The Campaign for Public Ownership condemns the decision of British Gas to hike gas prices by a record 35%.
The price increases come just six months after the company increased its dual fuel bills by 16 per cent.
While Centrica customers have been hit by a 44 per cent increase in their bills this year, the company's shareholders have suffered far less, with its shares dipping by less than 10 per cent since the start of the year.
And today, to rub salt into the wound, Centrica plc, the parent company of British Gas, will announce profits of £992m.
British Gas is profiteering, pure and simple. The appropriate response from the government is not greater regulation as some have called for, or a one-off windfall tax, but to end the profiteering once and for all by taking our utilities back into public ownership.
Thursday, July 31, 2008
Sunday, July 20, 2008
Dr Branson will see you now
From The Sunday Express, 20th July 2008
VIRGIN tycoon Sir Richard Branson is being courted by health chiefs planning to privatise hospital casualty units.
Tens of thousands of patients walking into Accident and Emergency departments could be treated by the private sector in sweeping reforms of the NHS.
Billionaire Branson and his 26-year-old daughter Holly, pictured, who recently qualified as a doctor, plan to bid to run the new generation of GP super-surgeries called polyclinics.
Health chiefs in north London have confirmed that a meeting was held with senior officials from Bransonís fledgling firm Virgin Healthcare.
Discussions took place about closing four GP surgeries in Camden and merging them to form a polyclinic at University College Hospital, pictured right.
The clinic, in a disused casualty wing, would treat all emergency cases except those brought in by ambulance or referred by GPs ñ about 70,000 patients a year.
VIRGIN tycoon Sir Richard Branson is being courted by health chiefs planning to privatise hospital casualty units.
Tens of thousands of patients walking into Accident and Emergency departments could be treated by the private sector in sweeping reforms of the NHS.
Billionaire Branson and his 26-year-old daughter Holly, pictured, who recently qualified as a doctor, plan to bid to run the new generation of GP super-surgeries called polyclinics.
Health chiefs in north London have confirmed that a meeting was held with senior officials from Bransonís fledgling firm Virgin Healthcare.
Discussions took place about closing four GP surgeries in Camden and merging them to form a polyclinic at University College Hospital, pictured right.
The clinic, in a disused casualty wing, would treat all emergency cases except those brought in by ambulance or referred by GPs ñ about 70,000 patients a year.
Tuesday, July 8, 2008
The fatal cost of bus privatisation
From the Daily Mail, Tuesday 8th July
Bus company bosses jailed after exhausted Polish driver who couldn't speak English killed workman on a crane
Two bus company chiefs who hired Polish drivers who didn't speak English or know how to handle a double- decker have been jailed after a workman was knocked down and killed.
Vincenzo Casale, 44, and David Ellis, 37, were 'morally responsible' for the death of Martin Pilling, a court was told.
The 27-year-old workman was at the top of a 'cherry picker' crane when it was hit by a bus with Polish driver Krzysztof Ociepa at the wheel.
Mr Pilling was knocked out of the cherry picker's 'basket' and suffered fatal injuries.
An investigation into the bus firm in the wake of the tragedy found a catalogue of safety breaches by the cost-cutting bosses who had employed 100 Polish drivers.
Bus drivers at UK North and GM Buses Enterprises Ltd worked up to 31 consecutive days without a proper break and one Polish employee ripped the roof off a double-decker because he was lost and didn't understand warning road signs.
Bosses Casale and Ellis were sent to prison for 15 months last week after they admitted trying to cover up evidence of the safety breaches.
Last night Mr Pilling's father Tony, 53, who works as a systems manager for another bus firm, condemned the pair for cutting corners.
'It was pure greed and profit that drove these men,' he said.
Bus company bosses jailed after exhausted Polish driver who couldn't speak English killed workman on a crane
Two bus company chiefs who hired Polish drivers who didn't speak English or know how to handle a double- decker have been jailed after a workman was knocked down and killed.
Vincenzo Casale, 44, and David Ellis, 37, were 'morally responsible' for the death of Martin Pilling, a court was told.
The 27-year-old workman was at the top of a 'cherry picker' crane when it was hit by a bus with Polish driver Krzysztof Ociepa at the wheel.
Mr Pilling was knocked out of the cherry picker's 'basket' and suffered fatal injuries.
