The Labour Government

[Kompany Car]

The whole system of franchises running at wild profit though is sometimes far-fetched because wasn't Arriva Northern nationalised because it was effectively bankrupt?

The Northern services have been nationalised for nearly 4 years now, has anything changed for the better yet?

Government policy so far has been to run down the franchises and then take over them. I haven't seen much about a unified infrastructure or system which is the real benefit of nationalisation. Maybe that dream is just decades and billions of pounds away (as usual).

It was essentially mismanagement which sank Arriva Northern. They committed to a timetable which their trains and drivers couldn't support leading to shed loads of cancellations and penalties. They then entered into a dispute with the unions over staffing levels leading to strikes. The trains they procured from CAF in Spain were delivered 1 year late and had no end of teething problems because the designer (which as always was not the best placed but the cheapest) didn't understand UK infrastructure properly.

Yet they were still providing a dividend yield to shareholders of around 7%. For reference the average across the stock market is between 2 and 5%.

Sure fire way to go bust.

It was handed back in a much worse state than when Arriva Northern were given the franchise.

As regards unified infrastructure, the rail spending programmes aren't correctly organised, they spend money patching up bits of the network to try to increase capacity but dont commit, certainly anyway outside of London to serious transformational infrastructure. Crossrail in London cost a fortune and overspent, yet it was seen as necessary, if it would have been in the North it would have been cut back to just a few enhancements.

 

[hampshireblue]

I’m amazed you carried on for as long as you did. An exercise in futility,

A bit like asking you for your conclusions on reforming the benefit system. It's only been 12 days since I asked you. I expected it to be easy considering most of the recipients are, according to you, scroungers.

 

[Alan Harper's Tash]

A bit like asking you for your conclusions on reforming the benefit system. It's only been 12 days since I asked you. I expected it to be easy considering most of the recipients are, according to you, scroungers.

He keeps debating with himself in the mirror, but losing; hence the delay.

 

[west didsblue]

A bit like asking you for your conclusions on reforming the benefit system. It's only been 12 days since I asked you. I expected it to be easy considering most of the recipients are, according to you, scroungers.

It’s funny how, according to him, all recipients of benefits are scroungers except for recipients of the WFA. I wonder why that is different from all the other benefits…

 

[threespires]

So privatization is not perfect either, I get that. My perspective however is that it is easier to fix that to fix the issues above in the public sector, which IMO can never be fixed, they are intrinsic.

Just some food for thought on this. You mentioned in a perfect world nationalisation would be good but we don't live in such a world. Similarly for the profit motive to truly work as an efficiency driver you need the theoretical model of a fully competitive market. Parking whether such a thing can actually exist, I think the reality is that the form of capitalism we have gravitated to over maybe the last five decades has pulled us much further away from that idealised fully competitive market that might in theory drive that efficiency. Be it manipulation of the political sphere to enable the socialisation of private risk, monopolistic or rigged markets, or other ways of loading the dice and issues such as rampant short termism, market imperfections are on the rise typically by design. I think the de facto way of thinking within capitalism has mutated in a way that has relegated the idea of real "competitive efficiency" to an afterthought for the vast majority of companies, certainly outside of retail but even there. That's before you get to the fact that Smith's Rational Choice Theory on which much of the profit motive is based is increasingly viewed as either an over simplification or just wrong.

So I would argue that the problems/dysfunction in how the private sector operates in practice, are such that it is no more intrinsically capable of addressing the issues. In fact when you factor in the globalisation of markets it may well be easier to fix the problems within the UK public sector than try and fix the version of global capitalism that is currently in the ascendency. Obviously the UK public sector doesn't exist in a vacuum outside of that global economy but nonetheless greater control should be possible.

I've worked for and in both private and public sector organisations across my working life and have regularly seen eye watering amounts of money wasted/syphoned off in private sector contracts for public services, along with equal wastefulness in public organisations. For what it's worth I'm not convinced success is achieved through adherence to one ideology or another. It's about multiple factors such as clarity of vision and quality of leadership and governance, none of which have to be a function of ideology.

