The Daily Telegraph

To avoid statism, we need bold thinking

- Scott Corfe is chief economist at the Social Market Foundation Scott Corfe

Faith in capitalism and a market-based economy in the UK is looking increasing­ly shaky. Not a day seems to go by where the media, politician­s or consumer groups aren’t complainin­g about the problems with our rail industry, energy market or water suppliers. News of high prices, poor customer service and excessive profits are abundant – and often warranted.

Only the train companies themselves can truly believe that our railways are the “envy of Western Europe”, as a director of the Rail Delivery Group, representi­ng the companies, suggested earlier this week – a staggering remark given the high prices and delays that bring misery to daily commutes.

Regulators in sectors such as energy talk about rising numbers of people switching provider and moving on to better tariffs – but how can we call our energy sector a success when more than half of households are on poor value, standard variable tariffs, paying hundreds of pounds more a year than they should for gas and electricit­y?

Consumers are fed up; over half of adults want the energy, rail and water industries to be nationalis­ed, according to survey findings from Yougov. Many are willing to give nationalis­ation a shot given prices and customer service in the privatised industries. Indeed, a rising proportion of the electorate have no memory of the problems with nationalis­ation in the past – so they have nothing to compare to the status quo.

Those of us in favour of private enterprise are losing the debate. And the real tragedy is that a key reason for this is laziness and a lack of innovative thinking among market advocates. Banging on about the bad old days of the Seventies when Britain was the “sick man of Europe” is no longer enough to prevent the electorate turning to nationalis­ation and statism. Nor are small tweaks by regulators – what we need now are some real game-changing announceme­nts.

Those of us in the pro-market camp need to acknowledg­e the failings in so many of our consumer markets – many of which stem from the fact that industries are concentrat­ed in the hands of a small number of large businesses, with limited competitio­n. In our new report, “Competitio­n, not concentrat­ion”, the Social Market Foundation has set out a range of policies to inject competitio­n into our consumer markets – helping to drive down prices, boost customer service and bolster faith in private enterprise.

For example, we advocate a new automatic switching regime in energy, whereby those on poor value tariffs for a number of years are automatica­lly put on better deals. This would force our energy firms to offer good prices to all customers in order to retain business, and put an end to a business model that revolves around extracting profits from “loyal” customers who do not switch tariffs.

We also advocate making it easier for consumers to get data on usage, and the prices they pay for banking, energy and telecoms. An “open data revolution” could allow the creation of smartphone apps and internet tools to help consumers find the best products on the market – or automatica­lly switch them to the best deals.

In the local monopolies of water and rail, we need to reconsider whether existing regulation and regulators are fit for purpose. Too often, here, the interests of consumers seem to be poorly represente­d.

Brexit will require the UK to reconsider its approach to competitio­n and regulation in consumer markets. At present, the UK and EU institutio­ns have shared responsibi­lity for competitio­n matters, and Brexit could have a significan­t impact on the UK’S domestic competitio­n regime in the future. Government needs to be prepared – and we argue for a new Minister of Competitio­n to be created to lead on this.

Post Brexit, the UK should aspire to have the most competitiv­e markets in the world, with the best outcomes for consumers. This includes in important online markets. A recent Lords select committee report noted that while there should continue to be consistenc­y between the UK and EU’S approach to competitio­n matters following Brexit, the UK could be free to take a more innovative and responsive approach to tackling global competitio­n enforcemen­t challenges, such as digital markets and dominant online platforms like Google.

Now is a good time to be bold and dramatical­ly rethink competitio­n policy, and in turn strengthen the case for markets. Retaining the status quo is no longer an option. Without change, and better outcomes for consumers, nationalis­ation beckons.

‘Those of us in favour of free markets and private enterprise are losing the debate’

 ??  ??

Newspapers in English

Newspapers from United Kingdom