On Wednesday Jon Cruddas announced his first findings from his inquiry into why Labour lost the election, writing an article on LabourList about how Labour lost because it was too anti-austerity, not because it was too pro-austerity. It was not, it’s fair to say, universally welcomed by Labour supporters and there was particular criticism of it being backed up with a couple of poll questions showing people agreed with a statement “We must live within our means so cutting the deficit is the top priority”.

I don’t like “do you agree or disagree with these statement” questions, as I’ve written before. They do have their uses (and indeed, comparing agreement with broad campaign messages that can’t really be unbiased is one of them) but in most cases there are better ways of asking the question. The bigger mistake being made here is to wrongly focus on just one polling question and ignore the wealth of other data – if Jon Cruddas was basing his whole review on a single poll he would be being rather foolish, but I doubt he is. I expect the polling question has been highlighted as an illustration of his case, rather than being the whole evidence his case is based upon. The broad thrust of his argument is in line with other polling.

The key question on Labour’s economic positioning at the election isn’t whether people were pro or anti austerity, it’s which party people trusted on the economy (specific economy policy questions are just things that feed into that). On that the polling was clear – for example here or here. For whatever reason, people did not trust Labour on the economy as much as the Conservatives.

The British Election Study analysis of what drove people’s votes with proper key driver analysis will come in due course. Typically though the main factors in voting intention are things like party identification, perceptions of the leaders and the parties’s perceived competence on whatever voters see as the important issues of the day. In hindsight now that we know that Labour’s polling lead was an illusion, Labour’s defeat seems very straightforward. A year ago we were scratching our heads at the paradox of how Labour were ahead despite trailing on the things that normally drive voting intentions. The actual reasons seems to be the polls were wrong, which means Labour’s defeat is suddenly pretty easy to explain: people did not have a positive perception of their party leader, people did not think they were competent on what they considered two of the three major issues of the day (the economy and immigration) and even in the area Labour normally have better figures than the Tories, perceptions of the party itself, people increasingly saw them as out of touch with ordinary people.

Turning specifically to austerity and Cruddas’s argument, the British public are not “pro-austerity” in any ideological sense, the vast majority of people don’t want to see the state cut down in size on principle – you can easily find lots of polls showing that people oppose particular cuts, think cuts are too deep or too fast or whatever. The government’s cuts were never “popular” as such, but throughout the Parliament they were consistently seen as necessary. After the economy began to grow again they gradually became seen as beneficial to the economy, by 2015 YouGov were typically finding around 45% of people thought that the government’s cuts had been good for the economy, 35% of people thought that they had been bad for the economy. By the time of the election 50% of people thought the government were handling the economy well.

Regardless of whether or not the government’s policy was right, regardless of whether or not they should have won the argument on the economy, regardless of whether or not they actually made any cuts, when it came to broad public perceptions this was the situation: the government had argued that cuts were needed for the economy, Labour had opposed them, cuts happened and the economy recovered, therefore the government were right. Yes, it’s a classic case of post hoc ergo propter hoc, but there goes.

It is not impossible that Labour could have combined being anti-austerity with perceived economic competence, but it would have been a huge ask. Once the economy started to turn around it was likely that the public would give the government some credit for it. Making an argument that the government’s whole approach was wrong when the public perceived it as “working” would have been difficult, more so when the public still held Labour partially to blame for putting the economy in such a state. Rightly or wrongly, getting spending under control came to be associated with sound economic management, failure to commit to getting spending under control was perceived as being against sound economic management.

There are different realities where an anti-austerity stance might have worked. If Britain hadn’t got back to economic growth for the last couple of years the government’s economic policy wouldn’t have been perceived as a success and the public would likely have been more open to alternatives. If the government had imposed their cuts in ways that had upset a greater number of swing voters they might have lost more support. However, parties can’t choose their own reality, they have to deal with the one they are given, and being anti-austerity was unlikely to be a winning strategy in the political realities of 2015.

