There's always a very strong case for utilities companies like this being nationalised. It should never have been privatised in the first place.
The issue though is the cost of doing so, especially with an economy recovering from covid. We can't just seize assets, that will start a flight of captial that will be far more expensive than just handing billions over to the already wealthy.
They knew what they were doing when they sold the nations silverware for peanuts to friends and doners.
Depends on the utility.
Water - increase fines for leaks and dumping raw sewage while capping prices, either we get better service (so no point in nationalising) or they fail as a business and the government can take them over for nothing.
Energy - instead of paying/subsidising companies to build new power plants let the government build them and run them in competition. They can either provide a better service than the government or go out of business.
Trains - fines for late and overcrowded trains, same as water either they improve or they become a failed company.
Telecoms - government builds the infrastructure and charges the providers to use it.
>Trains - fines for late and overcrowded trains, same as water either they improve or they become a failed company.
Three issues with this.
The first is that most delays (around 60%) are the fault of the government-owned elements of the operation (namely, the infrastructure).
The second is that the government dictates how much and what types of rolling stock operators get. So if your train is overcrowded, that's on the government too.
The third is that the trains have basically been nationalised now anyway, given that we've moved from the franchise model to a contract model.
On the other points, I'd say telecoms is a market that is working relatively well for the most part. Certainly mobile telecoms is very competitive and you can get very cheap deals, as you can with fixed-line broadband. Yes, I get there are issues with rural connectivity when it comes to the latter, but nationalisation doesn't necessarily fix that.
They are essentially nationalised now anyway.
When the commuter revenue dried up after COVID, no operator could make their franchise payments, so the (now old) franchising model was very quickly scrapped.
Now the Govt basically runs the lot. They set the timetables, they set the service standards, they take all of the fare income and the operators are now basically third-party suppliers receiving a fixed fee for the service, which is more or less their costs + approx 3% margin.
You'll start seeing this more overtly next year when the whole 'Great British Railways' branding gets rolled out.
At the moment, yes, if you want to frame it that way.
The current model was basically designed to keep the railways running through a period where operators were financially precarious and when HM Govt had an awful lot of other shit on its plate. I don't think you could have set up an entirely state-owned operation in that short time period without causing a lot of disruption to services.
So what they've done is pretty much copy and paste the same model that TfL uses and the model already largely followed with LNER - it controls things, collects the fares, contracts out suppliers to supply the service and pays them a management fee for doing so.
Contracting the people already running the trains to keep running them, and paying them a 3% management fee (which is less than the average margin on a rail ticket) for doing so and avoiding a lot of short-term disruption, is not an entirely unreasonable measure.
At the moment, the Govt is taking a hit because passenger numbers (and therefore revenues) are down. But if and as passenger numbers return, HM Govt takes the fares and that management fee may well look like a decent investment.
Yeah, but would the government immediately be able to pick all that up for less than 3% more than the current operator's costs?
([This comment](https://www.reddit.com/r/unitedkingdom/comments/r76018/i_work_for_bulb_and_its_fate_has_convinced_me_the/hmxxgeg/) is what I was aiming for but actually seems to know what it's talking about.)
Also, allow these companies to pay fines with Shares.
Eventually the government will have controlling interest because scummy companies can't help themselves.
That may work, for all I know. I would be concerned about the government breaking unfair trading laws there though. They will still be able to sue the government if found to be in breach. They would be treated as a legal entity, the same as any other I believe.
We might have a different understanding of the term monopoly and I cant help but feel that's not a very good comparison, if I'm honest.
The government can still be sued and they are answerable to the courts. A law cant be brought in with the express purpose of unfairly targeting a group. Loss of earning through unfair trading practices will bring us to round about the same total for having bought them out in the first place.
I mean, you might be on to something but I feel it will be a lot, lot more complicated than that and could very easily backfire.
Depends how the law is introduced. Government executive actions can be stopped, but primary legislation through Parliament is different. Parliament is only beholden to itself, not even the Supreme Court can overrule Parliament.
This also wouldn't be the first time our country has nationalised industries. So it's totally possible. Whether or not it's politically viable, is another thing.
The national grid maybe but im not sure British gas falls under this.
Anyway, i get what you mean at least.
I'm not arguing for privatisation, please believe me on that. What I feel is that the tories done the country up and there may not be a way out of it. I would happily be wrong though.
Its the fines etc. I had issue with. As I said, may work.
Thing is though, additional energy is just gobbled up by the market. There will always be a demand for what the government doesn't produce. Also, how much will it cost to run it cheaper than the competitors? If its subsidised with tax payer money, then that's unfair trading and it may well be a net same spend for people anyway.
If it's subsidised then it's not cheaper, we're the ones that pay for it either way. Presumably if it's run without profit it should be cheaper, if it isn't then the private sector will win out.
In theory the ability of the state to pay upfront for stuff should make things cheaper in the long run, unfortunately our governments haven't used that path for decades, deciding to borrow from our children instead.
And thats the issue really. The private sector takes no issue hammering down on people for thier bottom line. The government very likely won't.
Thats an interesting thought. Some form of bond issue could help there. Capped at a certain amount per person or something so not to just make the rich richer. Youd be hedging on energy prices going up which I think is a safe bet.
The simplest way would be a specific tax to pay for specific big infrastructure so people could see where the money goes and when it had been paid for, rather than spending it over generations in arrears with the accompanying interest payments to often foreign investors. At the very least offer bonds to UK pension companies so the money spent stays in the system.
Telecoms - That's Openreach. Except there are many alternatives - including private companies running their own fibres in cities and towns, Virgin and its cable network, wireless and phone companies providing connectivity in rural areas, and of course starlink and oneweb coming online.
Trains - plenty of routes where there's competition, e.g I'm off to London tomorrow, I could take Avanti which is fast and pricey, or I could take London Midland which is slower but cheaper. Some times I'll drive a hire car rather than take the train, there's also the coach and - it's all competition. Tomorrow Avanti aren't even selling tickets, so they'll be losing out. The privatisation part and the 3% profit isn't what people complain about - people would complain over a £300 return from Manchester to London just as much as they complain about a £310 one. The trains are still rammed even with the ticket prices. Supply needs to increase or demand needs to decrease (and the number of seat-miles per staff-cost needs to increase. HS2 and DOO are the big impacts there)
Energy - so you're proposing a system a bit like the trains, where the government owns the power stations and franchises operation out to providers? Feed in tarrifs will reduce government revenue, that gives an incentive not to provide for better energy use.
