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To be nakedly ideological about utilities nationalisation

Summary:
The country cousins over at the IFS are apparently being “nakedly ideological” when they question whether the re-nationalisation of the utilities will contribute to beating climate change. As is well known we’re rather less worried about that change problem, thinking it at worst a chronic problem that will be solved over time, but we can still be nakedly ideological ourselves on this more specific point.Labour’s plan to renationalise large chunks of the economy risks years of disruption that could delay Britain’s transition to a low-carbon economy, a thinktank has said. The Institute for Fiscal Studies warned that taking water, energy companies, the Royal Mail and railways under state control would be costly, complex and risky and said Labour might do better to tighten regulation

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The country cousins over at the IFS are apparently being “nakedly ideological” when they question whether the re-nationalisation of the utilities will contribute to beating climate change. As is well known we’re rather less worried about that change problem, thinking it at worst a chronic problem that will be solved over time, but we can still be nakedly ideological ourselves on this more specific point.

Labour’s plan to renationalise large chunks of the economy risks years of disruption that could delay Britain’s transition to a low-carbon economy, a thinktank has said.

The Institute for Fiscal Studies warned that taking water, energy companies, the Royal Mail and railways under state control would be costly, complex and risky and said Labour might do better to tighten regulation instead.

Lucy Kraftman, an IFS research economist, said: “The industries that Labour plan to nationalise are vital to the UK economy. The key question is whether they would be better managed in the public sector, and what nationalisation can achieve that changing the current regulatory frameworks cannot.

....

The shadow chancellor John McDonnell flatly rejected the IFS argument.

“Labour’s proposals for nationalisation will enable us to speed up the transition to a sustainable economy and enable us to meet our decarbonisation targets all the sooner,” he said.

It’s not exactly obvious that McDonnell is right here. We, nakedly ideological as we are, have difficulty in believing that political and bureaucratic management is going to be more efficient that profit seeking and capitalist. But putting that aside, why not remind ourselves why we did privatise the, say, water companies?

Because the system needed upgrading for environmental reasons - the EU was insisting - and government wouldn’t come up with the money. Therefore it was sold off to the capitalists who did put the billions in. Largely, it is true, by not wasting the current revenues on the politically insisted upon while politically run vast and unnecessary workforces.

That is, greater operational efficiency paid for the environmental upgrade.

We’d also be interested to see how a centralised CEGB would have allowed in all those small scale and privately funded wind farms, solar panels and all the rest.

Or, as we might put it, given that one of the reasons for privatisation was to enable meeting the new environmental standards, how will re-nationalisation aid meeting the new environmental standards?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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