company brought together all the state's bus interests in one company.
The way the system worked was simple. Buses were run locally by subsidiaries such as Midland Red or Southern Vectis while intercity coaches operated under the National Express banner.
There was even a national holiday company offering cheap coach holidays to different parts of the country.
This co-ordinated and efficient system was destroyed when the National Bus Company was broken up and privatised by the Thatcher government in the 1980s. We were told that privatising and deregulating bus transport would lead to greater competition and lower prices.
Instead, we have a situation where cash-strapped local authorities are effectively blackmailed by private operators into handing over ever more money in order to maintain services.
The Morning Star has already reported on the obscene case of fat-cat Go Ahead group chief executive Keith Ludeman, whose salary last year topped £910,000 and whose company has received millions of pounds in public subsidies, expressing his displeasure that Britain's pensioners, after a lifetime of work, have the benefit of free travel on buses. "Pensioners cannot be given a blank cheque," Ludeman complained.
But if anyone has been given a blank cheque these past 20 years it has been the profiteering private bus operators, which have made a fortune from the British taxpayer since Thatcher's destruction of the National Bus Company.
With the Conservative Party riding high in the opinion polls, the fanatically neoliberal "there is no such thing as society" brigade are becoming less reticent about voicing their obnoxious opinions in public.
Take Fraser Nelson, writing in the latest edition of the Spectator magazine.
Nelson argues that, while the 1980s mantra "greed is good" has become unfashionable, it is still true. We have, it seems, forgotten that wealth generates revenue, while high taxes - Nelson, like fellow neoliberals is incensed by the new 50 per cent top rate of tax for high earners - "crush prosperity and pauperise nations."
Instead of being regarded as a villain, Gordon Gekko, the ultra-selfish trader played by Michael Douglas in the 1987 film Wall Street, should be regarded as a wealth-creating hero.
What utter claptrap.
Nothing has done more to destroy British society and its economy than the naked greed and cult of selfishness unleashed by the Thatcherites in the '80s. To argue that the solution to our current ills is even more greed is like a politician in the devastated and defeated Germany of 1945 calling for more nazism.
As for the claim that high taxes crush prosperity and pauperise nations, Nelson has clearly never visited Norway.
The northern European country did exactly the opposite to what Thatcherites like Nelson were advocating in the 1980s.
Instead of privatising its oil industry, it nationalised it and set up a State Petroleum Fund. And it used high taxes in order to redistribute wealth and extend a welfare state where all citizens are cared for from the cradle to the grave. The result of these socialist policies is that Norway is now the third richest country in the world.
Aren't we lucky in Britain that we were rescued from going down the same path by Margaret Thatcher.
One cut they won't make
THE next Conservative government will, according to David Cameron, be a "government of thrift."
I've no doubt that spending on the NHS, state education and welfare provision will be slashed if the strong neoliberal faction within the party gets its way. But there's one cost-saving measure I'm fairly sure Dave and his chums won't introduce.
Renationalising British transport would save the country a fortune. Britain's railways companies receive over four times more in taxpayers subsidy than the much-maligned British Rail did in the last years of its existence. It's a similar story of government extravagance when it comes to subsiding private bus companies, which received £2.5bn from the public purse last year.
So, when a Tory or, indeed, a Labour or Lib Dem canvasser next comes to your door asking for your support, ask them why, if the public finances really are in such a bad shape, their parties refuse to advocate such a sensible, cost-saving measure.
A ticket to profits
THE year 1969. A man landed on the moon, Swindon stunned Arsenal in the League Cup final and Charles de Gaulle stepped down as president of France. It was also the year that Harold Wilson's Labour government set up the National Bus Company.
Established by the Transport Act a year earlier, the National Bus Company brought together all the state's bus interests in one company.
The way the system worked was simple. Buses were run locally by subsidiaries such as Midland Red or Southern Vectis while intercity coaches operated under the National Express banner.