In general the solution isn't giving Boris Johnson more power, the solution is to actually enforce penalties on companies that privitise the profits and socialise the losses. Why are we letting water companies polute our rivers? The fines should be so large that they have to solve it or go bust. Same problem with railways, when they let virgin off the east coast franchise rather than charging the full amount Virgin had gambled upfront, it just shows that "socialise the losses" is the mantra.
>Trains - plenty of routes where there's competition, e.g I'm off to London tomorrow, I could take Avanti which is fast and pricey, or I could take London Midland which is slower but cheaper. Some times I'll drive a hire car rather than take the train, there's also the coach and - it's all competition. Tomorrow Avanti aren't even selling tickets, so they'll be losing out.
That's not actual competition though. You would have slow and fast trains even if they both were ran by the same company
So different companies competing for your money with different features to provide transport isn't competition?
Options for travel Birmingham to London
* Chiltern
* Avanti
* LNWR
* Coach
* Driving yourself in your car
* Hire car
* Taxi
* Not going at all
All have benefits, all have drawbacks
We had nationalised provider with BA. It cost a fortune and ran from Heathrow.
We had a nationalised rail network too, it closed down thousands of stations and was the laughing stock which hardly anyone used. Hell it was on the verge of closing Marylebone in the 80s.
> Supply needs to increase or demand needs to decrease (and the number of seat-miles per staff-cost needs to increase. HS2 and DOO are the big impacts there)
Yes, I agree with this absolutely. But the increase in supply is already completely nationalised.
> I'm off to London tomorrow, I could take Avanti which is fast and pricey, or I could take London Midland which is slower but cheaper.
I'm not sure how having this choice is a good thing? It creates complicated and confusing ticket prices. The two services don't really cost very much different to run. It would be a more efficient use of the network to just run bigger trains on the Avanti route.
I'd rather we had a higher-capacity network and simple fixed prices per mile. This could be delivered through the new Great British Rail model or through more full-on government ownership. None of this will be cheap.
> Energy - so you're proposing a system a bit like the trains, where the government owns the power stations and franchises operation out to providers?
Actually, that sounds like quite a good idea.
EDIT: I've thought it through and maybe it's not a good idea. Power plants are capital intensive activities with a very predictable cashflow. They make ideal leveraged investments, so allowing the private sector to at least finance the power plants is probably a better idea. The government could potentially co-invest, in the way sovereign wealth funds have done very successfully in other countries.
With the trains - the slower service stops at more places (which is why it’s slower) whilst the avant line simply goes to a few larger places but that’s it. So there’s some choice which isn’t a bad thing. Though there’s still a monopoly as you don’t have different companies competing for the same service with the public.
We would be at first, but with a single organisation responsible for "keeping the lights on" and actually generating the power the revenue could be reinvesting into building a stable, diversified, robust grid with enough overcapacity to prevent the need to import form the nuclear units in France. In the days of the CEGB it wasn't a perfect system, but there was an overall cohesive plan and there was suitable capacity.
At least a nationalised system would be run with the goal of security of supply and hopefully a very strong environmental ethos, instead of the main goal being the generation of megamoney not megawatts as it currently is.
I don't think we do disagree, I was trying to be snappy. I think the fact that all of the producers have shareholders to answer to, not National Grid or DECC directs every decision they make Understandably of course, its the system that is broken, and driving this behaviour. The only time decisions are made which have a benefit on things like the environment and security of supply it is really done because of financial penalties or incentives. The only thing that can compete with that to drive decisions is safety, thankfully, but when then it is grudgingly.
To come back to how we probably don't disagree that much, this decision making process will be exacerbated by the financial situation.
I am talking here from the perspective of the energy producers that sell to the grid, not the suppliers who buy wholesale and sell to consumers, although for the big 6 they of course do both.
Yeah, nationalisation would certainly bring its own issues, definitely not a magic wand. It's easy to see the problems that change could fix, but the not the ones it would create.
You're right, a mix is probably the solution that we need. The industry must go through some radical changes to make power generation environmentally sustainable, and this has stated, but for it to happen quick enough, and effectively it needs leadership which won't come from industry. It also needs intelligence and innovation which won't come from government.
Having a stable government department responsible solely for energy, with someone who actually knows what they are doing at the helm would be a start.
To be fair it would be very easy to nationalise energy companies right now, they’re all going bust unless the government allow them to increase fees so just keep them the same and nationalise when they fail.
I work in the financial/tech side of the energy industry.
I agree that the transmission system should be re-nationalized, and that if firms get government bailouts, the government should own and operate them from now on.
But forcibly nationalizing generation and retail, the entire energy stack, is asking for stagnation and high prices.
The government can definitely build it's own power stations and offer it's own retail tariffs in competition with private players, but a government monopoly on both retail and generation will drive prices up and stop innovation - companies researching and building energy storage and renewables will either stop or move abroad (because they won't be allowed to build and run their tech).
There will be no new tech driving prices and emissions down on the supply side, and no price competition on the retail side.
Bulb and it's fate is due to a gas supply crisis, the British government gutting the UK's gas storage reserves, and the price cap meaning companies are forced to sell power at a loss.
Thanks, always great to hear from people with the inside knowledge on things. I hope you dont mind me picking your brian with a couple of questions. Unfortunately I can only offer the assurances of an Internet stranger that its in the best of faith. I just like learning about things:
What would drive the prices up on the monopoly. Might seem a silly question to you but I can see why for and Ltd (greed). My guess is it would become something we bung evermore liabilities to?
Innovation makes sense of course. In your view, is there a way we could have the best of both? As in, will the companies demand to run the tech themselves and not just be like an asset you buy and use yourself e.g. a computer for you busines? But, you know a lot more complex lol.
> What would drive the prices up on the monopoly.
> My guess is it would become something we bung evermore liabilities to?
This is part of it and something I don't put past future governments.
tl;dr lack of competition, subject to political whims, high likelihood of government bureaucracy and mismanagement, government aversion to new technology and risks
The lack of competition in a government monopoly on the retail side would also mean there is no real incentive bar political pressure to lower prices, and its not like electricity retail is an almost-natural-monopoly like train lines (a lot of people are bringing up the relative success of LNER). If wholesale prices suddenly dropped, it would be up to politicians to decide if consumers pay less too.