An investigation into the bus firm in the wake of the tragedy found a catalogue of safety breaches by the cost-cutting bosses who had employed 100 Polish drivers.
Bus drivers at UK North and GM Buses Enterprises Ltd worked up to 31 consecutive days without a proper break and one Polish employee ripped the roof off a double-decker because he was lost and didn't understand warning road signs.
Bosses Casale and Ellis were sent to prison for 15 months last week after they admitted trying to cover up evidence of the safety breaches.
Last night Mr Pilling's father Tony, 53, who works as a systems manager for another bus firm, condemned the pair for cutting corners.
'It was pure greed and profit that drove these men,' he said.
Thursday, July 3, 2008
New Zealand is in tune with the times- Britain's lagging
By Seumas Milne, The Guardian, Thursday 3rd July 2008
New Zealand has long had a record of being ahead of the political game. It was the first country in the world to accept women's right to vote, in 1893. In the 1930s, it emerged as a pioneer of the modern welfare state. Fifty years later, in the 1980s, it was the first state to declare itself nuclear-free. Less creditably, during the same decade, New Zealand became host to the first social democratic government to embrace a free-market programme of wholesale privatisation, liberalisation and deregulation.
Named after New Zealand Labour's then finance minister, "Rogernomics" was all the rage on the global new right for a time - and laid the ground for neoliberal social democratic governments like Tony Blair's - until it finally imploded amidst a litany of social and economic failures: stagnation, unemployment, bankruptcies, crime and rampant inequality. Two decades on, another New Zealand government, this time a more progressive Labour coalition headed by Helen Clark, is again at the forefront of political change - leading the revival of public ownership.
On Tuesday, Clark's government renationalised the country's railways and ferry services, privatised in the early 90s and subsequently run down and asset-stripped by the Australian owners. Launching the new, publicly owned KiwiRail, finance minister Michael Cullen declared that privatisation had "been a painful lesson for New Zealand". Nor is this the first renationalisation by the Clark government, which took over Air New Zealand after it nearly collapsed in 2001 and has also built up a successful state-owned retail bank - named Kiwibank, needless to say.
And unlike Gordon Brown's government, which strained every nerve to avoid nationalising Northern Rock to avoid seeming "old Labour", Clark has championed the takeover of rail as exactly what is needed to build a modern, environmentally sustainable transport network. Against a background of global warming and rising fuel prices, she argues, rail is a "central part of 21st-century economic infrastructure".
Given Britain's similarly disastrous experience with rail privatisation, you might think that taking a leaf out New Zealand's book would be just the kind of popular policy to help dig Brown's government out of its hole. Despite the modest improvements achieved by putting the lethal Railtrack out of its misery, Britain's railway system remains a byword for bewildering fragmentation, unreliability, overcrowding, delays and exorbitant cost - which has only now completed a high-speed link to the Channel tunnel, 15 years after its state-owned French counterpart.
Fleeced by the private train companies and rolling stock contractors (some of them pocketing 30% rates of return), it is now the most expensive, opaque and inefficient rail system in Europe. As the Campaign for Better Transport reported yesterday, walk-on fares are on average nearly five times those booked in advance - and all ticket prices are set to spiral in the next few years. Meanwhile, renationalisation is strongly supported by the public and is in fact official Labour party policy.
But far from planning to end what has been a disastrous experiment, the rail minister, Tom Harris, last month insisted that if the Tories hadn't privatised the railways, New Labour would have sold them off when it came to power in 1997. In a surreal aside that will baffle most UK train passengers, he insisted that "the private railway has provided a level of investment, innovation, imagination that wouldn't have happened if BR had stayed as it was".
This is nonsense. Investment in the railways comes from farepayers and government subsidy, now around three times the level before privatisation (£2bn a year goes to the train operating companies alone), while the leakage of cash from the industry to private investors and lenders is estimated at £800m a year. The rise in passenger numbers is simply the product of economic growth, and the case for a reintegrated, publicly owned rail system - at the heart of a national investment programme to encourage more people to move off road and air travel on to rail - is overwhelming. It has the added advantage that most services can be taken back at no cost as franchises expire.