There was even a national holiday company offering cheap coach holidays to different parts of the country.
This co-ordinated and efficient system was destroyed when the National Bus Company was broken up and privatised by the Thatcher government in the 1980s. We were told that privatising and deregulating bus transport would lead to greater competition and lower prices.
Instead, we have a situation where cash-strapped local authorities are effectively blackmailed by private operators into handing over ever more money in order to maintain services.
The Morning Star has already reported on the obscene case of fat-cat Go Ahead group chief executive Keith Ludeman, whose salary last year topped £910,000 and whose company has received millions of pounds in public subsidies, expressing his displeasure that Britain's pensioners, after a lifetime of work, have the benefit of free travel on buses. "Pensioners cannot be given a blank cheque," Ludeman complained.
But if anyone has been given a blank cheque these past 20 years it has been the profiteering private bus operators, which have made a fortune from the British taxpayer since Thatcher's destruction of the National Bus Company.
Wednesday, October 15, 2008
Renationalisation can cure other British failures
Why Stop at the Banks? Neil Clark, co-founder of the Campaign for Public Ownership, argues for renationalisation of the railways, utilities and airports.
From The First Post, 14th October 2008.
As the economics pundit Will Hutton put it, "It was only months ago that nationalisation seemed to belong to the world of big band music, ration coupons and nylons." Now, of course, everything has changed.
The Government's acquisition of Northern Rock in February, and this week's £37bn purchase of sizeable public stakes in three of Britain's leading banks, means that the great nationalisation 'taboo', in force since the Thatcherite counter-revolution of 1979, is finally at an end. Even the Sunday Telegraph has been forced to acknowledge that "nationalisation is no longer a dirty word".
Now that the Rubicon has been crossed, the question that needs to be asked is: If the government can nationalise our banks, why can't they bring our malfunctioning railways, our profiteering utility companies and our widely condemned privately owned airports back into public ownership?
In the standard neo-liberal rewrite of Britain's post-war history, nationalisation is portrayed as an unmitigated disaster. Nationalised industries were - so the narrative goes - inefficient, badly run and a drain on the public purse.
But new quantitative research goes a long way to shattering this myth. It shows how productivity growth in publicly owned enterprises compared favourably to that in the private sector and in the US, where utilities remained in private ownership. And the profitability of the nationalised industries improved too, from decade to decade.
Advocates of privatisation claimed that the mass sell-off of Britain's public utilities, public transport and infrastructure would improve efficiency and benefit the consumer. In fact, the opposite occurred. Britain's railways are by far and away the most expensive in Europe, with fares up to 14 times higher than on the continent - despite the new train companies receiving four times more in taxpayers' subsidies than the state-owned British Rail.
It's a similar story with our privatised airports, which, with their tacky, shopping-mall atmosphere are widely regarded as an international disgrace. Thosewho hold to the dogmatic 'publicly-owned bad, privately-owned good' mantra should reflect that Manchester Airport, the one major British airport which remains in public ownership, regularly comes out top in surveys of customer satisfaction and was voted Britain's best regional airport last year.
As for Britain's energy utilities, with record price hikes in place and more on the way, is there anyone now prepared to argue that privatisation has benefited consumers?
As opposed to the arguments for privatisation, the case for re-nationalising the railways, utilities and airports is based not on ideology, but on common sense. Natural monopolies such as railways and utility companies are better in public ownership than in private hands where, because of the need to pay dividends to shareholders, prices paid by consumers will always be higher.
To see how different things could have been, we only have to look across the Channel. While Britain pursued an extremist path in the 1980s and 1990s by "selling off the family silver" - to use former Conservative Prime Minister Harold Macmillan's wonderfully damning phrase - our European neighbours preferred to take a more pragmatic approach.
No other major European country has yet followed the British example and sold off its railways. Even Switzerland, regarded by many as a bastion of the free market, has kept its railways in public ownership. And while British householders face record hikes in their energy bills this winter, the position is rather different on the continent where, due to greater state involvement, price rises are nowhere near as high.
