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RidingPie

Has privatisation ever brought prices down in the UK

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The problem with privatisation of utilities is that the infrastructure costs are so big that it means there are only a handful of companies with the capital to operate in the market. The barriers to entry are massive for new players. So you end up with a small number of operators who effectively become a cartel and prevent a proper free market from ever developing. We do not in any sense have a free market. We have freedom of choice, but that's not the same thing.

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Isn't it strange how nobody ever suggests privatising the armed forces? Curry's Digital Electrical and Mechanical Engineers, BUPA Army Medical Corps, anyone?

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I used to travel to London every month on the train in the seventies, walk up and buy a ticket, the cost was not noticeably expensive. Today to do the same - Wakefield to London would cost at least £100 return.

In my ignorance of this cost increase a few years ago I, my wife and daughter set off for London on a spur of the moment jaunt - it cost a fortune. I was shocked but paid up - just as the train came in. My wife and daughter were on the platform, I rushed to board the train but the doors had been closed. The train was standing there, we were standing there, and, having just taken £300 off me the guard wouldn't re- open the f***ing doors! That's the standard of service you can expect from our privatised railway. I have several more examples I could relate that compare extremely poorly with the way things were under BR including a nightmare journey on a jampacked Virgin train from Wigan to Bristol.

I'm something of a socialist. But I can see that we have benefited from some privatisations. Sometimes privatisation works, best, sometimes public ownership works best. What doesn't work is having a slogan like "Private enterprise works" and sticking to it through thick and thin.

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. We do not in any sense have a free market. We have freedom of choice, but that's not the same thing.

but the question was "Has privatisation ever brought prices down in the UK"

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Not buying any of that. Many of your arguments against nationalisation are based upon how thing were at the time. There is no evidence to suggest that things would be better had these services been privatised at the time.

true, nor is there any evidence that nationalisation now would for example bring down prices. There is evidence though that things are better now that they were and the cost of reverting would have to be borne by...guess who?

Anyway, its not going to happen.

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but the question was "Has privatisation ever brought prices down in the UK"

In simplistic terms no it hasn't because of the aforementioned creating of self-interested cartels. Additionally, inflation plays a part. Can you name one thing today that costs less than it did in the early 90's ? But prices are only part of the equation.

A better question would be has it brought better value for money for both the consumer and the taxpayer ? Does the utilities consumer receive a better service in terms of uninterrupted supply and quality/reliability of infrastructure ? Does the exchequor receive money in taxes from companies where previously it paid out to subsidise - a net gain that can be used elsewhere ?

Using trains as an example, yes the cost of a journey has gone up substantially since BR days. However, on the West Coast mainline you travel on high quality clean trains with comfortable seats and decent facilities (wifi, plug points, decent buffet car etc) and have hugely reduced journey times. In BR days you often sat in cold dirty carriages with torn seats and vandalised toilets etc, you might get a lukewarm cuppa if you were lucky and journey times were longer than expected. The cost of those improvements in infrastructure - new rolling stock, overhead power lines etc - has to be paid for. If I compared a Virgin Trains £100 fare to London with an old BR £30 fare to London then I would say quite categorically that the Virgin fare is better value for money.

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In simplistic terms no it hasn't because of the aforementioned creating of self-interested cartels. Additionally, inflation plays a part. Can you name one thing today that costs less than it did in the early 90's ? But prices are only part of the equation.

A better question would be has it brought better value for money for both the consumer and the taxpayer ? Does the utilities consumer receive a better service in terms of uninterrupted supply and quality/reliability of infrastructure ? Does the exchequor receive money in taxes from companies where previously it paid out to subsidise - a net gain that can be used elsewhere ?

Using trains as an example, yes the cost of a journey has gone up substantially since BR days. However, on the West Coast mainline you travel on high quality clean trains with comfortable seats and decent facilities (wifi, plug points, decent buffet car etc) and have hugely reduced journey times. In BR days you often sat in cold dirty carriages with torn seats and vandalised toilets etc, you might get a lukewarm cuppa if you were lucky and journey times were longer than expected. The cost of those improvements in infrastructure - new rolling stock, overhead power lines etc - has to be paid for. If I compared a Virgin Trains £100 fare to London with an old BR £30 fare to London then I would say quite categorically that the Virgin fare is better value for money.

True but then in BR days there was no WIFI. I boarded a Leeds train at Skipton busting for the loo - there wasn't one that worked! I spent a fairly uncomfortable 30 minutes! The same thing apparently happened recently on a Grand Central London to Edinburgh train!!!

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There was an NHS dept that achieved all that was asked of it,profitable,etc ,but because of this it was sold off.I cant remember the name I think it may be the logistics dept.Private industry is fine and creates wealth,but as Sevvy said the utilities should be in public controll

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Anyone remember the privatisation of British Gas?

The first thing the management did was quaruple their own salaries and continued to run it as a monopoly for as long as they could without a single thought for the customer.

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In my view public services should be about providing services to the public, not about finding jobs for people to keep the unemployment figures down. I believe also that the case for the delivery of public services by the private sector is irrefutable, which is why the Labour Govt was so keen on it. What was missing was regulation. In my view, the real issue here is that regulation. the Govt. should be regulating transport, utilities the banks etc much more rigorously that it is.