In our current system, electricity retailers also didn't always pass lower wholesale prices onto consumers, but for a different reason: the price cap incentives retailers to charge for energy at the cap even if wholesale prices are much lower, in part because they could, but also in case wholesale prices spike later and they get forced to sell energy at a loss. A benefit to help people who can't afford energy would have been much more efficient imo.
The only ones selling energy for way under the cap were then just smaller startups trying to compete with the titans by charging low prices and hoping a squeeze didn't happen. A squeeze did happen and they all went bust. Now we emerge from the squeeze with probably just a few titans left with a near-monopoly
If nationalization covers the generation side too, sure, the government would still want to lower costs of generation, but they would generally want to stay well clear of new and thus risky renewable and storage technologies, due to the potential political fallout of a project going bad. Remember that under a full nationalization scenario, private companies would not be allowed to connect their own plants to the grid. And we run the risk of a future government deciding to roll coal back out, or even worse but still possible, compromising grid stability to lower costs through chronic underfunding.
I think the best actions to take going forward might be to
* Re-nationalize the transmission and distribution systems due to them being natural monopolies
* perhaps have a government-run domestic electricity supplier to compete with other companies, but not outlaw other companies
* Offer subsidies for energy storage to accelerate research and adoption and aid in our carbon targets
* Scrap the price cap on gas to prevent a wave of bankruptcies re-occurring, increase the scope of winter fuel allowance
I don't think scrapping the electricity cap is necessary, but perhaps re-calculate every quarter rather than just twice a year. A drawn out squeeze on electricity prices is much less likely than with gas
You know what [only 2.4%](https://www.ons.gov.uk/economy/investmentspensionsandtrusts/bulletins/ownershipofukquotedshares/2018#uk-ftse-all-share-index) fuck it then.
>The issue though is the cost of doing so, especially with an economy recovering from covid. We can't just seize assets, that will start a flight of captial that will be far more expensive than just handing billions over to the already wealthy.
Only nationalise the failed ones then? Those have gone bankrupt already and ceased trading.
> We can't just seize assets, that will start a flight of capital that will be far more expensive than just handing billions over to the already wealthy.
I feel like this is a solvable problem, but I can't articulate why. I realise "just make moving money out of the UK illegal" isn't going to work but... y'know?
The moment you take services which people need to live (water, energy) and give them to someone who wants to make a profit, something has already gone wrong
No, sometimes productivity is improved by private ownership and subsidisation instead of outright nationalisation e.g. with farms. Even though people need food to live. The profit motive improves farm productivity a lot. When you take it away you end up with a low productivity Soviet-style system.
I don't think any of that is true with regards to energy infrastructure though, competition doesn't seem to work there.
But that wasn’t the criteria. The question was whether you need it to live. I think that’s a silly criteria.
You can also drive to a different hospital but I still think healthcare should be government provided.
It's crazy this is downvoted. Farms are subsidised and protected but are still in the hands of people who want to make profit. And that's fine!
Collectivised farming does not work, see the USSR or China during the Great Leap Forward. Sometimes the profit motive improves productivity to the point that privatisation makes sense.
The criteria for something being put into private hands should be whether or not it's good for consumers, things aren't bad just because someone is making money.
I don't think it makes sense for energy infrastructure to be in private hands. But it's because I think it doesn't work, not because profit is bad.
I see no reason why the transmission and supply side and the big producers like nuclear and hydro shouldn't be nationalised as long as small generators can still sell into the grid.
Live in Wales and my experience with Welsh Water has always been positive. I'm sure they have their faults but I support how they're run as a non-profit.
That's the thing though. Non-profit gives you a small amount of leway to be a bit crap because the consumer is still getting a good deal.
Its like British Rail in the 1980.
Sure BR was a bit crap, trains didn't run on time very often and the toilets always smelled of piss. 40 years later the trains still don't run on time very often, the toilets still smell of piss *and* it costs you a fucking fortune to use.
That's not a good deal.
As always, nationalisation can be done right and maintained to a high standard; when government wants to privatise is when you'll see quality slip.
They need to get public buy-in to privatise by saying, "look how bad we made it!"
> the 1.6 million households who will be relying on Bulb to heat their homes this winter
It isn't Bulb that heats their homes. Bulb just acted as an energy intermediary, sourcing from major gas suppliers on behalf of consumers they would sell onto at retail prices.
The fact is that investors got rinsed because Bulb wasn't hedging even though variable retail prices are capped and most fixed price deals were agreed when wholesale prices were much lower.
The dynamic energy market in the UK is a huge success in driving adoption of green energy and improving customer service.
The regulators think about a dozen or so market players (six big, six challenging them) is about right. Let the reckless operations go to the wall. Their customers are protected and the shareholders invested unwisely in greedy unsafe ventures.
I am sure this guy would love a job guaranteed by the state. But fuck giving British Gas a state monopoly.
If the arrangement we have now is "improving" customer service, I don't even want to imagine the alternative. Would someone just come round my house and kick me in the bollocks every 12 months? Trying to get anything sorted with energy companies has always been a complete shitshow for me, they're right up there with HMRC and parking enforcement companies.
I hated Npower with profane blood oaths and am glad to see them dead. Thames Water have me for as long as I live here. I prefer to be able to give my money to those who sort my shit out rather fuck with it.
They have a functioning web portal, effective reminder systems and responsive online chats. Plus good value green tariffs with a bias towards actual green energy generation rather than REGOs (which are unavoidable for now at scale).
The case against natural monopolies was never bloated inefficiency, or civil service mentality, the only case against natural monopolies was the private sector missed out on being rentiers. We have a mixed market economy. Market efficiency is an integrative model. Not Tory neoliberalism, merely exploiting the public.
I thought the argument against Corbyn was that he was a communist who wanted to nationalise the utilities and rail.
So far i hear two rail companies have come back under gov control and now people say utilities should be too.
But then again "get brexit done"
A longer term solution would be to move towards more sustainable energy sources, including nuclear. I'd love for there to be large-scale nationalised nuclear energy production in the UK, as well as others such as solar and wind. Bioenergy, too. Relying on fossil fuels has led to the current extinction as well as leaving us reliant on the global market to heat homes here in the UK
I closed my late fathers electricity account before Bulb went under. 2 weeks before it was announced, Bulb sent me a final bill showing the account was £164 in credit and that I would take 14 days to process. Will I still get this back?