The recent financial meltdown has done much to discredit the neo-liberal ideology that Britain has followed - under both Conservative and Labour governments - over the past 29 years. It's time to ditch that ideology and return to the common sense approach to public ownership that Britain followed after World War Two.
Our unhappy experience since 1979 shows that it's privatisation - and not nationalisation - which deserves to be regarded as a 'dirty word'.
Wednesday, June 11, 2008
No Risk, Big Rewards
This article by Prem Sikka, appears in The Guardian.
"Privatisation" is the ideological mantra of all major political parties. It has been used to transfer huge amounts of wealth from the taxpayer to private companies, entrepreneurs, accountants, lawyers, bankers and sundry business advisers. Major industries built by taxpayers, such as railways, mines, buses, steel, shipping, gas, water, engineering, petrochemicals, airlines, motor vehicles, biotechnology, electricity, telecommunications, computers, armaments, space and pharmaceuticals have been handed to companies at knockdown prices. Many still receive public subsidies or rely on the state to buy their products. Yet governments seem to have learned little from the past and the routine fleecing of the taxpayer continues.
The most recent example relates to the privatisation of QinetiQ, Britain's defence research organisation. A report by the all-party public accounts committee provides a brief glimpse of conflicts of interests, failures and the private gains that can result from a coming together of the public and the corporate sector.
A stake in the company was bought in 2003 by Carlyle Group, a hedge fund with close connections with leading politicians. Former prime minister John Major was chairman of Carlyle Europe from 2002 to 2005. The company had close links with the family of US president George Bush. At the time of QinetiQ's privatisation, Carlyle was headed by Frank Carlucci, former CIA director and defence secretary under Ronald Reagan.
A stake in QinetiQ was bought at an initial investment of around £42m, and within three years it was worth £350m and floated on the stock market. For reasons best known to senior civil servants, Carlyle had been given preferred bidder status even though six other firms were competing for the defence contractor.
QinetiQ's top 10 managers, which included former civil servants, saw the value of their shares rise from £540,000 to over £107m, a near 20,000% increase. Overall, senior management received £200 for each £1 they invested. All this from technology that was entirely funded by the taxpayer who took the initial risks that the private sector was not willing to take. The government can always introduce legislation to claw back any excessive gains, but all political parties seem to be imitating Trappist monks on this issue.
The increase in value of the company was not due to some invisible hand of the market. Most of it came from the billions of pounds worth of contracts that QinetiQ signed with the Ministry of Defence around the time of its privatisation, including training for the RAF. Subsequently, the company was also the preferred bidder for the government's defence training rationalisation programme, estimated to be worth around £16bn over 30 years.
This guaranteed cash flow provided profits and higher market values. Wars in Iraq and Afghanistan have increased the potential for even more government contracts and profits. So the taxpayer funded the company, absorbed the risks, provided the contracts and guaranteed future cash flows, but the private sector took almost all the gains and profits. Unsurprisingly, the private sector wants everything privatised.
Business advisers also did very nicely out of the privatisation of QinetiQ. They included lawyers Simmons and Simmons, accountants Pricewaterhousecoopers and Arthur Andersen and bankers UBS Warburg, Merrill Lynch, Credit Suisse, JP Morgan Cazenove and ABN AMRO Rothschild, which between them managed to charge £28m (plus VAT) in fees. No doubt, there are considerable difficulties in valuing businesses, especially where the markets are thin, but how could the valuations in this case be so wide of the mark? At the very least, the government should refuse to give those involved with the valuation any more business until there has been a very thorough public investigation of the quality of their advice. It should amend the law so that the National Audit Office can investigate companies receiving public money. Even better, mobilise the public to scrutinise the privatisation deals by publishing all contracts, correspondence and reports. After all, the public has borne the risks and built the industries. What objection can there be to letting the taxpayer see the details?
