Why Nationalization should be at the heart of cutting our deficit
In the run up to the 2010 election George Osbourne Promised to have the deficit down to zero by 2015. Theresa May says that year will now be 2025. Labour will achieve a surplus without austerity.
The solution to our deficit is there, it’s bringing in industries to the public sector, but it means the loss of profits for our financial elites.
Ever since the Global Financial Crash Labour have been criticized as being careless with this nation’s economy, however it would seem Corbyn and Labour do have a model for reducing our deficit quickly, without the harmful effects of Austerity.
The secret to helping our consumers and fixing our deficit lie in reversing the harmful effects of Privatisation of key industries. The evidence for such can be seen across Europe, where Corbyn’s Social Democratic vision has already been installed in the Nordic nations.
Our nation’s deficit currently stands at £52 billion, Labour via Corbyn’s plan to take industries on board and bring about a large tax base are the best party to bring that down to zero.
Corbyn’s way to a government surplus lies in his most left wing policies. The nationalisation of Britain’s key industries: Energy, water, the Royal Mail and our trains. He also has plans to introduce public bus companies. Corbyn’s personal views also include having state owned banks, the government does have stakes in some high street names like RBS, and previously owned stakes in Lloyds. Savings also can be found in the NHS where the rot of privatisation is beginning to drain dry the pocket of the taxpayer and fill the pockets of large corporations.
Privatization has the support of the people and the savings to me made from an economic plan labelled insane, are truly remarkable. The numbers are alll here.
Providing water is the most obvious industry to be nationalized. The resource is vital to all humans and due to the infrastructure there is a natural monopoly. The regulator ofwat decides the prices and the corporations simply make the money. The consumer has no choice who to buy their water from yet under Thatcher’s government in 1989 English and Welsh water was privatized for a quick profit. Scottish and Northern Irish water still remains in public hands. The water companies in 2013 made £2.05 billion in profit. 7 of the 19 private companies paid no tax on those profits as well. These profits could be made by the community for the community instead of being sucked up by shareholders.
Another industry Corbyn pledged to nationalize was the energy companies. Despite those who live in Calais are 24 miles from a place where this exists, France. Corbyn’s claims were branded as a fantasy. Energy prices have been rising dramatically ever since the Tories took power and even Theresa May moved to stop that rise. May pledged to copy Ed Milliband’s price freeze proposal but has since U turned and let British Gas up it’s electricity prices by 12%. With market regulation failing nationalization looks like the only option. The Big Six energy companies made aggregate profits of £2.55 billion in 2015, a decline on the profits registered in the years following the financial crisis. Labour only want to partially nationalize Energy companies to help reduce fuel poverty in the UK but nevertheless their is large financial incentive in having the energy companies in public ownership should the government want to run them for profit.
The most recent privatization to be made by our government was Royal Mail. Prompting Dennis Skinner’s infamous quip to Blackrod in 2013, “Royal Mail for sale, Queen’s head privatized”. The Royal Mail was sold in 2013 for £3.3bn. Shares in the company then rocketted 40% in the same day, and calls for Vince Cable to be sacked as business secretary emerged. Labelled a conspiracy against the tax payer, Labour are keen to undo the mistakes of the coalition government. The Mail recently posted Profits of £335 million in 2016. Yet more money that has been siphoned off from the public.
However the large saving are to be made in the NHS, which the Tories are selling off bit by bit under our noses. Total spending by NHS into non NHS services is now at 10.9%, and with Theresa’s May support for the Naylor report we could see more of our health service put into private hands. Privatization has only made the service less efficient and the money wastes is substantial. The main loss for the taxpayer is via PFIs, Private funding iniatives, that were started by John Major’s government but continued by all governments since then. PFIs cost the taxpayer £6 billion a year. They are a financial disaster. However they are not the only sector of the NHS that has been sold off and is now costing us dear. In the recent £2bn injection of funds to the NHS, £901 million went to private companies rather than front-line services. We can see from PFIs that in the long run these private contracts will only lose us money. Corbyn’s pledge for a 100% publicly run NHS seem to make lots of sense. The actions of previous governments have cost the taxpayer huge chunks of money.
Whilst not in Labour’s manifesto, Corbyn believes some banks should be in public ownership. Most people would disagree with this until they realise what benefits it allows. We currently have RBS in public ownership. It has made £940 million in profit this year despite facing a large legal costs, £396m, over mis-sold US mortgages when it was owned by the private sector. If RBS continue to make profits at this rate it could make £2 billion in profits this year. The bank is 72% owned by the tax payer. However the government did formerly own a 43% share in Lloyds, rescuing it after the financial crisis. Once it began to make profits Osbourne sold it off. The bank made £2.5 billion in profit in the first 6 months of this year despite setting aside £350 million for PPI costs. If the taxpayer still had it’s stake in Lloyds it would have made £2.15 billion this year from it’s profits.
The private trains companies made £407 million in profit last year. These are mainly foreign governments state owned companies, like Abellio who run Scots Rail, but also large private companies like Virgin. The taxpayer pays £4 billion every year on rail infrastructure, as this is nationalized, but leaves private companies to make the profits off them. And the British state owned franchises operate a better service than private companies, Transport for London being the best example of this. There are few places in British politics were corporate interests are so blatantly obstructing the will of the general populace. Especially considering we can take them on for free once the private franchises expire, and make these profits without additional borrowing. Nationalizing the trains is a no brainer.
When we witness the huge expenditure we pay every year to fill the pockets of corporations you wonder where the claims that a Left wing government would bankrupt this nation come from. When we see the financial benefit nationaliation can bring the state, will we continue to call plans to do so economically naive?
The final figure: £13.5 Billion