No Starmer, we don't all profit

Keir Starmer is lying when he keeps pretending that we all benefit from private profiteering, when privatisation profiteers are making £billions at our expense, not to our benefit

Keir Starmer loves to claim things like "when business profits, we all do", but this is just a reworking of the same discredited theory of "trickle-down economics" that’s plagued British politics ever since Margaret Thatcher smashed the successful post-war mixed economy to pieces.

Here are some examples of businesses profiting at the expense of ordinary people and the wider economy, not to their benefit.

Privatised water

Since England’s water supply was privatised in 1989 greedy privatisation profiteers have extracted an extraordinary £78 billion in dividends, whilst lavishing £billions more on bloated executive salaries and bonuses.

Before the water boards were sold off in 1989 for an infinitesimal fraction of their true value (what it would have cost to build all the infrastructure from scratch) the Tory government cleared all of their debts so they started with clean balance sheets. Since then they’ve racked up a combined £60 billion in debts!

Failing water companies like Thames Water are now dramatically hiking water bills in order to cover the cost of servicing their enormous and unsustainable debts.

Privatised water companies have maximised profits by minimising investment and maintenance, which means that despite rising demand, not a single new reservoir has been created since 1989, and huge swathes of the country are served by leaky pipes and ageing Victorian sewers.

One of the biggest cost-savings the privatised water profiteers have found is by dumping raw sewage into our rivers and coastal waters, rather than building and maintaining sufficient water treatment capacity. The hopeless water regulator OFWAT slaps them on the wrist with occasional fines, but these fines are just a drop in the (sewage filled) ocean in comparison to the costs these polluting profiteers have saved by dumping sewage into the natural environment, instead of treating it.

Starmer is right that business has profited when it comes to privatised water, but the public, the wider economy, and the environment have all paid the price.

They’ve got filthy rich, while the public have paid the price through soaring water bills, creaking infrastructure, and polluted rivers and beaches.

Privatised energy

It’s arguable that the privatisation of the UK’s energy supply has been even more disastrous than the water privatisation scandal.

During the energy inflation crisis UK consumers suffered enormous price rises while other countries like France and Spain intervened to cap energy price rises at sustainable levels.

Since the beginning of the energy crisis in 2022, UK energy companies have raked in a mind-blowing £647 billion in profits.

Even after wholesale energy prices have fallen back dramatically, the energy profiteers and the diabolical energy regulator OFGEM have colluded to keep on hiking energy prices even higher.

Soaring energy prices are a major factor in the UK suffering the highest inflation rate in the OECD.

The scale of private energy profiteering in Britain isn’t just bad for ordinary families facing obscene energy bills, the costs are also debilitating to British businesses that actually manufacture things and provide services too. The UK economy is being rendered uncompetitive in relation to other countries that have sensibly restrained energy sector profiteering.

If we look at the nuclear industry in particular, it’s an extraordinary ideological mess. The Tories flogged off Britain’s entire fleet of nuclear reactors for a tiny fraction of what they’d have cost to build from scratch, then the privatisation profiteers at British Energy realised they’d make much more cash by simply flogging the whole lot off to the government of France (in the guise of EdF) than by running it themselves.

We handed our nuclear expertise over to France, and then when Tory/Lib-Dem coalition government decided they wanted an expensive new nuclear plant at Hinckley Point C, they had to bribe the governments of France and China into building it for us by promising to pay them double the market rate for electricity for 35 years.

Again, Starmer is right that business has profited, but there profits haven’t been made to the benefit of ordinary people, they continue to be extracted at our expense.

Privatised rail

Rail privatisation gives us another example of privatisation profiteers making vast profits at the expense of the general public.

The Tories created a bizarre ideological mess in the 1990s by splitting British Rail into chunks and flogging them off at a tiny fraction of their real value.

They sold off train operations to a bunch of regional franchises, many of which ended up under the ownership of overseas state rail companies. These franchises have raked in vast profits by hiking ticket prices and running unreliable and overcrowded services, whilst repeatedly walking away from services like the East Coast Mainline whenever they became unprofitable, leaving the government to cover the cost out of public funds.

The Tories sold off the tracks and stations to Railtrack, but this had to be renationalised after they caused multiple deadly derailments by underinvesting in rail maintenance to boost their profits. Railtrack became Network Rail, but the scandal didn’t stop there, as the now publicly-owned infrastructure company racked up a secret £50 billion black hole of debt by renting out the tracks to private rail franchises at way below cost, in order to artificially boost their profits.

