Many people will say this can’t be done, but of course it has been done before, writes Andrew Fisher, a former Labour policy chief.
(Rawpixel via Wikimedia Commons)
By Andrew Fisher
openDemocracy
When 62 percent of Conservative voters want energy run in the public sector, it’s fair to say the left has won the argument (75 percent of Labour voters agree, 68 percent of Lib Dems).
Yet public ownership is opposed passionately by the Conservative government, while the leader of the opposition has said he is “not in favour” of it — despite his election on a platform that committed to “bring rail, mail, water and energy into public ownership to end the great privatisation rip-off and save you money on your fares and bills.”
Public ownership is on the media’s radar, too. When Labour Leader Keir Starmer announced his policy to freeze bills this week, he was asked why he wouldn’t also nationalise energy, replying that: “In a national emergency where people are struggling to pay their bills … the right choice is for every single penny to go to reducing those bills.”
But so long as energy remains privatised, every single penny won’t. Billions of pennies will keep going to shareholders instead.
Thatcher’s Mass Privatisations
The energy market was fractured under the mass privatisations of the Thatcher governments in the 1980s. It contains three sectors: producers or suppliers (those that produce energy), retailers (those that sell you energy) and distribution or transmission (the infrastructure that transports energy to your home).
It is important to bear this in mind when we’re talking about taking energy into public ownership. We need to be clear about what we want in public ownership and why.
By 2019, Labour had a detailed plan on how to do this — worked up by the teams around then Shadow Business and Energy Secretary Rebecca Long Bailey and then Shadow Chancellor John McDonnell. The plan is not the only way, but it illustrates what exists and how one could go about re-establishing a public energy ecosystem, run for people not profit.
The recent TUC report shows the cost of nationalising the “Big 5” energy retailers — British Gas, E.ON, EDF, Scottish Power and Ovo — to be £2.8bn, which would go on buying all the companies’ shares. That’s a lot of money, equivalent to more than the annual budget of the Sure Start programme in 2009/10 (its peak year). But it’s a one-off cost, not an annual one.
And it’s not like the current privatised system doesn’t have its costs: since June 2021, the U.K. government has spent £2.7bn bailing out 28 energy companies that collapsed because they put short-term profits ahead of long-term stability — companies like Bulb Energy. We have spent billions of pounds already to get nothing in return. So £2.8 billion is not a large amount of money to pay to gain these assets, rather than just bailing them out.
The big energy retail companies made £23 billion in dividends between 2010 and 2020 according to Common Wealth, and £43 billion if you include share buy-backs. What you choose to do with that surplus in public ownership is another matter: you could use it to invest in new clean energy or to lower bills or fund staff pay rises, rather than subject your workers to fire-and-rehire practices as British Gas did last year.
Labour’s previous plan also involved taking the distribution networks — the National Grid — into public ownership. This would end the profiteering at this level, too — with £13 billion paid out in dividends over the five years prior to 2019.
As Long Bailey said at the time, we need “public driven and coordinated action, without which we simply will not be able to tackle climate change.” Like previous nationalisations, the purchase of the grid and distribution networks could be achieved by swapping shares for government bonds. By international accounting standards, the cost is fiscally neutral as the state gains a revenue-generating asset, which more than pays for the bond yield.
Production & Supply
Saudi Aramco oil pipe lines, Jubail. (Suresh Babunair, CC BY 3.0, Wikimedia Commons)
The final part of the plan — and the most complicated — is production and supply. It would be impossible to nationalise the oilfields of Saudi Arabia or Qatar — and for good reasons we should want to leave fossil fuels in the ground, anyway, rather than contest their ownership.
And so what Labour proposed in 2019 was a mass investment in new renewable energy generation projects, with the public sector taking a stake and returning profits to the public. For example, under the People’s Power Plan, we proposed 37 new offshore wind farms with a 51 percent public stake, delivering 52GW alone by 2030, equivalent to 38 coal power stations. There were additional proposals for onshore wind, solar and tidal schemes, as part of a 10-year £250 billion Green Transformation Fund, which included other schemes like the Warm Homes insulation initiative.
Labour’s new Shadow Xhancellor Rachel Reeves has promised a similar level of investment — a £28bn a year climate investment pledge.
Any surplus energy would then be sold on international markets, with a People’s Power Fund — a sort of sovereign wealth fund — to deliver public investment in local communities’ social infrastructure: a genuine levelling-up fund, perhaps.
Many people will say this can’t be done, but of course it has been before. The 1945 Attlee government nationalised energy and successive Conservative governments — including those of Winston Churchill, Harold MacMillan and Edward Heath — were happy to have a nationalised asset. Harold MacMillan famously accused Margaret Thatcher of “selling off the family silver” when she privatised state industries.
Clement Attlee visiting a munitions factory in 1941. (British government, Wikimedia Commons)
When I was born in 1979, the National Coal Board, British Gas and British Petroleum were all publicly-owned or majority publicly-owned companies. Between them, they were the major suppliers of our energy. Our gas bills came from British Gas and our electricity bills from our regional electricity board (in my case Seeboard, the South Eastern Electricity Board), and coal and oil fueled our power stations.
The regional electricity boards had been brought into being by the Attlee government’s Electricity Act 1947, when electricity companies were forcibly merged into regional area boards and nationalised. The Coal Industry Nationalisation Act 1946 and the Gas Act 1948 had together brought energy into public ownership.
Seeboard was privatised in 1990, and later became part of EDF Energy – ironically, the nationalised French energy company, whose profits from the U.K.’s stupidity are used to subsidise French consumers.