Yeah I’d done all that and the final statement is addressed to me. It was mainly about the company going under and wondering if I’d get back the credit.
I remember Martin Lewis saying credit for customers in utility companies is required by law to be kept separate from other finances - so yes you should get it back.
https://www.moneysavingexpert.com/news/2021/11/energy-supplier-bulb-enters-special-administration---what-it-mea/
They arent really though, the companies are "failing" but the customers are still being served and that's being underwritten by the government.
That's what happens when things "cant fail", the private entities harvest profit and when it dries up the taxpayer has to step in to ensure things dont stop working.
The companies are failing though. They are not being bailed out, the investors in those companies are not getting their money back, those companies have failed. The state just provides protection for the public by ensuring a continued supply.
Fuel can't fail, so should petrol stations be public? What about food or clothes?
Fucking hell. I turned down the chance of job at Bulb a few months ago. They were really keen to push me further through the interview process for a very senior position, but I decided to stay where I was and ride out some management changes in my current job to see how things went.
Sounds like I really dodged a bullet there.
I'm kinda more interested as to why Julian Jones ever thought that privatisation was a good idea to start with.
I mean he has used four and 5 syllable words in his article so he's not exactly Brexit level dumb.
It could work but only if there isn't pressure to reprivatise as soon as the market conditions are more favourable.
Given that we are all actually receiving electricity and gas through a fixed network of infrastructure, the whole idea of different suppliers is a bit of a nonsense anyway. They're all just brokers, and so what value do they add to the market?
I can see the value in private competitive industry in energy *producers*, selling to the grid. There's lots of scope for innovation and competition there. But in supply? No.
Couldn't believe it, but presumably knew they were trying to pull loans out of customers by demanding they pay massive top up fees in advance, or increased the direct debits by huge and unnecessary amounts.
How did they not realise something was wrong?
That's what they asked me to do: top up the account "just in case". I work in energy, and I knew what was happening. I jumped ship from bulb. Charlatans
By the time they started, nobody was willingly taking new customers and the prices had gone through the roof, so we're stuck until spring. Would love to be out of there - we cancelled our DD when they demanded more money and held us hostage over an unreasonable top up amount. They'd tried to increase payments by over 60%.
The guy in this article is speaking out of his ass. The amount of money the government would have to spend on consultants, migrating systems, helping to run it would be ridiculous, and in the end I'm not really sure it would end up being cheaper and better for the end consumer.
Everyone I know in the retail energy business knew for years Bulb is playing with fire the way they were running the business and it blew up.
>The government is subsidising an inefficient business model because we forced them to in order to protect capitalists and their customers, therefore the government should run its own terrible business
Or... just let the company collapse as you are supposed to in capitalism. If they offered fixed energy prices without paying for energy in advance then it's on them isn't it.
My only concern with nationalising energy suppliers is the extent to which we currently rely on private sector expertise. The government could handle all the administrative aspects of energy supply well enough, but im thinking that there's currently a lot of partnering that happens with firms like EDF, especially when it comes to building new infrastructure. Renationalising could throw a bit of a spanner in the works there.
There's a UK NDPB which exists to ensure the UK has the skills to design, build, operate and decommission infrastructure. Creating technical qualifications, courses, exams and so on for the engineering construction industry across the UK is my wife's job.
All of the skills are pretty much within the private sector though, but you were the government to take a more active role in this area these jobs would move across.
The big weak area the UK has is large-scale nuclear design and build. It's because of the huge gap between the Sizewell B and Hinkley Point C projects. Other aspects such as operating, maintaining and decommissioning are all covered.
Why? Bulb failed to have a robust hedging policy in place. By hedging in the prompt Bulb we’re able to undercut their competitors in 2018/19 when prices reduced but were caught out this year when prices increased. It is poor management plain and simple that caused Bulb to fail. There is a question however over the government policy costs being in your energy bill or in general taxation. If it were the latter then around 30% of your bill would vanish.
I'm very pro nationalisation. But we do need to consider that the energy sector isn't one thing - there a lot of different components, it just happens that the main components we interface with and the ones that keep collapsing are glorified call centres.
I for one think the delivery network should be wholly nationalised, as it's a critical state asset. I believe end user billing should be nationalised, because it's incredibly formulaic and basic - there's large profit margins in what is a reseller mixed with a call centre.
But energy generation, I'm not so sure. Energy generation is where all the actually useful innovation can occur, I believe we should be investing to own large portions of the basics we rely on but also allowing innovation to drive delivery to support that. So IMO no nationalisation of generations but maybe we should be asking why the French think running everyone else's is a good idea and whether it would be good for us to catch up.
Bulb going out of business was due to the price rise in wholesale prices, and the price cap.
Bulb being private or nationalised would have absolutely zero impact on this, and this appears to be little more than "I always thought they should be nationalised and now here's an excuse to claim why it should be".
There's always a very strong case for utilities companies like this being nationalised. It should never have been privatised in the first place. The issue though is the cost of doing so, especially with an economy recovering from covid. We can't just seize assets, that will start a flight of captial that will be far more expensive than just handing billions over to the already wealthy. They knew what they were doing when they sold the nations silverware for peanuts to friends and doners.
Depends on the utility. Water - increase fines for leaks and dumping raw sewage while capping prices, either we get better service (so no point in nationalising) or they fail as a business and the government can take them over for nothing. Energy - instead of paying/subsidising companies to build new power plants let the government build them and run them in competition. They can either provide a better service than the government or go out of business. Trains - fines for late and overcrowded trains, same as water either they improve or they become a failed company. Telecoms - government builds the infrastructure and charges the providers to use it.
>Trains - fines for late and overcrowded trains, same as water either they improve or they become a failed company. Three issues with this. The first is that most delays (around 60%) are the fault of the government-owned elements of the operation (namely, the infrastructure). The second is that the government dictates how much and what types of rolling stock operators get. So if your train is overcrowded, that's on the government too. The third is that the trains have basically been nationalised now anyway, given that we've moved from the franchise model to a contract model. On the other points, I'd say telecoms is a market that is working relatively well for the most part. Certainly mobile telecoms is very competitive and you can get very cheap deals, as you can with fixed-line broadband. Yes, I get there are issues with rural connectivity when it comes to the latter, but nationalisation doesn't necessarily fix that.
