The shallow pendulum swings back for British Labour

The problem with Labour’s plan for the UK economy, unveiled by shadow chancellor John McDonnell at his party’s conference this week, is that I instinctively sympathise with it.

Even for me, a Tory-boy shopkeeper’s son who remembers the 1970s, it is a wearisome effort to remind myself why it will all go wrong in short order.

In fact, I'm not sure McDonnell’s proposal to buy out the UK’s 700 private finance initiative contracts will go wrong. He wants to borrow the money to do so and hints at paying under the odds, but if anything this is unduly restrained.

Profit is the return on risk and every conceivable risk in these contracts seems to have been assumed by the state, so all the private investors have risked for their enormous profits is that some future government might call time on the whole farrago. Pension funds would take a hit, but pensioners are the richest part of the British population.

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Northern Ireland retains nationalised trains and buses, which are better than often appreciated

It is commonplace to link the rise of Jeremy Corbyn’s Labour to the rise in house prices, locking people out of capitalism because they cannot own capital.

Radical housing plan

Yet McDonnell said relatively little about housing. The centrepiece of his speech was a call for renationalisation. He mentioned “construction” in his list of target industries, suggesting a radical housing plan may be in the offing – and of course the socialist shadow chancellor does not want to create capitalists. The rest of his list comprised transport, communications and utilities, and so was aimed at the voter as consumer.

Frustration with privatised utilities is an English political phenomenon. The devolved regions have tweaked or escaped the worst excesses of Margaret Thatcher’s 1980s sell-offs.

Northern Ireland retains nationalised trains and buses, which are better than often appreciated. Water privatisation, ironically pursued by Labour, was placed in limbo by Sinn Féin – there are household water bills in theory, which Stormont pays in practice. How direct rule might affect this is going carefully unmentioned.

Northern Ireland’s electricity market is a successful privatisation, with meaningful choice at the consumer end and serious private investment at the producer end. However, the system contrived to achieve this is so arcane it just feels like confronting a government-corporate nexus. The gas industry is worse, with prices swinging around as firms misjudge the futures market, creating a public sense of low dealings in high finance.

Few remember the nationalised Northern Ireland Electricity Service (or “Nothing Is Ever Simple”, as it was known to its staff) with its strikes, power cuts and dreary ShopElectric high street chain, where paying your bill or buying an oven felt like applying for benefits.

In the mobile phone age, it is amazing to recall nationalised British Telecom, with its party lines, waiting list for a phone, “choice” of two models and even longer waiting list for an extension.

Share-owning democracy

What has mainly been forgotten, however, is that privatisation was barely about the consumer – it was about creating a share-owning democracy. For most of those who participated, this lasted a matter of days. People bought their allocated shares and immediately flipped them to institutional investors for a few hundred pounds. If those shares had been placed in Singapore-style lifetime savings accounts, we might have built more than a shallow consumer capitalism, now losing patience with cynical monopolies.

My father marvelled at his local Tesco, where the doors at the back opened straight onto the loading bay. To him, it was an extraordinary combination of efficiency and vulnerability

Nationalisation was barely aimed at the consumer either – it was about creating a worker’s democracy. That too lasted only a matter of days. Ministers in the 1945-51 Labour government were horrified as ungrateful employees in the newly nationalised industries refused to sit on committees and help run their enterprises, forcing the government to appoint professional boards. Union militants then seized the initiative, driving their industries and in time the whole British economy into the ground.

Presumably that is how McDonnell’s plan will founder – but how many people under 50 can picture this today? Union activity has been relegated to the public sector, where strike action is rarely more than a clerical nuisance. The prospect of the lights going off seems unthinkable.

Hedging stock

My father survived the 1970s by running his business along directly opposite lines to modern retailing. His storeroom was four times the size of his shop, allowing stock to be hedged against inflation and stoppages – ferries were part of nationalised British Rail and shipments to Northern Ireland were often interrupted.

In his retirement, my father marvelled at his local Tesco, where the doors at the back opened straight onto the loading bay. To him, it was an extraordinary combination of efficiency and vulnerability – a fragile consumer paradise.

In the UK we do not buy into grand ideologies of socialism or capitalism. We just buy stuff, while a battle of vested interests rages over our heads and the electoral pendulum swings in sullen reaction. Corbyn and McDonnell only have to ride it into Downing Street. Then we will learn, or rather not learn, our lesson all over again.