 

[Chippy_boy]

Just some food for thought on this. You mentioned in a perfect world nationalisation would be good but we don't live in such a world. Similarly for the profit motive to truly work as an efficiency driver you need the theoretical model of a fully competitive market. Parking whether such a thing can actually exist, I think the reality is that the form of capitalism we have gravitated to over maybe the last five decades has pulled us much further away from that idealised fully competitive market that might in theory drive that efficiency. Be it manipulation of the political sphere to enable the socialisation of private risk, monopolistic or rigged markets, or other ways of loading the dice and issues such as rampant short termism, market imperfections are on the rise typically by design. I think the de facto way of thinking within capitalism has mutated in a way that has relegated the idea of real "competitive efficiency" to an afterthought for the vast majority of companies, certainly outside of retail but even there. That's before you get to the fact that Smith's Rational Choice Theory on which much of the profit motive is based is increasingly viewed as either an over simplification or just wrong.

So I would argue that the problems/dysfunction in how the private sector operates in practice, are such that it is no more intrinsically capable of addressing the issues. In fact when you factor in the globalisation of markets it may well be easier to fix the problems within the UK public sector than try and fix the version of global capitalism that is currently in the ascendency. Obviously the UK public sector doesn't exist in a vacuum outside of that global economy but nonetheless greater control should be possible.

I've worked for and in both private and public sector organisations across my working life and have regularly seen eye watering amounts of money wasted/syphoned off in private sector contracts for public services, along with equal wastefulness in public organisations. For what it's worth I'm not convinced success is achieved through adherence to one ideology or another. It's about multiple factors such as clarity of vision and quality of leadership and governance, none of which have to be a function of ideology.

Good post IMO and much to reflect upon.

I certainly agree that short-termism of management and their objectives has been a huge inhibitor.

 

[bluethrunthru]

Good post IMO and much to reflect upon.

I certainly agree that short-termism of management and their objectives has been a huge inhibitor.

Its the scourge of so many parts of modern life. Look how many ministers the last burned through in various posts since 2019 and its the same in business.

The place I worked at there were two things that your post brought immediately to mind -

one was where they recruited a senior manager who was well known in the industry to be a cost cutter - he was known as the Axe Man. He came in and within a month half of his workforce was put on notice of redundancy - once completed he left. Clearly he had been in possession of information prior to appointment for him to understand the business and do what he did. He left his poor successor a poisoned chalice as the retained workforce had little trust and motivation to work hard for the organisation.

The second happened to me. We got a new leader who - at great cost - got the entire workforce off the road for at least a day ( some had to travel the day before and stay over).
We were given his 5 year plan - his vision - for the way forward. He left within 3 months for another business for a "better" job and that plan was never ever mentioned again.

 

[hampshireblue]

In a perfect world, I would absolutely be all in favour of nationalised businesses that ran super efficiently, had employees really motivated and prepared to go the extra mile, totally focused on delivering fabulous services AND focusing all their returns on continuing improvement. Wouldn't that be marvellous.

I am 63 years old. I have never seen such an organization because no such organization can exist. It is fantasy.

I don't want my post to be too long, so I will try to keep it brief but my issues with state ownership include:

1. A false belief that the government or government appointed people can run businesses better than executives in the private sector.
2. At the core, a deep-seated lack of care as to whether the organization is delivering or not, because there tends to be little or no consequences for poor performance.
3. A lack of desire to go the extra mile, work late, work weekends, strive to be better because their tends to be insufficient reward for doing so and no pain if you do not do so.
4. Poor productivity with people not working hard enough, leaving early, taking too much time off sick.

In short, the end result is they deliver a Lada not a BMW.

Privatiztion solves the above with its desire to maximise profit through higher sales, higher market share, better service, lowest cost. People in private businesses need to work hard or ultimately they lose their jobs. Unfortunately, that same profit desire will if not properly channelled also drive companies to cut costs to the extent of ruining the service, if there is no disincentive from doing so.

So privatization is not perfect either, I get that. My perspective however is that it is easier to fix that to fix the issues above in the public sector, which IMO can never be fixed, they are intrinsic.

EDIT: This should go without saying but I will say it anyway else some people get the wrong idea. OF COURSE there are many people in the public sector who work tremendously hard and do well all the things I criticise, and there are many idle and incompetent twats in the private sector. I am talking about a generalisation, a general theme which typically affects organisations.