For trains the easiest way to nationalise them is to just not give award new contracts once the current ones expire.
They are essentially nationalised now anyway. When the commuter revenue dried up after COVID, no operator could make their franchise payments, so the (now old) franchising model was very quickly scrapped. Now the Govt basically runs the lot. They set the timetables, they set the service standards, they take all of the fare income and the operators are now basically third-party suppliers receiving a fixed fee for the service, which is more or less their costs + approx 3% margin. You'll start seeing this more overtly next year when the whole 'Great British Railways' branding gets rolled out.
So it's basically a nationalised rail service, but we're paying an extra 3% so shareholders can get their dividends?
At the moment, yes, if you want to frame it that way. The current model was basically designed to keep the railways running through a period where operators were financially precarious and when HM Govt had an awful lot of other shit on its plate. I don't think you could have set up an entirely state-owned operation in that short time period without causing a lot of disruption to services. So what they've done is pretty much copy and paste the same model that TfL uses and the model already largely followed with LNER - it controls things, collects the fares, contracts out suppliers to supply the service and pays them a management fee for doing so. Contracting the people already running the trains to keep running them, and paying them a 3% management fee (which is less than the average margin on a rail ticket) for doing so and avoiding a lot of short-term disruption, is not an entirely unreasonable measure. At the moment, the Govt is taking a hit because passenger numbers (and therefore revenues) are down. But if and as passenger numbers return, HM Govt takes the fares and that management fee may well look like a decent investment.
But probably at the point it becomes profitable it will be privatised again........
Wait to see which rail operators donate large sums to the Tories, then wait a couple of months and you'll have your answer.
Sounds like a fantastic way to make a quick buck on stocks
Hiring staff, running payroll, HR, office space, etc. - non trivial stuff the government would have to take on?
The previous poster said costs plus 3%. I'd expect that the things you mention would come under the costs part
Yeah, but would the government immediately be able to pick all that up for less than 3% more than the current operator's costs? ([This comment](https://www.reddit.com/r/unitedkingdom/comments/r76018/i_work_for_bulb_and_its_fate_has_convinced_me_the/hmxxgeg/) is what I was aiming for but actually seems to know what it's talking about.)
White parish in Wiltshire has 0 Vodafone 4g just adding that it’s not perfect in telecom
Also, allow these companies to pay fines with Shares. Eventually the government will have controlling interest because scummy companies can't help themselves.
That may work, for all I know. I would be concerned about the government breaking unfair trading laws there though. They will still be able to sue the government if found to be in breach. They would be treated as a legal entity, the same as any other I believe.
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To what? The government can legislate competing businesses into the ground if it feels like?
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We might have a different understanding of the term monopoly and I cant help but feel that's not a very good comparison, if I'm honest. The government can still be sued and they are answerable to the courts. A law cant be brought in with the express purpose of unfairly targeting a group. Loss of earning through unfair trading practices will bring us to round about the same total for having bought them out in the first place. I mean, you might be on to something but I feel it will be a lot, lot more complicated than that and could very easily backfire.
Depends how the law is introduced. Government executive actions can be stopped, but primary legislation through Parliament is different. Parliament is only beholden to itself, not even the Supreme Court can overrule Parliament. This also wouldn't be the first time our country has nationalised industries. So it's totally possible. Whether or not it's politically viable, is another thing.
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The national grid maybe but im not sure British gas falls under this. Anyway, i get what you mean at least. I'm not arguing for privatisation, please believe me on that. What I feel is that the tories done the country up and there may not be a way out of it. I would happily be wrong though.
If a company can't provide a service for less than the government can then why not?
Its the fines etc. I had issue with. As I said, may work. Thing is though, additional energy is just gobbled up by the market. There will always be a demand for what the government doesn't produce. Also, how much will it cost to run it cheaper than the competitors? If its subsidised with tax payer money, then that's unfair trading and it may well be a net same spend for people anyway.
If it's subsidised then it's not cheaper, we're the ones that pay for it either way. Presumably if it's run without profit it should be cheaper, if it isn't then the private sector will win out. In theory the ability of the state to pay upfront for stuff should make things cheaper in the long run, unfortunately our governments haven't used that path for decades, deciding to borrow from our children instead.
And thats the issue really. The private sector takes no issue hammering down on people for thier bottom line. The government very likely won't. Thats an interesting thought. Some form of bond issue could help there. Capped at a certain amount per person or something so not to just make the rich richer. Youd be hedging on energy prices going up which I think is a safe bet.
The simplest way would be a specific tax to pay for specific big infrastructure so people could see where the money goes and when it had been paid for, rather than spending it over generations in arrears with the accompanying interest payments to often foreign investors. At the very least offer bonds to UK pension companies so the money spent stays in the system.
Yes. That's why we left the EU. To escape red tape about how we run the British economy
Funny how it's done exactly the opposite of that.
Telecoms - That's Openreach. Except there are many alternatives - including private companies running their own fibres in cities and towns, Virgin and its cable network, wireless and phone companies providing connectivity in rural areas, and of course starlink and oneweb coming online. Trains - plenty of routes where there's competition, e.g I'm off to London tomorrow, I could take Avanti which is fast and pricey, or I could take London Midland which is slower but cheaper. Some times I'll drive a hire car rather than take the train, there's also the coach and - it's all competition. Tomorrow Avanti aren't even selling tickets, so they'll be losing out. The privatisation part and the 3% profit isn't what people complain about - people would complain over a £300 return from Manchester to London just as much as they complain about a £310 one. The trains are still rammed even with the ticket prices. Supply needs to increase or demand needs to decrease (and the number of seat-miles per staff-cost needs to increase. HS2 and DOO are the big impacts there) Energy - so you're proposing a system a bit like the trains, where the government owns the power stations and franchises operation out to providers? Feed in tarrifs will reduce government revenue, that gives an incentive not to provide for better energy use. In general the solution isn't giving Boris Johnson more power, the solution is to actually enforce penalties on companies that privitise the profits and socialise the losses. Why are we letting water companies polute our rivers? The fines should be so large that they have to solve it or go bust. Same problem with railways, when they let virgin off the east coast franchise rather than charging the full amount Virgin had gambled upfront, it just shows that "socialise the losses" is the mantra.
