James Worron is a Government Relations Consultant and Deputy Chairman of Greenwich Conservatives.
Nationalisation is back on the agenda, and, absurd as it may seem, Conservatives need to be wary of it – simply because the reasons why it didn’t work are now mostly long-forgotten.
To illustrate the point, two library books that I borrowed on the nationalised industries had last been taken out in 1986, despite regular usage before then. To put that in context, Tom Pursglove, the MP for Corby, was still two years from being born. So if Jeremy Corbyn and the hard left really do advance the cause nationalisation there will be a vast knowledge vacuum in the public debate.
Proponents of nationalisation will be able to cherry-pick their evidence – if only because the newer state-owned industries, such as telecoms and airlines, were profitable. Others, however, were in long-term decline. The sector as a whole comprised 12 per cent of the economy and 1.75 million workers by the late 1970s.
It failed on what we now consider the key criteria of economic success: productivity. Nationalised industries were poor performers in international terms, and, where it can be measured, compared to privately-owned British competitors. It is worth taking a look at the detailed productivity figures of the key nationalised industries by the late 1970s:
- Output per man hour in German coal mines was 46 per cent higher than in British ones in 1979.
- British Rail train miles per man hour were only one-third the level of France, the Netherlands, Belgium or Sweden.
- The labour productivity of the comparable US airline TWA was 75% per cent higher than that of British Airways
- British Steel’s productivity was 25 per cent lower than the original six EEC members.
- British Leyland’s productivity was only a fifth to a third that of foreign carmakers.
- British power stations required twice as many staff per unit as energy as French ones.
These figures aren’t just abstract numbers. They had real world consequences in the form of bad and unreliable cars, shoddy steel, months to wait for a telephone, and pressure on households not use too much energy (and not for environmental reasons).
Entire books have been written on the cause of this failure, but overmanning was a consistent theme. This problem got worse in the 1970s, when the nationalised industries were used as a job-protection tool, rather than being run on a more commercial basis, as they often were previously. The power of the trade unions exacerbated this problem.
The nationalised industries also had a habit of investing in the wrong technology, and then sticking with their decision because of a short-termist approach to costs. The British nuclear industry famously chose the flawed Advanced Gas Reactor design, and on a smaller scale British Rail chose to invest in the wrong sort of brakes in the 1950s, leaving the country was decades behind in the use of power brakes.
The result was that British freight trains averaged 22½ mph in 1973 – that’s slower than Usain Bolt. Naturally, this was not ideal for British industry. Elsewhere, British Telecom maintained the crowdbar switch whilst other countries moved to semi-electronic and electronic switched. The idea of organisations that functioned in this way having the speed and flexibility to cope in today’s high competitive world economy seems absurd.
Defenders of nationalisation will point out that the worst failures were during the late 1970s, and this reflects wider problems in the British economy. They may also argue that many of the more successful foreign operations referred to above were also nationalised – and that the British experience of nationalised industries was uniquely bad.
This should make us uniquely determined not to repeat it, but it also suggests that, in principle, nationalised industries can be run better. It’s worth noting that semi-nationalised companies such as EDF and France Telecom do compete successfully in the global economy. However, they also seem to exist within a wider economy that is not successful, suggesting perhaps that the domestic French economy is subsidising individual corporate success – which is doesn’t seem to be to the benefit of the people of France.
And here’s the point. Nationalisation was never about people. The ideas was developed at a time when people criticised capitalism for not being rational and “scientific” – unlike today, when it is said to be too rational, and not humane enough. The trade unions resisted the idea that nationalised industries should be controlled by workers, and refused to serve on the boards of public corporations. The opportunity for an ideal of socialist workplace democracy was not seized. It was never about workers, never about consumers, never about results. In the end, nationalisation existed for its own sake, and there was no point in continuing the model. There is none in reviving it now.