But the government is still in the grip of an ideology that sees privatisation as the only way to reform the health service, and nationalisation as a throwback to be avoided at all costs. As global economic conditions increasingly undermine the credibility of free-market economics, however, real life is pointing in another direction. The revival of public ownership in countries as diverse as New Zealand and Venezuela reflects a wider disillusionment with the neoliberal experience of the past decade.
As the writer and Work Foundation chief executive Will Hutton recently argued in a BBC programme on nationalisation, the takeover of Northern Rock, Railtrack and Metronet has begun to force a mainstream reappraisal of what had become a political taboo - just as academic research has been rehabilitating the productivity and costs record of Britain's postwar nationalised industries.
But it's also clear that, if there is going to be an effective new role for public enterprise and intervention, it will have to be about more than bailing out the failures of the private sector in traditional industries, and engage with the cutting edge of the economy. In Britain, the credit crisis has exposed the dangers of the reliance on finance, the rundown of manufacturing, and the chronically low rate of investment in the economy. The case for a national fibre-optic network, for example, giving universal fast broadband access to the home is a powerful one, both on economic and social grounds - countries such as South Korea are far ahead of Britain. But the private sector won't deliver the necessary multibillion pound long-term investment. A publicly owned network, on the other hand, could do - perhaps funded by service providers as part of a universal service obligation, as the Communication Workers Union argues.
What is certain is that the Brown government's kneejerk resistance to public intervention and ownership will have to end if it is to have a hope of riding out the crisis and dealing with the new economic reality. By making a stand for progressive common sense, New Zealand has at least helped break the spell that privatisation is somehow the natural order of things in the modern world.
New Zealand has long had a record of being ahead of the political game. It was the first country in the world to accept women's right to vote, in 1893. In the 1930s, it emerged as a pioneer of the modern welfare state. Fifty years later, in the 1980s, it was the first state to declare itself nuclear-free. Less creditably, during the same decade, New Zealand became host to the first social democratic government to embrace a free-market programme of wholesale privatisation, liberalisation and deregulation.
Named after New Zealand Labour's then finance minister, "Rogernomics" was all the rage on the global new right for a time - and laid the ground for neoliberal social democratic governments like Tony Blair's - until it finally imploded amidst a litany of social and economic failures: stagnation, unemployment, bankruptcies, crime and rampant inequality. Two decades on, another New Zealand government, this time a more progressive Labour coalition headed by Helen Clark, is again at the forefront of political change - leading the revival of public ownership.
On Tuesday, Clark's government renationalised the country's railways and ferry services, privatised in the early 90s and subsequently run down and asset-stripped by the Australian owners. Launching the new, publicly owned KiwiRail, finance minister Michael Cullen declared that privatisation had "been a painful lesson for New Zealand". Nor is this the first renationalisation by the Clark government, which took over Air New Zealand after it nearly collapsed in 2001 and has also built up a successful state-owned retail bank - named Kiwibank, needless to say.
And unlike Gordon Brown's government, which strained every nerve to avoid nationalising Northern Rock to avoid seeming "old Labour", Clark has championed the takeover of rail as exactly what is needed to build a modern, environmentally sustainable transport network. Against a background of global warming and rising fuel prices, she argues, rail is a "central part of 21st-century economic infrastructure".
Given Britain's similarly disastrous experience with rail privatisation, you might think that taking a leaf out New Zealand's book would be just the kind of popular policy to help dig Brown's government out of its hole. Despite the modest improvements achieved by putting the lethal Railtrack out of its misery, Britain's railway system remains a byword for bewildering fragmentation, unreliability, overcrowding, delays and exorbitant cost - which has only now completed a high-speed link to the Channel tunnel, 15 years after its state-owned French counterpart.
Fleeced by the private train companies and rolling stock contractors (some of them pocketing 30% rates of return), it is now the most expensive, opaque and inefficient rail system in Europe. As the Campaign for Better Transport reported yesterday, walk-on fares are on average nearly five times those booked in advance - and all ticket prices are set to spiral in the next few years. Meanwhile, renationalisation is strongly supported by the public and is in fact official Labour party policy.
But far from planning to end what has been a disastrous experiment, the rail minister, Tom Harris, last month insisted that if the Tories hadn't privatised the railways, New Labour would have sold them off when it came to power in 1997. In a surreal aside that will baffle most UK train passengers, he insisted that "the private railway has provided a level of investment, innovation, imagination that wouldn't have happened if BR had stayed as it was".