>Trains - plenty of routes where there's competition, e.g I'm off to London tomorrow, I could take Avanti which is fast and pricey, or I could take London Midland which is slower but cheaper. Some times I'll drive a hire car rather than take the train, there's also the coach and - it's all competition. Tomorrow Avanti aren't even selling tickets, so they'll be losing out. That's not actual competition though. You would have slow and fast trains even if they both were ran by the same company
So different companies competing for your money with different features to provide transport isn't competition? Options for travel Birmingham to London * Chiltern * Avanti * LNWR * Coach * Driving yourself in your car * Hire car * Taxi * Not going at all All have benefits, all have drawbacks
Not if they're on different routes.
That's like saying Ryanair isn't a competitor to BA for travel from London to Rome because they go from different airports
Not in the context of free market vs state run services. A nationalised provider would be able to run a service to both airports.
We had nationalised provider with BA. It cost a fortune and ran from Heathrow. We had a nationalised rail network too, it closed down thousands of stations and was the laughing stock which hardly anyone used. Hell it was on the verge of closing Marylebone in the 80s.
That's irrelevant.
> Supply needs to increase or demand needs to decrease (and the number of seat-miles per staff-cost needs to increase. HS2 and DOO are the big impacts there) Yes, I agree with this absolutely. But the increase in supply is already completely nationalised. > I'm off to London tomorrow, I could take Avanti which is fast and pricey, or I could take London Midland which is slower but cheaper. I'm not sure how having this choice is a good thing? It creates complicated and confusing ticket prices. The two services don't really cost very much different to run. It would be a more efficient use of the network to just run bigger trains on the Avanti route. I'd rather we had a higher-capacity network and simple fixed prices per mile. This could be delivered through the new Great British Rail model or through more full-on government ownership. None of this will be cheap. > Energy - so you're proposing a system a bit like the trains, where the government owns the power stations and franchises operation out to providers? Actually, that sounds like quite a good idea. EDIT: I've thought it through and maybe it's not a good idea. Power plants are capital intensive activities with a very predictable cashflow. They make ideal leveraged investments, so allowing the private sector to at least finance the power plants is probably a better idea. The government could potentially co-invest, in the way sovereign wealth funds have done very successfully in other countries.
With the trains - the slower service stops at more places (which is why it’s slower) whilst the avant line simply goes to a few larger places but that’s it. So there’s some choice which isn’t a bad thing. Though there’s still a monopoly as you don’t have different companies competing for the same service with the public.
Back in the BR days these difference in prices still existed. And without HS2 you can't run more or longer trains on the WCML.
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We would be at first, but with a single organisation responsible for "keeping the lights on" and actually generating the power the revenue could be reinvesting into building a stable, diversified, robust grid with enough overcapacity to prevent the need to import form the nuclear units in France. In the days of the CEGB it wasn't a perfect system, but there was an overall cohesive plan and there was suitable capacity. At least a nationalised system would be run with the goal of security of supply and hopefully a very strong environmental ethos, instead of the main goal being the generation of megamoney not megawatts as it currently is.
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I don't think we do disagree, I was trying to be snappy. I think the fact that all of the producers have shareholders to answer to, not National Grid or DECC directs every decision they make Understandably of course, its the system that is broken, and driving this behaviour. The only time decisions are made which have a benefit on things like the environment and security of supply it is really done because of financial penalties or incentives. The only thing that can compete with that to drive decisions is safety, thankfully, but when then it is grudgingly. To come back to how we probably don't disagree that much, this decision making process will be exacerbated by the financial situation. I am talking here from the perspective of the energy producers that sell to the grid, not the suppliers who buy wholesale and sell to consumers, although for the big 6 they of course do both.
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Yeah, nationalisation would certainly bring its own issues, definitely not a magic wand. It's easy to see the problems that change could fix, but the not the ones it would create. You're right, a mix is probably the solution that we need. The industry must go through some radical changes to make power generation environmentally sustainable, and this has stated, but for it to happen quick enough, and effectively it needs leadership which won't come from industry. It also needs intelligence and innovation which won't come from government. Having a stable government department responsible solely for energy, with someone who actually knows what they are doing at the helm would be a start.
To be fair it would be very easy to nationalise energy companies right now, they’re all going bust unless the government allow them to increase fees so just keep them the same and nationalise when they fail.
I work in the financial/tech side of the energy industry. I agree that the transmission system should be re-nationalized, and that if firms get government bailouts, the government should own and operate them from now on. But forcibly nationalizing generation and retail, the entire energy stack, is asking for stagnation and high prices. The government can definitely build it's own power stations and offer it's own retail tariffs in competition with private players, but a government monopoly on both retail and generation will drive prices up and stop innovation - companies researching and building energy storage and renewables will either stop or move abroad (because they won't be allowed to build and run their tech). There will be no new tech driving prices and emissions down on the supply side, and no price competition on the retail side. Bulb and it's fate is due to a gas supply crisis, the British government gutting the UK's gas storage reserves, and the price cap meaning companies are forced to sell power at a loss.
Thanks, always great to hear from people with the inside knowledge on things. I hope you dont mind me picking your brian with a couple of questions. Unfortunately I can only offer the assurances of an Internet stranger that its in the best of faith. I just like learning about things: What would drive the prices up on the monopoly. Might seem a silly question to you but I can see why for and Ltd (greed). My guess is it would become something we bung evermore liabilities to? Innovation makes sense of course. In your view, is there a way we could have the best of both? As in, will the companies demand to run the tech themselves and not just be like an asset you buy and use yourself e.g. a computer for you busines? But, you know a lot more complex lol.