The actual trains were flogged off on the cheap to private rolling stock companies (ROSCOs) which have spent decades draining enormous profits out of the system by renting the trains out to operators. First they completely killed off Britain’s train building industry by not ordering any new trains for the first three years, because they were determined to rinse the maximum profits out of the old British Rail fleet they’d been gifted at bargain basement prices, and since then, the profits have continued rolling in.

ROSCOs killed the British train building industry, and they continue extracting hundreds of £millions per year in dividends, while paying their executives vast bloated salaries too, all paid for by the unbelievably excessive cost of tickets on Britain’s ageing, unreliable, and over-crowed rail network.

Keir Starmer’s deceptive rail "renationalisation" agenda does not include plans to remove these train leasing profiteers from the system.

Add in the fact that UK governments have spent decades subsidising the privatised rail fiasco by more than it used to cost to run the whole of British Rail pre-1994 (£billions per year in direct subsidies plus the Network Rail black hole of debt) and it’s been catastrophic for everyone except the privatisation profiteers.

Private business has profited enormously from the rail privatisation fiasco, while ordinary people have suffered obscene ticket price inflation; rail crashes due to profiteering negligence; unreliable and over-crowded services; and a shocking lack of rail infrastructure investment outside of London.

PPE contracts

During the Covid pandemic the Tory government ripped up all the procurement rules to enable an absolute orgy of private profiteering on PPE supplies.

Established PPE suppliers were ignored in favour of a bunch of pandemic profiteers with personal connections to members of the Tory government.

Tory politicians; Tory family members; Tory donors; and even Matt Hancock’s former pub landlord all set themselves up as PPE suppliers to siphon off tens of £billions in public cash through a load of dodgy untendered supply contracts.

After prioritising their dodgy mates over established medical supply companies, the government unsurprisingly ended up wasting £billions on completely unusable PPE, and they ended up paying way over the odds for much of the kit that was actually usable.

Once again, businesses profited, but not to the benefit of Britain and the British people, but at our expense.

Austerity

Using the pandemic as an excuse to siphon off tens of £billions in public cash to their dodgy mates came at a cost to ordinary people, because there’s no intention to get the lost money back, and because austerity obsessed politicians like Chancellor Rachel Reeves and her Tory predecessors have delighted in using the disastrous state of the public finances as an excuse to cut public services; abandon infrastructure investment, and economically sanction children, disabled people, and pensioners.

The £billions squandered on dodgy PPE supply contracts would have been more than enough to do things like scrap the two-child economic sanctions on families, or keep the winter fuel allowance for pensioners.

The same goes for the tens of £billions the government keeps pumping into the privatised water, energy, and transport sectors in order to artificially boost the profitability of the private profiteers.

The depraved Westminster establishment cartel are ruinously addicted to the deluded "cut our way to prosperity" austerity agenda of trying to balance the country’s books on the backs of poor and ordinary people, while they actually gloat about the profits that private profiteers have been making, and lie through their teeth that this obscene wealth extraction is good for the rest of us.

Renationalisation

There are compelling cases to be made for the renationalisation of water and energy, to take them out of the hands of greedy private profiteers, and run them for the benefit of the British people and the British economy.

The water companies have loaded themselves up with so much debt that many of them, particularly Thames Water, are as as good as insolvent anyway. Legislation should be introduced to force them to pay off their debts and stop sewage dumping, or hand the infrastructure back if they won’t comply.

There’s a similarly strong case that the railways should be properly nationalised to stop the greedy train leasing companies leaching so much profit out of the system at the expense of rail customers.

Renationalisation of energy, water, and transport is overwhelmingly popular with the British public, so it seems like an absolute no-brainer for Labour to bring these essential services back under public control so that any profits can be re-invested into the system, rather than siphoned off in lavish shareholder pay outs and bloated executive pay packages.

Conclusion

It’s repulsive to see a Labour Party leader recycling the old right-wing lie of trickle-down economics when it’s so obvious that corporate profits don’t just fail to trickle-down to the rest of us, but are actually generated at the expense of ordinary people, the environment, and the whole UK economy in general.

Instead of using the poor state of the nation’s finances as an excuse to inflict even more economic pain on many of the most vulnerable people in society (children, pensioners, disabled people), perhaps the government should be looking into why the public finances are in such a mess in the first place, and why we keep allowing privatisation profiteers to keep bleeding the UK economy dry in return for such substandard services.