Privatisation slows down worldwide

Has the money lost heart, or is it the bureaucrats?

Via Richard Murphy comes this Financial Times piece (£), suggesting that privatisation may be declining globally:

The pace of privatisation around the world has slowed sharply, with an unprecedented number of asset sales delayed or cancelled amid volatile markets and political uncertainty.

Despite governments across the globe continuing to hoist for-sale signs over state-owned enterprises ranging from airports to electricity networks, the number of completed deals last year was less than half the 2010 figure, according to the Privatisation Barometer, a joint project between KPMG and Fondazione Eni Enrico Mattei, a Milan-based research institute.

The report (pdf) offers the explanation that last year was one of "global financial retrenchment", prompted by the Eurozone crisis and the fight in the US over the debt ceiling. It offers, as a "dramatic" example of the former:

The Spanish government['s] forced cancellation, literally days before execution, of what would have been 2011’s largest privatization — the October sale of 30% of the national lottery, Loterias y Apuerto del Estado, which would have raised over €7 billion ($9.7 billion) — and the near-coincident delayed (not yet renewed) sale of the Madrid and Barcelona airports that could have raised more than €5 billion ($6.9 billion).

The explanation leaves something to be lacking, however. If, as the report argues, the Eurozone crisis was one of sovereign debt, then it ought to have led to more, not fewer, privatisations, given that they are one of the most effective ways for a nation to raise in a short period of time the amount of cash necessary pay down debt.

Similarly, the big economic story of the last year has been the flight to safety, which has led to the reverse-sovereign-debt-crisis being experienced across much of the world, as well as little quirks like RORO. That too ought to lead to greater, not lesser, privatisation, since taking control of an established monopoly is a pretty safe investment. So long as a company doesn't completely misjudge how much it can make from a utility (looking your way, GNER), it's hard to fail when buying out the state (hard to fail, that is, from a financial point of view. Very easy to fail when it comes to actually providing services).

I think the best explanation is that privatisation is becoming uncool, not for economic reasons, but for political ones. States simply don't want to take the unpopular move of handing over control of their services to the private sector. Whether this is good or bad depends on the specific circumstances (as with Matt Yglesias, I think a well-thought-out mutualisation of the US Postal Service could do wonders, but the sale of Madrid and Barcelona airports risks creating the nation's own version of BAA), but Murphy thinks there is something to celebrate anyway:

Let’s hope that there might also be a realisation implicit in this that people now realise that it’s not just banks that can be too big to fail, but that much else that we depend upon is also too big to fail, and needs to be state run to ensure it survives as a result.

Barcelona airport, following a protest by cleaners. The airport was due to be privatised this year. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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On Brexit, David Cameron knows exactly what he's doing

It's not a dead cat - it's about disarming the Leave campaign. 

If you’re explaining, you’re losing. That’s the calculation behind David Cameron’s latest entry into the In-Out (or Remain-Leave in new money) battle. The Prime Minister has warned that were Britain to leave the European Union, the migrant camp at Calais – popularly known as “the Jungle” – could move to Britain. But Eurosceptic campaigners have angrily denounced the remarks, saying that there’s little chance of it happening either way.  

Who’s right? My colleague Henry Zeffman has written a handy explainer of the ins and outs of the row, but the short version is: the Eurosceptic campaigners are broadly right.

But the remarks are very far from a gaffe by Downing Street or Cameron, and they aren’t a “dead cat” strategy – where you say something offensive, prompting a debate about that instead of another, trickier issue – either.

Campaigners for Remain have long been aware that immigration remains their glass jaw. The line wheeled out by Cameron has been long-planned. Late last year, senior members of the In campaign discussed what they saw as the danger points for the campaign. The first was a renegotiation that managed to roll back workplace rights, imperilling the support of the Labour party and the trade unions was one – happily avoided by Cameron’s piecemeal deal.

That the deal would be raked over in the press is not considered a risk point. Stronger In has long known that its path to victory does not run through a sympathetic media. The expectation has long been that even substantial concessions would doubtless have been denounced by the Mail, Telegraph and Sun – and no-one seriously expected that Cameron would emerge with a transformative deal. Since well before the general election, the Prime Minister has been gradually scaling back his demands. The aim has always been to secure as many concessions as possible in order to get an In vote – but Downing Street’s focus has always been on the “as possible” part rather than the “securing concessions” bit.

Today’s row isn’t about deflecting attention from a less-than-stellar deal, but about defanging another “risk point” for the In campaign: border control.

Campaign strategists believe they can throw the issue into neutral by casting doubt on Leave’s ability to control borders any better. One top aide said: “Our line is this: if we vote to leave, the border moves from Calais to Dover, it’s that simple.” They are also keen to make more of the fact that Norway has equally high levels of migration from the European Union as the United Kingdom. While In will never “own” the issue of immigration, they believe they can make the battle sufficiently murky that voters will turn to the areas that favour a Remain vote – national security, economic stability, and keeping people in their jobs.

What the row exposes, rather than a Prime Minister under pressure is a politician who knows exactly what he’s doing – and just how vulnerable the lack of a serious heavyweight at the top makes the Leave campaign(s). Most people won't make a judgement based on reading up the minutinae of European treaties, but on a "sniff test" of which side they think is more trustworthy. It's not a fight about the facts - it's a fight about who is more trusted by the public: David Cameron, or Iain Duncan Smith, Chris Grayling or Priti Patel? As one minister said to me: "I like Priti, but the idea that she can go against the PM as far as voters are concerned is ridiculous. Most people haven't heard of her." 

Leave finds itself in a position uncomfortably like that of Labour in the run-up to the election: with Cameron able to paint himself as the only option guaranteeing stability, against a chaotic and muddled alternative. Without a politician, a business figure or even a prominent celebrity who can provide credibility on the level of the Prime Minister, any row about whether or not Brexit increases the chances of more migrants on Britain’s doorsteps helps Remain – and Cameron. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.