The French government has now fully nationalised EDF (previously it was 84 percent publicly owned), and household energy bills rose by just 4 percent this year — compared to over 50 percent in the UK and a forecast 200 percent by January 2023.
If Starmer doesn’t want to listen to me (or his own commitments from 2020), perhaps emulating the centrist Emmanuel Macron in this instance would be palatable?
In his later years, Labour politician Robin Cook argued: “The market is incapable of respecting a common resource such as the environment, which provides no price signal to express the cost of its erosion nor to warn of the long-term dangers of its destruction.”
From the depletion of fish stocks to the burning of the Amazon, profit has proved a failed regulator for use of our natural resources. The market has also failed to decarbonise at pace, or to end the scourge of fuel poverty.
On the media this week, Shadow Energy Secretary Ed Miliband said Labour is “continuing to look at what the right long-term solution is for our energy system.” It is up to all of us to campaign for that solution to be public ownership — whether that’s from within the Labour Party (like me) or from the outside.
As Labour’s executive director of policy, Andrew Fisher oversaw the production of the 2017 and 2019 Labour manifestos. He is now a columnist for the i paper.
This article is from openDemocracy.
The views expressed are solely those of the author and may or may not reflect those of Consortium News.
Starmer would change absolutely nothing if he wins the next General Election. The man is a stooge of the establishment and will do nothing to stop e.g. the pillaging of £billions of our utility bills for corporate dividend payments instead using that money as reinvestment into our broken Victorian infrastructure.
If the ‘legalised’ release of raw sewage into every UK waterway & watercourse isn’t enough to bring his head above the parapet then nothing will.
I don’t think anything will change, and the worst thing is that I don’t think civil unrest will ever happen (like the Poll Tax riots), people are just too divided and are fighting the wrong battles.
The b*stands seem to have have won
Ps (This charlatan, masquerading as an ‘opposition leader’ sealed Assange’s fate approximately a decade ago).
Andrew Fisher I am a US citizen and resident of Costa Rica and I fully support your efforts. Climate change effects all countries & all hsve a role to play. Some will say public onership does not work; they are wrong. CR nationalize d the electric system in 1949 and while it has taken 70 years they are now st 98% green energy and in 2018 passed a law to help bring about the rapid introduction of EVs. CR is small but now has 500 charging ststions and 5000 EV and plans for 15000 in a year. It can be done, but you may have to fight for it. Good luck!
Privatizing them was a BIG MISTAKE to begin with. NO service that serves the public – NONE, should ever be in private hands. EVER!
The only thing that doesn’t work in this plan, is that the autor overlook completly nuclear energy: it is the only solution that physically work if you want to reduce CO2 and having cheap and reliable energy. France had, before the Otan-Russia conflict, an electricity production which was twice cheaper than Germany and which produced 10 time less carbon than Germany, thanks to his huge nuclear energy production and hydro whereas Germany, who irrationnaly turned off its nuclear reactors, which were the safest on earth, invested billions on wind and solar, only to discover they were intermitent energy (oh surprise..) which needed absolutly gas and coal energy back up, which rise price and CO2 production. And even before the conflict, with billions invest and skyrocketting energy bill, they didn’t reduced at all CO2 level!! Had they invested the same money amount in nuclear energy, they would have been almost at zero emission. By the way, in France, electricity price did rise for two reasons: imposed wind production subsidized heavyly with the cheap electricity of nuclear and hydro and crazy “free” market ideology imposed by Brussel. So yes for nationalising in Uk, but the surplus must be invest not in intermittent energy, which as Germany showed, is a failured to reduced CO2, not mentionning skyrocketing price, but in nuclear energy.
Surely the right answer is a mix of generation methods as well as investment in future methods.
Current nuclear is not without it’s problems – huge and long construction – still need fuel from abroad ( we don’t mine our own Uranium ) – which is quite energy intensive to mine BTW – and security issues around ‘other’ uses for enriched fuels.
In the UK we have limited opportunity for hydro – but some of the best places in the world for offshore wind.
Improvements to grid are also important – better local generation and storage options as well as more international interconnects. You could have smart car charging for example – there is no reason you couldn’t spread the charging of cars overnight using ‘smart’ chargers to match demand to supply.
No silver bullet.
It’s curious that the government absolutely don’t want the British people to own and profit from the British utility sector but they are more than happy for non-British companies to own and profit from large chunks of this sector and to be subsidised and bailed out by the British tax payers when they screw up. It’s almost like the government is our enemy, a kind of proxy/Vichy government for the capitalist establishment !!
Arguably the supposedly democratic government IS the enemy when it opposes the public will. It seems to take the view that once elected it can override the wishes, and needs, of the public – that its so-called mandate is not subject to ongoing consultation during its term of office.
This behaviour reflects the poor health, I prefer to call it sickness, of the democratic system. With a huge lack of transparency and accountability, governments do what they want and then lie to the public to justify their actions, and then make impossible and rarely-kept promises at election time.
Democracy 2.0 is long overdue. The current system has been hijacked and corrupted by unelected interests, and needs a massive overhaul, yet why aren’t there more calls and movements towards making it happen? Isn’t this the enormous elephant in the room that nobody wants to talk about? Certainly the media doesn’t, any more than the politicians, civil servants and other related groups do. They don’t want to upset the status quo that they use to their advantage – at our expense.
To me, it seems that the electorate and voters need a new mechanism for forcing change, and looking after their interests since the original one doesn’t do so. Our elected officials are NOT working for us, and ignore us most of the time unless we shout loud enough and hard enough!
Isn’t it time for a change? A real one, I mean.