Starmer Pushes State Ownership, Undoing Thatcher’s Privatization
“Renationalization” of railroads, and a government-run “Great British Energy”
[The Editors is called The Editors, plural, not The Editor, singular, for a reason. When I launched it, a shrewd friend advised, “it can’t just be you.” I’m delighted to start introducing some additional voices. Today’s comes from Michael Mosbacher, who is associate comment editor at London's Daily Telegraph. He is a past editor of Standpoint and The Critic, having co-founded both British magazines.—Ira Stoll.]
Britain leads the world in pageantry. One of the great annual spectacles is the monarch—crowned, in ermine-caped gown and bearing the regalia of office—perched on his House of Lords throne reading out the Government’s program of legislation for the coming parliamentary year.
The State Opening of Parliament, following swiftly on from Labour’s election victory, followed the time-honored format. But some of the words read out departed from those of recent years, indeed decades. The voice may be that of the monarch, but the words are those of Keir Starmer’s new government.
There was the King, the very embodiment of the hereditary principle, solemnly declaiming that the remaining hereditary peers, 92 of them, would be kicked out of the House of Lords. (Don’t worry, the upper chamber won’t be left bereft of members. There are nearly 700 Lords and Baronesses there courtesy of a life peerage, a title that will perish alongside their own demise).
But the concept that was disinterred from the well deserved resting place that Margaret Thatcher’s 1980s government had crafted for it was nationalization. The UK’s 1945 Labour government had embarked on a program of nationalization of the commanding heights of the economy greater than any other seen in non-Communist Europe. Twenty percent of the entire British economy was taken over by the state, including the mines, the shipyards, the car makers, the railways, the airlines, iron and steel manufacturing and healthcare. The ideological context of expanded government power is part of what generated a reaction in Hayek’s “The Road to Serfdom.”
After some initial Conservative opposition, and a few industries going out and back into state ownership, the broad edifice of nationalized industry persisted until Margaret Thatcher’s election victory in 1979. The consequences of state ownership were much as one might have predicted—stagnation, then decline. It is one of the reasons the UK had come to be seen as the sick man of Europe by the late 1970s.
Mrs Thatcher’s government—actually not much in her first time, but pursued with full vigor after her reelection in 1983—reversed these nationalizations. The rest of the 1980s and the early 1990s, under her successor John Major, were the era of privatization. The flotation of companies such as British Telecom, BP and British Airways were great popular successes. The only nationalized industry that remained sacrosanct and that British politicians have been too fearful to touch was healthcare—the ailing National Health Service remains very much with us.
A new consensus emerged. It was now nationalization, not privatization, that had become a political taboo. When Labour came back to power after 18 years of Tory rule, with Tony Blair’s landslide victory in 1997, the taboo was not challenged. Indeed, Blair’s government went further than the Conservatives had done in terms of private sector investment and involvement in public service provision.
The only nationalizations under Labour’s 13 years of rule under Blair and then Gordon Brown were accidental, or at least broadly accidental. Railtrack, the company that owned Britain’s stations and rail infrastructure but did not operate the trains themselves, ran into financial trouble. It was taken over by Network Rail in 2002, a self-owning, government-appointed entity the government at first insisted was not the state, largely to keep its debts off government books. That fiction was later dropped. Some argue that the bankruptcy of Railtrack was engineered—subsidies it had been receiving were not renewed—but its taking back into state ownership wasn’t interpreted as heralding a wider departure from the post-Thatcher orthodoxy.
Following on from the global financial crisis of 2008, the UK government, alongside virtually every other Western government, bailed out the banks and in this process took equity stakes in them. But this was touted as a temporary emergency measure, although the unwinding is still going on 16 years later.
But the King’s Speech of July 17, 2024, did mark an unapologetic return to the language of nationalization. It announced that a new state-owned energy provider, Great British Energy, would be launched. This would not take over existing energy firms, but rather put government funds into new renewable energy projects. It was part of a wider mantra of Starmer’s belief in a reinvigorated activist state. The government would somehow be better adept at picking winners than the market alone—although why it would do better this time around than the abject failure of such policies in the 1960s and 1970s has still not been made clear.
The more unambiguous embrace of renationalization was the King’s pronouncement that Britain’s railways would be taken back into public ownership in their entirety.
This announcement is a complete departure from more than 40 years of prevailing orthodoxy.
With the railways, Labour has found a way of nationalizing an industry without having to buy-out existing shareholders. It is nationalization on the cheap. Labour members can think their government has taken radical action, without the government incurring huge new spending commitments. The reason is that the way the actual private rail companies operate is that they are given franchises for a certain number of years to operate railway lines. With the stations and track infrastructure already in state ownership, what will now happen is that the train operators’ franchises will not be renewed when they come to their end. It’s a caution against privatization in the form of leases and licenses rather than outright sales; anything less than fully private ownership is more susceptible to a government take-back.
Will rail travel be improved? If past experience is anything to go by, it will undoubtedly get worse. But Labour will have something to show its members how radical it is.
What is worse is that a taboo has been broken. A British government is once more boasting about nationalization, even if the structure of this particular raid stops short of an outright confiscation or seizure of a privately owned business.
In a final irony for British Leftists who also yearn for EU membership, this takeover would have been impossible if the UK were still part of that bloc. The EU insists that track companies and train operators must be separate. Perhaps the Labour Left should be grateful to the Brexiteers Boris Johnson and Nigel Farage for enabling the fulfillment of a longstanding leftist fantasy.
With luck, the revival of nationalization in Britain will generate a Hayek- and Thatcher-style counterrevolution to stop it before the idea skips across the Atlantic to inspire the Kamala Harris presidential campaign or her presidential administration.
This is all about Starmer and his insiders enriching themselves to the detriment of Great Britain.
What a nightmare! How could anyone with half a brain think socialism would work.