State Capitalism is Back in Fashion — and Bloomberg is Furious About It
Andy Burnham wants to bring privatised utilities — water and transport in particular — back under public control, and far from being an outlier he's part of a global trend.
Politicians everywhere are rediscovering an enthusiasm for public ownership, from modest state stakes in strategic firms right through to full nationalisation. Whatever the motive — supply chains, national security, deindustrialisation, or plain old profiteering — this might not be such a good move....
State control has nearly always been a mistake, because the great challenge of industrial policy is avoiding capture by producer interests, and public ownership entrenches capture rather than solving it. When decision-makers regulate themselves you get inefficiency and chronic underperformance. Competition and private enterprise remain the keys to economic success, and apparently that truth has to be rediscovered from time to time.
Better accountability with State ownership?
If the state owns the water company and sets the rules for the water company, who exactly is holding anyone to account? Nationalised industries in the 1970s were not famous for their responsiveness to customers, and "the government will sort it out" has never been a policy in itself.
On the other hand, we have run the private-enterprise experiment on English water for thirty-seven years. The result is billions in debt loaded onto companies that were handed over debt-free, sewage in the rivers, bills rising above inflation, and Thames Water sitting on roughly £20bn of debt while warning about its own ability to keep the lights on. That isn't a regulator having an off decade. That's a structural outcome.
Burnham's real problem isn't ideology, it's the bill
Burnham himself has admitted nationalising water would be "complicated and probably expensive", and estimates put full nationalisation at somewhere around £100bn, possibly £144bn by 2030, with the National Audit Office suggesting up to £290bn is needed by 2050 just to make the infrastructure fit for purpose (IBTimes UK).
Which is why the likely direction of travel isn't 1970s-style state ownership at all. Burnham's actual model is the Greater Manchester bus franchising system: public control of routes, fares and standards, with private operators still running the services. Lawyers looking at his programme believe tighter regulatory control, licensing conditions and public equity stakes are far more legally deliverable than outright buyouts.
Final thoughts
The honest position is that neither ownership model is magic. Private monopolies extract; public monopolies stagnate. What actually determines outcomes is whether whoever runs the thing faces real accountability — transparent accounts, enforceable standards, and consequences for failure. We've spent nearly four decades assuming the market supplies that automatically. It didn't. Which doesn't make nationalisation right, but maybe moving in that direction just a little will be cheaper for us all in the long run?
The record debt burden on Thames Water isn't due to investment in infrastructure. The vast bulk was paid to shareholders and directors bonuses if we are to believe what we are told.
I've lived long enough to see the Thames go from a dead river to a very clean river and back to the hellscape it is today. Guess when it was cleaned up...under nationalisation.
Clean water should not be considered a commodity but rather an essential need. Profit should not be a factor in its delivery.
I'm happy to renationalise everything with strict oversight of what goes where and prison time for any miscreants who get caught fiddling the books.
Of all the skullduggery that has occurred in these privatised monopolies not a single person has been held to account.
Private business should not have a stranglehold on what are effectively public goods.
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Your final thoughts really bring it down to the point. Public or private does not matter, as long as there is healthy competition. And regulation (including trust-busting regulation to make sure competition continues) should come from the outside. Shouldn't this be more obvious?