The state sector is growing at private companies’ expense.
The Post Office is to remain state-controlled and the East Coast rail line has been nationalised. They sit in a UK government portfolio already boosted by the addition of Northern Rock, Royal Bank of Scotland, Bradford & Bingley, almost half of Lloyds and Railtrack. The government remains a reluctant owner of the Tote and our canal system while Channel 4 and the Royal Mint are still state-owned despite disposal hopes.
If this isn’t quite communism then it can’t be called capitalism either. We must accept we are living in a mixed economy whose mix has changed dramatically.
There may be special circumstances for such additions to the public sector but this creeping government ownership should concern every business in the country.
The fear is not that your company might be next but that in future, more of your customers and suppliers will be part of the state.
At the macro level that means their ability to buy may be affected by public funding or cutbacks in government spending. It has already meant telling banks to divert lending to particular customers.
But at the micro level, dealing with government can mean bureaucratic procurement procedures and a requirement for companies to conform to specified disclosure criteria or adopt particular employment policies.
You’d have to be able to demonstrate an equal opportunities programme, which might mean collating data such as an employee’s race, that you might not normally collect. Easy for a large business, but hard on smaller firms.
There is a generation that probably does not realise how important the state sector was in the decades after the Second World War. Nationalised steel companies used coal from nationalised pits to supply state-owned shipyards whose vessels docked at publicly-owned ports.
Nationalised planemakers supplied nationalised airlines that used state-owned airports.
Electricity, gas and water, like the phone system, were public bodies. The taxpayer owned car firms — Rover, Jaguar and Rolls-Royce – plus companies that put the petrol in their tanks, including a large part of BP. The roads they drove on were state-owned too, like the railways.
Other governments have extended state-ownership too, not least the US with its rescue of the auto and banking industries.
Unlike earlier waves of nationalisation, the current UK trend does not seem politically motivated. The British government wanted to sell the Post Office and resisted bailing out the motor industry.
But the post-war trend has been Labour nationalisations followed by Conservative privatisations and a new Tory government could be expected to pass the banks, the East Coast line and other state assets back to the private sector. The UK steel industry has been nationalised twice and privatised twice. Parts of the rail system look like repeating that double, too.
Such parcel-passing between public and private sector is unsettling for the rest of business. Companies may prefer the capitalist structure but they like stability, too.
Constantly changing their buying and selling procedures to meet whoever currently owns their suppliers or customers is unsettling.
(Photo: IngytheWingy, CC2.0)
