We can­not af­ford to re­turn to state-run ser­vices

Pri­va­tised in­fra­struc­ture is more ef­fi­cient and more re­spon­sive to cus­tomer needs than na­tion­al­i­sa­tion

The Sunday Telegraph - - Letters To The Editor - JOHN ALLAN John Allan is pres­i­dent of the CBI

How do you start your morn­ing? Have a shower, put the ket­tle on, go through your post and take a train to work, per­haps. It’s no ex­ag­ger­a­tion to say that many as­pects of mod­ern life rely upon ef­fi­cient and ef­fec­tive de­liv­ery of our in­fra­struc­ture, by the com­pa­nies that run them, from dawn to dusk.

It’s fair to say that this doesn’t work every time – any­one who reg­u­larly takes a train in and out of our ma­jor cities will have sto­ries about de­lays, can­cel­la­tions and crammed car­riages. Firms rightly recog­nise that there have been is­sues with the de­liv­ery of some ser­vices, and that they must drive change. But we would be fool­ish to take for granted the enor­mous im­prove­ments pri­vate com­pa­nies have driven across the UK’s in­fra­struc­ture.

In the rail sec­tor, there are a quar­ter more car­riages on the rail­ways, ser­vices have in­creased by nearly a third, and the fre­quency of ser­vices on many long-dis­tance routes has dou­bled since the fran­chise sys­tem be­gan. In en­ergy, the £100bil­lion in­vested since pri­vati­sa­tion has seen the num­ber of power cuts fall by half and the length of power cuts has de­creased by well over half since the start of the mil­len­nium, against a back­drop of more than halv­ing emis­sions since 1990. In­vest­ment in the wa­ter sec­tor is dou­ble that of pre-pri­vati­sa­tion lev­els. Leak­ages have been re­duced by a third since the Nineties. Cus­tomers are five times less likely to suf­fer sup­ply in­ter­rup­tions now than pre-pri­vati­sa­tion, while low wa­ter pressure is be­com­ing a thing of the past.

In just five years, Royal Mail has trans­formed its in­ef­fi­cient, loss-mak­ing op­er­a­tions to fi­nan­cial sus­tain­abil­ity, higher pro­duc­tiv­ity and bet­ter staff pay. Th­ese com­pa­nies have im­proved be­cause they are well-reg­u­lated, and be­cause it also makes ob­vi­ous busi­ness com­mon sense to keep striv­ing for a bet­ter ser­vice for their cus­tomers.

There are more im­prove­ments to come. Rail com­pa­nies have com­mit­ted to run­ning 7,000 new car­riages by 2021. En­ergy com­pa­nies con­tinue to re­duce emis­sions as they tran­si­tion to re­new­able sources. And do­mes­tic wa­ter bills are ex­pected to fall by 4 per cent in real terms from 2020 to 2025.

One po­lit­i­cal in­ter­ven­tion that may ap­pear an easy-to-grasp com­fort blan­ket – but would prove hugely dam­ag­ing for con­sumers and the econ­omy – would be to bring those in­dus­tries back un­der govern­ment own­er­ship. The Seven­ties was a decade no­to­ri­ous for chronic un­der­in­vest­ment in the rail­ways, poor labour re­la­tions and govern­ment in­ter­fer­ence. The wa­ter net­work had to com­pete with other key in­dus­tries for in­vest­ment, and reg­u­larly lost out, lead­ing to crum­bling in­fra­struc­ture. And the en­ergy in­dus­try was in dire straits, with strikes prompt­ing the Govern­ment to im­ple­ment the in­fa­mous three-day week.

The truth is, we can­not af­ford to re­turn to the fail­ing state-run ser­vices that brought such strife to the UK. The mar­ket value of en­ergy net­work com­pa­nies is over £55bil­lion, wa­ter com­pa­nies over £86bil­lion and Royal Mail £4.5bil­lion – a to­tal of over £146bil­lion. Pay mar­ket rate and that’s an aw­ful lot of tax­pay­ers’ money. Pay be­low mar­ket rate and that’s a nasty shock for pen­sion funds and savers, the value of which could well de­crease if the fund has in­vested – as is com­mon – in th­ese in­dus­tries. And, of course, the Govern­ment would have to take on the mas­sive fu­ture in­vest­ments that are still needed. If we keep re­turn­ing to failed so­lu­tions, we risk not only go­ing back to a sys­tem that had se­ri­ous flaws but also get­ting trapped in an end­less gen­er­a­tional pen­du­lum swing of squan­dered po­ten­tial, while fail­ing to tackle real cus­tomer con­cerns.

Ul­ti­mately, what most peo­ple want to know is “am I get­ting a fair deal?” Putting cus­tomers at the heart of de­ci­sion-mak­ing and em­brac­ing new tech­nol­ogy can help en­sure this is the case. The wa­ter sec­tor is ahead of the game here, op­er­at­ing cus­tomer chal­lenge groups to hold com­pa­nies to ac­count. In en­ergy, tech­nol­ogy is be­ing used to sup­port proac­tive switch­ing. In rail, “one click” au­to­mated claims sys­tems help right prob­lems.

With the eyes of the world on us as we chart a new fu­ture for the coun­try post-Brexit, we need to go above and beyond to make the UK as at­trac­tive a des­ti­na­tion as pos­si­ble for the very best in global in­fra­struc­ture in­vest­ment. Giv­ing in­vestors a rea­son to head else­where is the last thing we can af­ford to do. Busi­nesses and politi­cians need to be hon­est – about the chal­lenges, but also the many ben­e­fits that the pri­vate sec­tor has brought to our in­fra­struc­ture. Con­sumers will be the real win­ners if we have a de­bate based on ev­i­dence, not ide­ol­ogy.

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