The parliamentary committee reports are supposed to enhance public scrutiny and accountability. Yet there are other aspects of the QinetiQ story that deserve further investigation. QinetiQ is a story of political and economic elites combining to profit from war and doing so behind a wall of secrecy.
"Privatisation" is the ideological mantra of all major political parties. It has been used to transfer huge amounts of wealth from the taxpayer to private companies, entrepreneurs, accountants, lawyers, bankers and sundry business advisers. Major industries built by taxpayers, such as railways, mines, buses, steel, shipping, gas, water, engineering, petrochemicals, airlines, motor vehicles, biotechnology, electricity, telecommunications, computers, armaments, space and pharmaceuticals have been handed to companies at knockdown prices. Many still receive public subsidies or rely on the state to buy their products. Yet governments seem to have learned little from the past and the routine fleecing of the taxpayer continues.
The most recent example relates to the privatisation of QinetiQ, Britain's defence research organisation. A report by the all-party public accounts committee provides a brief glimpse of conflicts of interests, failures and the private gains that can result from a coming together of the public and the corporate sector.
A stake in the company was bought in 2003 by Carlyle Group, a hedge fund with close connections with leading politicians. Former prime minister John Major was chairman of Carlyle Europe from 2002 to 2005. The company had close links with the family of US president George Bush. At the time of QinetiQ's privatisation, Carlyle was headed by Frank Carlucci, former CIA director and defence secretary under Ronald Reagan.
A stake in QinetiQ was bought at an initial investment of around £42m, and within three years it was worth £350m and floated on the stock market. For reasons best known to senior civil servants, Carlyle had been given preferred bidder status even though six other firms were competing for the defence contractor.
QinetiQ's top 10 managers, which included former civil servants, saw the value of their shares rise from £540,000 to over £107m, a near 20,000% increase. Overall, senior management received £200 for each £1 they invested. All this from technology that was entirely funded by the taxpayer who took the initial risks that the private sector was not willing to take. The government can always introduce legislation to claw back any excessive gains, but all political parties seem to be imitating Trappist monks on this issue.
The increase in value of the company was not due to some invisible hand of the market. Most of it came from the billions of pounds worth of contracts that QinetiQ signed with the Ministry of Defence around the time of its privatisation, including training for the RAF. Subsequently, the company was also the preferred bidder for the government's defence training rationalisation programme, estimated to be worth around £16bn over 30 years.
This guaranteed cash flow provided profits and higher market values. Wars in Iraq and Afghanistan have increased the potential for even more government contracts and profits. So the taxpayer funded the company, absorbed the risks, provided the contracts and guaranteed future cash flows, but the private sector took almost all the gains and profits. Unsurprisingly, the private sector wants everything privatised.
Business advisers also did very nicely out of the privatisation of QinetiQ. They included lawyers Simmons and Simmons, accountants Pricewaterhousecoopers and Arthur Andersen and bankers UBS Warburg, Merrill Lynch, Credit Suisse, JP Morgan Cazenove and ABN AMRO Rothschild, which between them managed to charge £28m (plus VAT) in fees. No doubt, there are considerable difficulties in valuing businesses, especially where the markets are thin, but how could the valuations in this case be so wide of the mark? At the very least, the government should refuse to give those involved with the valuation any more business until there has been a very thorough public investigation of the quality of their advice. It should amend the law so that the National Audit Office can investigate companies receiving public money. Even better, mobilise the public to scrutinise the privatisation deals by publishing all contracts, correspondence and reports. After all, the public has borne the risks and built the industries. What objection can there be to letting the taxpayer see the details?
The parliamentary committee reports are supposed to enhance public scrutiny and accountability. Yet there are other aspects of the QinetiQ story that deserve further investigation. QinetiQ is a story of political and economic elites combining to profit from war and doing so behind a wall of secrecy.
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