‘Social ownership’ in U.K.

Press, 15 September 1986, Page 18

‘Social ownership’ in U.K.

Nowhere in the world has a Government been more vigorous in selling State enterprises than the Conservative Government in Britain. Now the Labour Party in Britain has announced a programme, if it wins power, to reassert State control over some of the industries which have been sold to the public. The word “nationalisation” has been eschewed; the favoured term is “social ownership.” It might be difficult to make the distinction. In announcing this policy, the British Labour Party has probably defined one issue on which the next election will be fought: nationalisation versus privatisation. The election does not have to be held until 1988, although one may be held next year. The drive to privatisation has not been confined to Britain; there is a world-wide swing away from State interventionism. The swing has been driven by economic factors, but also by moods. It is aided by Governments desperately attempting to bring down Government spending. Countries in which privatisation is developing, rather than firmly established as in Britain, will watch the public reaction to the British Labour Party’s moves with interest. Sooner or later, the swing to privatisation will reach reverse. A different mood will take over. The question is whether the Labour Party in Britain has made a correct political judgment, or whether it is simply giving a last gasp about old Labour verities. If it has made a mistake, the chances seem strong that it will lose the lead it has been gaining in the opinion polls, and it may set the stage for even more radical moves by the Conservative Government. Voters know that nationalisation has to be paid for, and that it will be their own money that is used.

The move to privatisation has had as much revolutionary zeal about it as drives for nationalisation have had at other times. A balance is necessary. It is thoroughly improper for a Government to keep itself in power by selling State assets, reaping the short-term profits and thereby avoiding some of the nasty but necessary measures which would help the economy. Once sold, the assets cannot be sold again. Ideally, the assets will become part of enterprises which will be taxable by the Government and the public will continue to benefit. However, to assume this is more an act of faith than a certain financial calculation. In some instances, the privatisation would seem to be the handing over of a country’s resources to private investors. The State would lose control and could excuse itself totally from accountability and any form of stewardship.

The British Labour Party may be in difficulty over reasserting social ownership of British Telecom, the telephone company. Those who have bought shares in the company — and the employees bought many of them — have seen their shares grow in value. These shareholders will be offered the price at flotation, interest-bearing bonds, or securities. Probably many traditional Labour supporters bought shares in the company, and will be reluctant to lose their shareholding. The Thatcher Government plans to sell British Gas in the biggest flotation ever. The Labour Party’s intentions may thwart the Conservative Government’s plans. If the Labour Party has got its political judgment wrong, it may well have thwarted its own chances of regaining power, and lost the chance of influencing Mrs Thatcher, wta) seems not to know when to stop.