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Privatisation debate: long-term market share v get-rich-quick barrow-boys

British Leyland and Del-BoyThe Tories have always boasted that privatisation of major industries has been good for the economy and good for Britain. A rain-check on the history of Thatcher’s mass programme of privatisation now suggests otherwise. Who thinks the privatisation of energy, or of water, or of telecoms (or of the Post Office) has been a roaring success either for the economy or for consumers, as opposed to an opportunity for exploitation and a rip-off for customers? Much less mentioned, but equally if not more significant, is what has happened to the privatised car industry. It still suffers from a massive trade deficit, with £48bn of vehicles and parts imported last year – that is nearly half of Britain’s net manufacturing trade deficit – with profits and control lost abroad probably for ever. A worse deal than that is difficult to imagine.

Blair’s support for privatisation allowed the former British Leyland to collapse in April 2005, leading to the loss of 10,000 jobs in and around the Longbridge plant near Birmingham and in effect to the demise of British carmaking. It is true that, under foreign ownership, production has risen from a low in 2009 of fewer than 1m vehicles to more than 1.5m vehicles last year, 80% of which were exported. Sunderland now makes more cars than Italy. But there are now Indian, Japanese and German owners so that the UK car industry now serves the interests of its owners and their countries, not the fundamental UK interest. Indeed there have long been concerns about a hollowing out of the supply chain and the average local content of vehicles assembled in Britain is about a third only, compared with about two-thirds in Germany. In the past 20 years Britain has lost almost all its large top-tier suppliers – Dunlop, Lucas and Automotive Products – which all but disappeared. leaving only GKN as a leader in power-train technology.

A classic example of what has been lost by Tory policy in treating world-class British companies as baubles for sale in the international market to the highest buyer, irrespective of the loss to the British economy, concerns the electric supercharger. It was conceived in Essex and is British innovation at its best. It will soon find its way into top-end cars. Sadly it is now French. Valeo, the French automotive supplier, bought the technology from Controlled Power Technologies in Basildon in 2011. This e-supercharger is just the last in a long line of great British inventions where the UK has led the world, but because the industrial structure into which it needs to be fitted has been sold off, it ends up in foreign hands to the permanent disadvantage of Britain. What is needed is builders of long-term industrial market share (Labour), not get-rich-quick barrow-boy salesmen (Tories).


  1. Robert says:

    Three terms of a labour government and we lost the Post office OK partially, the Royal mint, and labour were willing to flog off the Royal Mail and the NHS.

    So moaning about the Tories is a bit rich.

  2. David Pavett says:


    Also Labour, having argued against PFI when in opposition enthusiastically backed its successor PPI with disastrous long-term consequences. Labour promoted private intrusion in the NHS. It also started the move to educational privatisation through sponsored academies. Labour even privatised defence research and spoke of this as a “model for future privatisations”.

    So yes, there is a problem with speaking of privatisation as a Tory phenomenon. Not only has Labour embraced it in practice but in theory also with its adoption under Blair of the idea of the “enabling state” which facilitates the work of private providers rather than acting as a provider itself thereby, among other things opening up central and local government to outsourcing.

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