Private Ownership

Lord Wrigglesworth Excerpts

Thursday 22nd October 2015 Lords Chamber

[Lord Wrigglesworth (LD)]

My Lords, the noble Lord has done the House a service in raising this issue at the present time, although I hope that we shall not see the polarisation and ideological nature of the debate that we had in decades gone by. I take a very pragmatic approach to this issue and will rehearse the arguments for it in a moment, but before doing so I want to join the noble Lord in welcoming the maiden speech of the noble Lord, Lord Young. He and I worked in the Post Office together before we were both elected to the other place in 1974. Just as when I was making my maiden speech here I looked back to see what I had said in my maiden speech in the other place, I looked at the noble Lord’s maiden speech, which was made seven days before mine. I see that he spoke on this very issue of nationalised industries, and we look forward to the contribution he will make to this debate and those he will undoubtedly make to the benefit of the House in the future.

Having had a vote of no confidence from my constituents in the other place after nearly 14 years, I have had the benefit of some experience in different types of business. As I mentioned, I worked in the Post Office when it was a nationalised public corporation before going into the other place. I was director of a major consumer co-op for a number of years and the research officer for the then quite substantial Co-operative Party, which was the political arm of the co-operative movement, so I had a lot of experience of different types of co-operatives in that capacity.

When I came out of the other place, I joined a partner in establishing a commercial and industrial property development company which became the biggest investment and development company in the north-east and is still doing that work today, probably creating more jobs than I ever did as a Member of Parliament in the other place or indeed probably here. That was a great success and I still have an interest in industrial and commercial property in the north-east. In addition, before coming here I was on a number of plc boards and chairman of the Port of Tyne, one of our biggest deep sea ports, for seven years. That ran in a very commercial way as a statutory corporation. So I hope that I can bring those experiences to the House in discussing the Motion before us.

It is unhelpful to business and to industry to have the uncertainty of a raging public debate, as we did in decades gone by, on an ideological basis over the issue of privatisation or nationalisation. As the noble Lord, Lord Howell, said, we should take a technical, not an ideological, view of this. There are very good examples of public sector organisations that prosper and serve the country well and do not suffer the maladies that the noble Lord outlined, but I regret that the Pandora’s box of this debate has been opened again by the new leader of the Labour Party. As a frequent user of the rail services up to the north-east, the idea of them going back into state ownership fills me with horror. I do not know why the privatised railway companies have not sold the success that they have had over the past decade and more to much better effect. Those who want to go back to the old British Rail must be looking at our stations with rose-tinted spectacles. The stations, and the services on our trains, are infinitely better than they were in those days. Memories seem to be very short. There has been a long-standing campaign, funded and organised by the trade unions from that sector, to try to get them nationalised again and the new leader of the Labour Party has obviously bought that.

In the Library’s briefing for this debate there is a piece by the Professor of Political Economy at Glasgow University. I can see where he is coming from ideologically. He talks about public ownership serving,

“social needs and environmental concerns over private gain”.

He talks about,

“democratic accountability and public engagement in the economy”.

What does he mean? He should remember some of the things the noble Lord mentioned. The nationalised industries used to be run with constant interference by civil servants and government departments, making it impossible for them to manage their businesses as they would if they were proper commercial organisations, or serve the consumers as they were supposed to. The idea of going back to that sort of arrangement fills me with horror.

No matter who the owners are, the trick is getting the relationship right between the shareholders, or stakeholders, and the management. Then management can manage on a proper commercial basis, to achieve the objectives that have been laid down by the shareholders or stakeholders. I think not only of our Port of Tyne, but of the very successful port of Dover, which is a statutory corporation. When it was suggested that it be privatised, the campaign against this was led by the Conservative Member for Dover because it is a perfectly good organisation, doing a good job. As was said many years ago, “If it ain’t broke, don’t fix it”. The Port of Tyne is the same: it made over £10 million last year being run on a commercial basis and there is no reason to disturb an arrangement like that. Channel 4 is in public ownership, and it does a good job but it has not been constantly interfered with by government. The noble Lord made a fundamental point: if a public sector organisation like that needs capital, one may have to go to the market and privatise to enable the business to succeed. If you do not, any debt that it builds up will, inevitably, be on the PSBR and the Treasury will take an interest in everything it is doing, and that leads to stop-go investment in the business.

There are cases where it is right for a body in the public sector to be moved into the private sector, but there are also cases for doing the opposite. The Conservative Government to which the noble Lord referred nationalised Rolls-Royce in the public interest. At the moment there is a case for the Government paying the costs of mothballing the steel plant in Redcar which is being closed. That plant is as big as St Paul’s Cathedral and has the second biggest blast furnace in Europe. The furnace, the coke ovens that go with it and all the surrounding deep berths for importing iron ore and taking the steel out, would need a massive investment of billions of pounds. The chances of that facility being revived are very slim indeed but, strategically, the Government should seriously consider having it available, for the relatively cheap cost of mothballing it for some years. However, I have not seen any serious consideration of that. That is what I mean about taking a pragmatic approach. Do not take an ideological approach, but ask what is best in the circumstances and behave in accordance with that.

The French seem to be much better at getting this right with the public sector. French Governments manage to sustain businesses right across the board in the public sector—or those with considerable public sector interests in them—without the sort of interference the noble Lord talked about. That is why the relationship between the ownership, the shareholders and the management is fundamental. If that is wrong, everything goes wrong. One can see plenty of examples of the dangers of the way it has been done in this country at any time. Look at the demands from Members of the other place, and even some in this place, regarding the way the Government should run the banks in which they have a shareholding. You cannot run an organisation if people externally are telling you what salaries should be paid to the management, what organisation they should have or what services they should provide. You cannot chop and change from time to time according to a political timetable and political demands, rather than taking a strategic, long-term approach, and be giving the management the job of doing it. Frankly, if the management does not do the job, it may have to be removed, which I have had to do at times, in order to ensure that the objectives that have been laid down are achieved.

I hope the ideological debate that raged in the past does not come back—I think the noble Lord would agree on this point—and that the settled position we have reached as a country is maintained. The blind doctrinal faith and ideology of a minority, which thinks that by putting things in public ownership you are somehow serving the consumer and the public interest, is completely wrong. It need not look in the crystal ball; it can look to history to find the truth of that case. From these Benches, I am advocating a pragmatic and non-ideological approach. If we do that, consumers, the people working in those businesses and the whole country will benefit.