This is nonsense. Investment in the railways comes from farepayers and government subsidy, now around three times the level before privatisation (£2bn a year goes to the train operating companies alone), while the leakage of cash from the industry to private investors and lenders is estimated at £800m a year. The rise in passenger numbers is simply the product of economic growth, and the case for a reintegrated, publicly owned rail system - at the heart of a national investment programme to encourage more people to move off road and air travel on to rail - is overwhelming. It has the added advantage that most services can be taken back at no cost as franchises expire.
But the government is still in the grip of an ideology that sees privatisation as the only way to reform the health service, and nationalisation as a throwback to be avoided at all costs. As global economic conditions increasingly undermine the credibility of free-market economics, however, real life is pointing in another direction. The revival of public ownership in countries as diverse as New Zealand and Venezuela reflects a wider disillusionment with the neoliberal experience of the past decade.
As the writer and Work Foundation chief executive Will Hutton recently argued in a BBC programme on nationalisation, the takeover of Northern Rock, Railtrack and Metronet has begun to force a mainstream reappraisal of what had become a political taboo - just as academic research has been rehabilitating the productivity and costs record of Britain's postwar nationalised industries.
But it's also clear that, if there is going to be an effective new role for public enterprise and intervention, it will have to be about more than bailing out the failures of the private sector in traditional industries, and engage with the cutting edge of the economy. In Britain, the credit crisis has exposed the dangers of the reliance on finance, the rundown of manufacturing, and the chronically low rate of investment in the economy. The case for a national fibre-optic network, for example, giving universal fast broadband access to the home is a powerful one, both on economic and social grounds - countries such as South Korea are far ahead of Britain. But the private sector won't deliver the necessary multibillion pound long-term investment. A publicly owned network, on the other hand, could do - perhaps funded by service providers as part of a universal service obligation, as the Communication Workers Union argues.
What is certain is that the Brown government's kneejerk resistance to public intervention and ownership will have to end if it is to have a hope of riding out the crisis and dealing with the new economic reality. By making a stand for progressive common sense, New Zealand has at least helped break the spell that privatisation is somehow the natural order of things in the modern world.
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.
Tuesday, June 10, 2008
Energy bills to soar as British Gas announces 14% price hike
From the Daily Express, Saturday 7th June 2008
MILLIONS of families face being hit by spiralling energy costs after British Gas yesterday announced a massive 14% hike in its tracker bills. The huge increase- to be introduced with immediate effect- could see average gas and electricity bills rocket to £1,327 a year by 2009. News of the price jumps was greeted with dismay by groups representing the elderly, who said pensioners were already struggling to keep themselves warm in winter.
MILLIONS of families face being hit by spiralling energy costs after British Gas yesterday announced a massive 14% hike in its tracker bills. The huge increase- to be introduced with immediate effect- could see average gas and electricity bills rocket to £1,327 a year by 2009. News of the price jumps was greeted with dismay by groups representing the elderly, who said pensioners were already struggling to keep themselves warm in winter.
Wednesday, June 4, 2008
Water giants gush profits as bills soar
From The Sunday Express, 1st June 2008
MILLIONS SEE HIGHEST-EVER CHARGES AS FIRMS RAKE IT IN
Major water companies will this week unveil profits estimated at more than £1bn just weeks after anouncing inflation-busting price rises for householders. Quoted groups United Utilities, Northumbrian Water, Pennon and Severn Trent, which serve millions, are poised to post pre-tax profits adding up to an estimated £1.054 billion. This will not please consumers whose water costs have risen. This year's bills will be 6% up on last year's, at £330 on average. Since the water industry was privatised in 1989, householders have been clobbered with an increase in real terms of 42%.
MILLIONS SEE HIGHEST-EVER CHARGES AS FIRMS RAKE IT IN
Major water companies will this week unveil profits estimated at more than £1bn just weeks after anouncing inflation-busting price rises for householders. Quoted groups United Utilities, Northumbrian Water, Pennon and Severn Trent, which serve millions, are poised to post pre-tax profits adding up to an estimated £1.054 billion. This will not please consumers whose water costs have risen. This year's bills will be 6% up on last year's, at £330 on average. Since the water industry was privatised in 1989, householders have been clobbered with an increase in real terms of 42%.
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