I'll address the bold part. I worked for a safety based business that went from public to private ownership in the early 2000's. It was a controversial political move as it was actually Labour who pushed it through. The mantra was that we were to be a "not for profit" organisation. Prior to privatisation we weren't, admittedly, the most efficient outfit staff numbers wise ( once valid, most people didn't leave as it took 3+ years to qualify) but we got the job done with little or no industrial relations issues depite there being a 95%+ membership of the union. The management were ,in the main, ex operational people who understood the operation and to a big degree what made their highly trained and skilled staff tick. In return, staff took alot of pride in what they did and many were valid on more positions than they needed to be. The quid pro quo was for example, leave and the like were managed on watch by the staff. Management didn't get involved as they recognised those who actually knew the day to day were those very people on the shop floor. There was even a system of getting people off shift a bit early if there wasn't demand for all of the staff, but never at the expense of getting the job done. Sickness levels were about half of the national average. Point4 above is dispelled

then came privatisation:

The private company was established with a botched ownership, including a group of customers, a small staff shareholding and a golden Government share. The company was also heavily indebted right from the start as it was forced to take over its' own pension liabilities right from the start. Its' income was also down as the privatisation went through shortly after 9/11. A new CEO was brought in. He was out of his depth as he didn't actually have a clue what the operation entailed but he was supported by mangers who still did. This continues to this day. A number of CEOs out of touch with the core business have come and gone. What has changed is that the managers beneath have now retired and so almost all of the senior mangers now have no operational experience. Point 1 above dispelled
The bean counters slowly took over. Staff numbers reduced but people were still happy to hold more validations than were required. There was still a benefit to doing so as it allowed flexibility around leave both long and short term and rostering. But of course what happened was that management started to abuse the two way flexibility. Eventually leave had to be booked nearly a year in advance,little short term leave was approved,and the ability for people to leave a bit early diminished even in the winter when the workload was low. But staff numbers were cut too far and eventually, on many occasions staff were asked to work beyond their shift length. Many did so initially but as time went on the goodwill was curtailed. Staff realised the management were now gettting most of the benefits from the flexibility and many decided to revert to doing only what was contracturally required. Guess what-the operation could now no longer run in the busiest periods without the need for overtime. So goodwill was pretty much dead and voluntary overtime was being paid at a high rate. Sickness rate also climbed as fatigue became an issue. The desire to go the extra mile, work late was destroyed-by the bean counter management. Point 3 above is dispelled

Every single member of operational staff I came across were proud to do the very best they could on a daily basis. If they got it wrong, the travelling public were put at risk. Poor performance was addressed quickly and re-training brought in for the small number who fell below the required standard. Point 2 is dispelled

The not for profit lasted about 2 years. Dividends have been paid almost continuously for 20 years, the staff shortages continue, people are leaving as soon as they can afford to and about 5 years earlier than they used to, the much needed overtime is now at an eye watering level and the CEO is on over £1m per year.

The union membership is around 98% in a private company. Unheard of these days but without it things would have been even worse than it has turned out. It was all done, somehow, without any major industrial action.

 

[KS55]

Surely the most potent argument against nationalisation is that it leads to lack of investment. No gov is going to increase investment in, say, the railways in preference to health care. They would lose votes. The history of nationalisation is precisely that, a lack of investment. Water, for eg, was privatised because the sewers were falling apart and had no significant investment for 100 years.
I don’t care whether services are public or private, so long as the service is adequate. My solution to this dilemma is to take investment decisions out of the budget and place them with an independent commission the decisions of which the gov of the day must follow or answer to the commons.
There is a body called the House of Lords which, suitably reformed, could accomplish this task. Unfortunately all parties in the commons are loath to give away power.

 

[metalblue]

It was essentially mismanagement which sank Arriva Northern. They committed to a timetable which their trains and drivers couldn't support leading to shed loads of cancellations and penalties. They then entered into a dispute with the unions over staffing levels leading to strikes. The trains they procured from CAF in Spain were delivered 1 year late and had no end of teething problems because the designer (which as always was not the best placed but the cheapest) didn't understand UK infrastructure properly.

Yet they were still providing a dividend yield to shareholders of around 7%. For reference the average across the stock market is between 2 and 5%.

Sure fire way to go bust.

It was handed back in a much worse state than when Arriva Northern were given the franchise.

As regards unified infrastructure, the rail spending programmes aren't correctly organised, they spend money patching up bits of the network to try to increase capacity but dont commit, certainly anyway outside of London to serious transformational infrastructure. Crossrail in London cost a fortune and overspent, yet it was seen as necessary, if it would have been in the North it would have been cut back to just a few enhancements.

Yeah but apart from all that?