The director-general of the Confederation of British Industry (CBI) has backed the introduction of new mechanisms to automatically compensate and switch customers to the best deal in a bid to head off mounting calls by Labour for nationalisation.
In a lecture in Liverpool earlier today (28 March), Carolyn Fairbairn outlined a three-pronged plan to improve services in energy, water and rail.
She was speaking on the same day that Labour leader Jeremy Corbyn had been due to outline the party’s plans to renationalise the National Grid in a speech, which had to be postponed due to uncertainty over the Brexit parliamentary timetable.
Fairbairn said in her Roscoe lecture that Labour’s proposals would do “profound harm” to the UK’s economy, services and public finances.
And she said Labour’s plans represented a “regression” to “already failed” ways of doing things that would not succeed in the future.
“To claim – as Labour’s manifesto does – that these proposals would put consumers’ interests first is to forget that consumers are not just users but owners who because of renationalisation could end up poorer in old age.”
Fairbairn suggested that nationalisation is a “blunt tool” for managing services like energy and water.
But she acknowledged that Labour’s proposals were addressing public concerns about the “elusive” nature of accountability in the areas that it had identified for nationalisation.
To meet these worries, the CBI head outlined a string of measures for recovering public confidence in the industries in Labour’s nationalisation firing line.
The first is that energy companies should automatically move customers to the best value deal at the end of their contract unless they opt-out in order to pay more for a particular service.
She said: “Many would benefit. And it would be a powerful tool for driving efficiency.”
Secondly, she said that utilities could pay customers automatic compensation in the event of power cuts or water shortages, like rail companies must when services are very late.
“It would help put things right. But it would also provide another incentive not to let things go wrong in the first place.”
And finally she proposed that companies, which fail to meet their performance targets, should suspend payments of dividends to shareholders with the cash diverted to address the areas where customers are being let down.
“It would prove a powerful incentive for putting things right and for not letting things go wrong in the first place.”
Responding to the speech, Cat Hobbs, director of the pro-nationalisation campaign We Own It, said: “It’s great that the CBI has at long last abandoned their ideological commitment to the failed model of privatisation and recognised the lack of accountability in privatised services. It’s a real shame that they are missing the real opportunity to tackle it – embracing democratic public ownership as part of a mixed economy.
“The CBI’s fear-mongering statement shows that they are far more interested in protecting the interests of wealthy shareholders than the public, or of the wider business community. Public ownership of services isn’t a threat to business. Lower utility costs, as well as more efficient and effective transport networks, will help business thrive and prosper. That’s what public ownership can deliver.”