See here for example :http://www.guardian.co.uk/business/2012/oct/19/regulator-rbs-abn-amro-financial-services-authority

The Financial Services Authority could and should have intervened to block Royal Bank of Scotland taking over Dutch bank ABN Amro, the Treasury select committee has said, in a report that makes a "serious indictment" of the former management of the City regulator.The £49bn deal is one of the factors that led to the £45bn taxpayer bailout of RBS in October 2008, because it squeezed the bank's capital buffers to wafer-thin levels and exposed it to more troubled loans.

Anyone remember the privatisation of British Gas?

The first thing the management did was quaruple their own salaries and continued to run it as a monopoly for as long as they could without a single thought for the customer.

You mean the customers who benefited hugely from the share issue? The general public is just as greedy chasing low interest rates to finance the acquisition of assets whose growth as far out stripped the cost of borrowing all at the expense of those in social housing and savers.

Anyway, a small price to pay for the huge improvement in service post privatisation.

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No one's saying private business for private profit isn't important, but it isn't the be all and end all. Publicly owned industries did make losses, but take the railways, the bits that were making a profit and to some extent were subsidsing the rest, were sold off by Thatcher. The hotels, and ferries, all instituted in the days when the railways were privately owned were all sold off in the eighties leaving BR with the loss making bits.

And private industry can be wasteful. The canal system of this country was built for private profit, but unfortunately to two different lock gauges, so it couldn't universally used. The railways were also built to two different gauges, necessitating the expense of large sums of money by the GWR in order ot come into line with the rest of the country. Or look at the recording industry - two different speeds for vynyl. Or cassettes vs 8 track cartdidges, or VHS vs Betmax, bayonet cap vs Edison screw - there are loads of examples of this type of thing where the public have been inconvenienced by different systems for the same purpose. All for private profit.

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Or an alternative way of looking at it, the private sector created and innovated different standards and the public chose which one survived.

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The problem with the conservative way of looking at things is that they do not see the value of things, only the cost.

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The problem with the conservative way of looking at things is that they do not see the value of things, only the cost.

Actually conservatives are of the opinion that only the individual knows what the value of something is to them. Hence individuals should be left to make decisions for themselves rather than have nanny state do it for them.

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Actually conservatives are of the opinion that only the individual knows what the value of something is to them. Hence individuals should be left to make decisions for themselves rather than have nanny state do it for them.

Therein lies the problem. Gestalt theory states that the whole is greater than the sum of its parts. Governance requires a holistic view.

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Look free rider issue and that will explain why.

http://en.wikipedia.org/wiki/Free_rider_problem

Lol! Or for the same reason that at times of war, natural disaster and national emergency we engage in collective/communal/national effort because it responds to actual needs, is better planned and is essentially more efficient.

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Or an alternative way of looking at it, the private sector created and innovated different standards and the public chose which one survived.

No the company with the most money's system survived. BSB's system was technically better than Sky but Murdoch had deeper pockets. I'm told that Betamax was superior to VHS but VHS triumphed.

It comes down to money. The GWR had to conform to the technically inferior 4ft 8 1/2" gauge because that's what the rest of the country were using.

The disparity in canal lock gauges exists to this day.

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Therein lies the problem. Gestalt theory states that the whole is greater than the sum of its parts. Governance requires a holistic view.

Gestalt theory isn't an economic theory. Economics has an equivalent but just because the whole is sometimes greater than its parts doesn't mean that it always is.

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No the company with the most money's system survived. BSB's system was technically better than Sky but Murdoch had deeper pockets. I'm told that Betamax was superior to VHS but VHS triumphed.

It comes down to money. The GWR had to conform to the technically inferior 4ft 8 1/2" gauge because that's what the rest of the country were using.

The disparity in canal lock gauges exists to this day.

VHS / Sky triumphed because consumers had little interest in "technically better". Consumer power trumped expert opinion.

Lock guages is pretty much an exception, everywhere you can see common standards, the Internet is a perfect example. We have one Internet not several different incompatable versions.

These common standards arose because they were quality products appreciated by the consumer.

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Lol! Or for the same reason that at times of war, natural disaster and national emergency we engage in collective/communal/national effort because it responds to actual needs, is better planned and is essentially more efficient.

No, we don't, we do so because of spillover effects and the free rider problem. These effects don't apply to industrial production and that's why "communal effort" belongs in the dustbin of (economic) history.

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VHS / Sky triumphed because consumers had little interest in "technically better". Consumer power trumped expert opinion.

Lock guages is pretty much an exception, everywhere you can see common standards, the Internet is a perfect example. We have one Internet not several different incompatable versions.

These common standards arose because they were quality products appreciated by the consumer.

VHS actually won because it was backed by a very powerful industry (the porn industry).

Written tragically by someone who still has a betamax somewhere upstairs.

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VHS actually won because it was backed by a very powerful industry (the porn industry).

Written tragically by someone who still has a betamax somewhere upstairs.

Is that your way of pretending you don't have a porn collection? :D

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VHS actually won because it was backed by a very powerful industry (the porn industry).

Written tragically by someone who still has a betamax somewhere upstairs.

And the customers bought videos to watch porn (or at least a lot of them did) - the result being that the consumers wanted something that the VHS high-ups had overlooked.

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Is that your way of pretending you don't have a porn collection? :D

Nope... its just currently on HD-DVD as well not BluRay :(

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