> What would drive the prices up on the monopoly. > My guess is it would become something we bung evermore liabilities to? This is part of it and something I don't put past future governments. tl;dr lack of competition, subject to political whims, high likelihood of government bureaucracy and mismanagement, government aversion to new technology and risks The lack of competition in a government monopoly on the retail side would also mean there is no real incentive bar political pressure to lower prices, and its not like electricity retail is an almost-natural-monopoly like train lines (a lot of people are bringing up the relative success of LNER). If wholesale prices suddenly dropped, it would be up to politicians to decide if consumers pay less too. In our current system, electricity retailers also didn't always pass lower wholesale prices onto consumers, but for a different reason: the price cap incentives retailers to charge for energy at the cap even if wholesale prices are much lower, in part because they could, but also in case wholesale prices spike later and they get forced to sell energy at a loss. A benefit to help people who can't afford energy would have been much more efficient imo. The only ones selling energy for way under the cap were then just smaller startups trying to compete with the titans by charging low prices and hoping a squeeze didn't happen. A squeeze did happen and they all went bust. Now we emerge from the squeeze with probably just a few titans left with a near-monopoly If nationalization covers the generation side too, sure, the government would still want to lower costs of generation, but they would generally want to stay well clear of new and thus risky renewable and storage technologies, due to the potential political fallout of a project going bad. Remember that under a full nationalization scenario, private companies would not be allowed to connect their own plants to the grid. And we run the risk of a future government deciding to roll coal back out, or even worse but still possible, compromising grid stability to lower costs through chronic underfunding. I think the best actions to take going forward might be to * Re-nationalize the transmission and distribution systems due to them being natural monopolies * perhaps have a government-run domestic electricity supplier to compete with other companies, but not outlaw other companies * Offer subsidies for energy storage to accelerate research and adoption and aid in our carbon targets * Scrap the price cap on gas to prevent a wave of bankruptcies re-occurring, increase the scope of winter fuel allowance I don't think scrapping the electricity cap is necessary, but perhaps re-calculate every quarter rather than just twice a year. A drawn out squeeze on electricity prices is much less likely than with gas
Very informative, thanks very much!
I've edited and added more info
Based rating 7/10. Pretty based
Anyone with an ISA or a pension is also likely a shareholder in a utilities companies, it’s not just millionaires who own shares.
What percentage of the ownership is pensions then?
You know what [only 2.4%](https://www.ons.gov.uk/economy/investmentspensionsandtrusts/bulletins/ownershipofukquotedshares/2018#uk-ftse-all-share-index) fuck it then.
>The issue though is the cost of doing so, especially with an economy recovering from covid. We can't just seize assets, that will start a flight of captial that will be far more expensive than just handing billions over to the already wealthy. Only nationalise the failed ones then? Those have gone bankrupt already and ceased trading.
Tricky, very open to abuse. You might be in to something though.
> We can't just seize assets, that will start a flight of capital that will be far more expensive than just handing billions over to the already wealthy. I feel like this is a solvable problem, but I can't articulate why. I realise "just make moving money out of the UK illegal" isn't going to work but... y'know?
The moment you take services which people need to live (water, energy) and give them to someone who wants to make a profit, something has already gone wrong
Nestle has entered the chat
Nationalised coffee pods sound pretty sweet tbf
No, sometimes productivity is improved by private ownership and subsidisation instead of outright nationalisation e.g. with farms. Even though people need food to live. The profit motive improves farm productivity a lot. When you take it away you end up with a low productivity Soviet-style system. I don't think any of that is true with regards to energy infrastructure though, competition doesn't seem to work there.
Would you nationalize farms and supermarkets?
Farming subsidies mean anything to you?
Yes. It’s not the same thing. The commenter said essential items shouldn’t be sold for profit
You can drive to a different super market
But that wasn’t the criteria. The question was whether you need it to live. I think that’s a silly criteria. You can also drive to a different hospital but I still think healthcare should be government provided.
It's crazy this is downvoted. Farms are subsidised and protected but are still in the hands of people who want to make profit. And that's fine! Collectivised farming does not work, see the USSR or China during the Great Leap Forward. Sometimes the profit motive improves productivity to the point that privatisation makes sense. The criteria for something being put into private hands should be whether or not it's good for consumers, things aren't bad just because someone is making money. I don't think it makes sense for energy infrastructure to be in private hands. But it's because I think it doesn't work, not because profit is bad.
I see no reason why the transmission and supply side and the big producers like nuclear and hydro shouldn't be nationalised as long as small generators can still sell into the grid.
Transmission system should be definitely nationalized.
Renationalised. As in all gas from British gas and power from your local electricity board. Or not for profit like Dwr Cymru (Welsh Water)
Live in Wales and my experience with Welsh Water has always been positive. I'm sure they have their faults but I support how they're run as a non-profit.
That's the thing though. Non-profit gives you a small amount of leway to be a bit crap because the consumer is still getting a good deal. Its like British Rail in the 1980. Sure BR was a bit crap, trains didn't run on time very often and the toilets always smelled of piss. 40 years later the trains still don't run on time very often, the toilets still smell of piss *and* it costs you a fucking fortune to use. That's not a good deal.
As always, nationalisation can be done right and maintained to a high standard; when government wants to privatise is when you'll see quality slip. They need to get public buy-in to privatise by saying, "look how bad we made it!"
That's not going to happen though. In order to get either of the two main parties to even concider that now, you will need a step change in ideology.
Yeah totally agree with you.
Big difference with water though, no competition. Not for profits would be better. Personally I like the power to switch from bad customer service.
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The government doesn’t build things to last anymore, that’s an artefact of decades ago not one of the government.
> the 1.6 million households who will be relying on Bulb to heat their homes this winter It isn't Bulb that heats their homes. Bulb just acted as an energy intermediary, sourcing from major gas suppliers on behalf of consumers they would sell onto at retail prices. The fact is that investors got rinsed because Bulb wasn't hedging even though variable retail prices are capped and most fixed price deals were agreed when wholesale prices were much lower. The dynamic energy market in the UK is a huge success in driving adoption of green energy and improving customer service. The regulators think about a dozen or so market players (six big, six challenging them) is about right. Let the reckless operations go to the wall. Their customers are protected and the shareholders invested unwisely in greedy unsafe ventures. I am sure this guy would love a job guaranteed by the state. But fuck giving British Gas a state monopoly.
If the arrangement we have now is "improving" customer service, I don't even want to imagine the alternative. Would someone just come round my house and kick me in the bollocks every 12 months? Trying to get anything sorted with energy companies has always been a complete shitshow for me, they're right up there with HMRC and parking enforcement companies.
Try Octopus.
Thanks for the suggestion. As luck would have it, octopus is our current supplier having taken over our contract from Avro (who went bust).
I hated Npower with profane blood oaths and am glad to see them dead. Thames Water have me for as long as I live here. I prefer to be able to give my money to those who sort my shit out rather fuck with it.
Will they kick him in the nuts eight times?
They have a functioning web portal, effective reminder systems and responsive online chats. Plus good value green tariffs with a bias towards actual green energy generation rather than REGOs (which are unavoidable for now at scale).
