Austerity
is far more than just cuts. It’s about privatising everything we
own
Aditya Chakrabortty
Desperate
for short-term cash, George Osborne is causing long-term damage by
selling off Britain’s most prized assets. ‘Everything must go’
is now public policy
Almost everyone who
gives the matter serious thought agrees that George Osborne and David
Cameron want to reshape Britain. The spending cuts, the upending of
the NHS, even this month’s near-miss over the BBC: signs lie
everywhere of how this will be a decade, maybe more, of massive
change. Yet even now it is little understood just how far Britain
might shift – and in which direction.
Take austerity, the
word that will define this government. Even its most astute critics
commit two basic errors. The first is to assume that it boils down to
spending cuts and tax rises. The second is to believe that all this
is meant to reduce how much the country is borrowing. What such
commonplaces do is reduce austerity to a technical, reversible
project. Were it really so simple all we would need to do is turn the
spending taps back on and wash away all traces of Osbornomics.
Austerity is far
bigger than that: it is a project irreversibly to transfer wealth
from the poorest to the richest. It’s doing the job very nicely:
while the typical British worker is still earning less after
inflation than he or she was before the banking crash, the number of
UK-based billionaires has nearly quadrupled since 2009. Even while he
slashes benefits, Osborne is deep into a programme to hand over much
of what is still owned by the British public to the wealthiest.
Privatisation is the
multibillion-pound centrepiece of Osborne’s austerity – yet it
rarely gets a mention from either politicians or press. The Queen
mentioned it in her speech last week, but the headline writers
ignored it. And if you don’t know that this Thursday is the closing
date for consultation on the sale of the Land Registry, our public
record of who owns what property, that’s hardly your fault – I
haven’t spotted it in the papers, either.
But without getting
rid of prize assets, Osborne’s austerity programme falls apart. At
a time when tax revenues are more weak stream than healthy flood,
those sales bring much-needed cash into the Treasury and make his
sums add up. The independent Office for Budget Responsibility has
ruled that the only reason the chancellor met his debts target last
year was because he flogged off our public assets. And what a fire
sale that was, with everything from our last remaining stake in the
Royal Mail to shares in Eurostar shoved out the door in the biggest
wave of privatisations of any year in British history.
And more, much more,
is to come. The all new and mostly grotesque housing bill will force
local authorities to sell “high-value” council houses once a
family moves out – which will basically hand over whatever remains
of social housing in central London to investors. Osborne also wants
local authorities “to dispose of potentially surplus assets”, of
which he calculates they have £60bn “in property not used for
schools or housing”. That would be property such as our public
libraries and swimming pools – but to a government hellbent on
asset-stripping such communal necessities are merely unsold
inventory.
At Whitehall,
ministers plan to sell a big chunk of Channel 4, and the public stake
in the national air traffic control. And that’s just the start,
because here’s something else you probably won’t have read about:
Osborne has bundled up all of our public holdings – in every
company from the collapsed banks to the Royal Mint – and put them
under the control of a government organisation called UK Government
Investments. Its CEO (what else?) is a former doyen of the City
called Mark Russell. In a rare interview in 2013, Russell declared:
“We don’t believe government makes for a particularly good
shareholder. Our belief is that unless there is a good policy reason
for government to have a shareholding then really we should be
seeking to divest those shareholdings.” Everything must go is no
longer the cry of distressed shopkeepers – it is now public policy.
As an employee of
the taxpayer, Russell earns up to £159,999, which is far more than
the prime minister’s salary. Yet the one thing he has done that you
will have heard of was an unmitigated disaster. He was among those in
charge of selling 70% of Royal Mail three years ago – a sale that,
even the government now admits, brought in less money than it should.
We let a 500-year-old public service go at a £1bn discount, a select
committee of MPs calculated in 2014. And that takes us to the heart
of the problem with such sales.
At best,
privatisation is a short-term gain for a long-term loss. The public
sells one of its prize assets in order to enable the chancellor to
bank some cash immediately. In a report published on Monday, the
campaign group We Own It calculates that if Osborne sells the Land
Registry, National Air Traffic Services, Channel 4 and the Ordnance
Survey the public will kiss goodbye to control over £7.7bn in
dividends and profits in the next 50 years. Sure, we pocket a couple
of billion now – but we lose far more in the long run.
These are services
that have taken many decades, even centuries, of public investment
and management to build up. The Land Registry dates back to Victorian
times; the Ordnance Survey’s aerial photographs of enemy territory
helped Britain win the first world war.
All that accumulated
effort and ingenuity will be handed over to a small group of
investors – and for what? Better management? A recent study of the
evidence by the University of Greenwich concludes there is “no
significant difference in efficiency between public and privately
owned companies in public services”. For more investment? Ministers
selling off everything from railways to water have promised
privatisation will bring greater investment. It comes – but it’s
always the public that ends up paying for it.
Thatcher claimed
that selling off BT, British Gas and the rest would turn Britain into
a shareholder democracy. Official figures show that Britons now own
less than half as much of the UK stock market as they did before
Thatcher’s first privatisation.
Osborne’s
privatisation, like the rest of his austerity programme, will enable
him to transfer wealth from the public to a far smaller group of
private investors. The employees can look forward to cuts in jobs,
pay and conditions – as we have seen across the privatised
utilities. The rest of us, the customers, will endure higher bills
and paying for hidden subsidies. And the chancellor? He will have
brought in enough cash to enable him to make some pre-election tax
cuts – to literally buy himself votes.
Osborne calls this
privatisation. I treat it as part and parcel of austerity. But there
is another term you and I might use. Because this making off with our
public property is nothing more than legalised larceny.
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