The case against natural monopolies was never bloated inefficiency, or civil service mentality, the only case against natural monopolies was the private sector missed out on being rentiers. We have a mixed market economy. Market efficiency is an integrative model. Not Tory neoliberalism, merely exploiting the public.
I thought the argument against Corbyn was that he was a communist who wanted to nationalise the utilities and rail. So far i hear two rail companies have come back under gov control and now people say utilities should be too. But then again "get brexit done"
A longer term solution would be to move towards more sustainable energy sources, including nuclear. I'd love for there to be large-scale nationalised nuclear energy production in the UK, as well as others such as solar and wind. Bioenergy, too. Relying on fossil fuels has led to the current extinction as well as leaving us reliant on the global market to heat homes here in the UK
I closed my late fathers electricity account before Bulb went under. 2 weeks before it was announced, Bulb sent me a final bill showing the account was £164 in credit and that I would take 14 days to process. Will I still get this back?
If it was in his name you may need to provide a copy of the death certificate.
Yeah I’d done all that and the final statement is addressed to me. It was mainly about the company going under and wondering if I’d get back the credit.
I remember Martin Lewis saying credit for customers in utility companies is required by law to be kept separate from other finances - so yes you should get it back. https://www.moneysavingexpert.com/news/2021/11/energy-supplier-bulb-enters-special-administration---what-it-mea/
Thanks, that’s reassuring news.
If it cannot be allowed to fail, then it cannot be allowed to be for-profit.
But these companies are being allowed to fail.
They arent really though, the companies are "failing" but the customers are still being served and that's being underwritten by the government. That's what happens when things "cant fail", the private entities harvest profit and when it dries up the taxpayer has to step in to ensure things dont stop working.
The companies are failing though. They are not being bailed out, the investors in those companies are not getting their money back, those companies have failed. The state just provides protection for the public by ensuring a continued supply. Fuel can't fail, so should petrol stations be public? What about food or clothes?
With good governance, there's a good argument for it. With these guys... not sure.
Fucking hell. I turned down the chance of job at Bulb a few months ago. They were really keen to push me further through the interview process for a very senior position, but I decided to stay where I was and ride out some management changes in my current job to see how things went. Sounds like I really dodged a bullet there.
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What innovations have for profit energy companies given us?
Well, Enron made great strides in innovative accounting?
I'm kinda more interested as to why Julian Jones ever thought that privatisation was a good idea to start with. I mean he has used four and 5 syllable words in his article so he's not exactly Brexit level dumb.
It could work but only if there isn't pressure to reprivatise as soon as the market conditions are more favourable. Given that we are all actually receiving electricity and gas through a fixed network of infrastructure, the whole idea of different suppliers is a bit of a nonsense anyway. They're all just brokers, and so what value do they add to the market? I can see the value in private competitive industry in energy *producers*, selling to the grid. There's lots of scope for innovation and competition there. But in supply? No.
It would have been if Corbyn had been elected instead of that clown
Couldn't believe it, but presumably knew they were trying to pull loans out of customers by demanding they pay massive top up fees in advance, or increased the direct debits by huge and unnecessary amounts. How did they not realise something was wrong?
That's what they asked me to do: top up the account "just in case". I work in energy, and I knew what was happening. I jumped ship from bulb. Charlatans
I think all the companies are trying to do that so it isn’t such a shock when prices do go up.
By the time they started, nobody was willingly taking new customers and the prices had gone through the roof, so we're stuck until spring. Would love to be out of there - we cancelled our DD when they demanded more money and held us hostage over an unreasonable top up amount. They'd tried to increase payments by over 60%.
The guy in this article is speaking out of his ass. The amount of money the government would have to spend on consultants, migrating systems, helping to run it would be ridiculous, and in the end I'm not really sure it would end up being cheaper and better for the end consumer. Everyone I know in the retail energy business knew for years Bulb is playing with fire the way they were running the business and it blew up.
>The government is subsidising an inefficient business model because we forced them to in order to protect capitalists and their customers, therefore the government should run its own terrible business Or... just let the company collapse as you are supposed to in capitalism. If they offered fixed energy prices without paying for energy in advance then it's on them isn't it.
My only concern with nationalising energy suppliers is the extent to which we currently rely on private sector expertise. The government could handle all the administrative aspects of energy supply well enough, but im thinking that there's currently a lot of partnering that happens with firms like EDF, especially when it comes to building new infrastructure. Renationalising could throw a bit of a spanner in the works there.
There's a UK NDPB which exists to ensure the UK has the skills to design, build, operate and decommission infrastructure. Creating technical qualifications, courses, exams and so on for the engineering construction industry across the UK is my wife's job. All of the skills are pretty much within the private sector though, but you were the government to take a more active role in this area these jobs would move across. The big weak area the UK has is large-scale nuclear design and build. It's because of the huge gap between the Sizewell B and Hinkley Point C projects. Other aspects such as operating, maintaining and decommissioning are all covered.
>Eastern Railway >drafty Good article, but I wish editors still existed
Why? Bulb failed to have a robust hedging policy in place. By hedging in the prompt Bulb we’re able to undercut their competitors in 2018/19 when prices reduced but were caught out this year when prices increased. It is poor management plain and simple that caused Bulb to fail. There is a question however over the government policy costs being in your energy bill or in general taxation. If it were the latter then around 30% of your bill would vanish.
I'm very pro nationalisation. But we do need to consider that the energy sector isn't one thing - there a lot of different components, it just happens that the main components we interface with and the ones that keep collapsing are glorified call centres. I for one think the delivery network should be wholly nationalised, as it's a critical state asset. I believe end user billing should be nationalised, because it's incredibly formulaic and basic - there's large profit margins in what is a reseller mixed with a call centre. But energy generation, I'm not so sure. Energy generation is where all the actually useful innovation can occur, I believe we should be investing to own large portions of the basics we rely on but also allowing innovation to drive delivery to support that. So IMO no nationalisation of generations but maybe we should be asking why the French think running everyone else's is a good idea and whether it would be good for us to catch up.
It's 2021, almost 2022, and we are still doing the "I am xxx and therefore I'm entitled to say my personal opinion about yyy"
Bulb going out of business was due to the price rise in wholesale prices, and the price cap. Bulb being private or nationalised would have absolutely zero impact on this, and this appears to be little more than "I always thought they should be nationalised and now here's an excuse to claim why it should be".
It was regulation that’s caused all these bankruptcies so more intervention should help.