2020, of course, will be a different battle – the great recession will have receded a decade into history, if the government have met their targets there won’t be a deficit for Labour to answer difficult questions about. I expect Labour being seen as economically responsible will still be important and questions about whether a party is seen as moderate or extreme, risky or safe will always be relevant… but the specifics of arguments about being pro or anti-austerity and questions about how you deal with the deficit may well all sound a bit, well, a bit 2015.

286 Responses to “On Jon Cruddas and why Labour lost”

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  1. @PETE B

    “I do. But – spoiler alert – it’s not a documentary.”


    It doesn’t have to be. It just has to alert to the many and varied ways the private sector can be inefficient, which it does.

    Scott Adams has had success with it because it chimes with the experiences of so many cubicle dwellers throughout the world.

    But you can get your own info. if you keep your eyes open. When the internet took off, I was amazed at the numbers in the private sector goofing off on sports boards, social media, discussion boards all day long while at work. Arranging dates, all sorts. Bosses let it happen cos either doing it themselves or surfing for holidays while at work. They would discuss online their methods for getting away with it.

    Obviously, eventually the upper echelons got wise and started putting in blocks on networks, but then staff just migrate to smartphones.

    Frankly just one’s experience as a customer makes one very aware of needless inefficiency in the private sector. I shan’t repeat the sorry tale of how I got messed around for two months over my internet connection, or the many other tales, but shall just point you in the direction of banking and US healthcare etc.

  2. Re- Clause 4 – It is perhaps worth pointing out that a commitment to Clause 4 did not prevent Labour polling 35.2% of the GB vote share in 1992. Moreover, had it not been for the Sheffield Rally fiasco 36 % would have been likely!

  3. @Pete B

    Sure, it may be more common in large organisations, but many public services are necessarily large, for economies of scale, integration etc.

    Look what happens when you fragment rail services etc.

    An interesting example where they don’t necessarily have to be large is schooling, hence the debate over Free Schools.

  4. @Pete B

    It also depends on what one means by efficient, as I pointed out the other day.

    For example, a small telesales outfit might be highly efficient at pressuring the elderly and vulnerable to buy stuff they don’t really need, but you might wish they weren’t.

  5. @Pete B

    Aother reason public services are necessarily large, is ensuring coverage. Leave schooling to the private sector, and may not ensure everyone gets taught.

    In fact, they may not ensure much coverage at all without public sector or other input first.

    Education is a classic example. For centuries, despite obvious need and demand, few got educated, were literate.

    Why? A chicken-and-egg, Catch 22 scenario in which people couldn’t afford to pay for the education because didn’t earn enough because couldn’t read.

    It needed the public sector to provide the education in the first place. In countries where the church was stronger they did a lot of it, but the State had to step in to ensure universal coverage.

    Even now, if you do the Free Schools thing, you can get too many schools in one area and not enough in another, with inevitable disruption.

  6. Average managerial positions in large UK companies 15% + (excluding supervisors and charge hands). Managerial positions in the NHS 3%. But just carry on.

  7. @Laszlo

    Lol, I think others have commented on the cost-effectiveness of the NHS vs other systems before.

    That said, it could be more efficient as could other healthcare systems. But making it so is not a trivial thing. And private sector is not some automatic panacea, when one looks at the US system…

  8. Just for a good measure,

    JC was rather circumspect about Clause IV (which is not particularly left wing on its own). He certainly didn’t evoke the national ownership of the means of production.

    Just an example, how can it be done in the case of railways and energy. I think QE methods would work wonder, but I would be astonished if he even contemplated it,

    So, no, in spite of the press, people won’t be imposed upon by the social democratic nationalisation (let alone a proper nationalisation, based on an economic policy) clause. But there are votes are in this.

  9. @Laszlo

    One wonders if the more neoliberal really get how capitalism works. The idea is that as you succeed, you accrue more capital, letting you hoover up more of the market and buy up or block smaller rivals, until you achieve the dream of monopoly over Essentials where you can charge as much as you like for as little as you like, be as inefficient as you like, pay yourself more and more for less and less hiring whole cadres of people to delegate to and bolster your power, hiring talent to stop rival companies getting it, lobbying governments to thwart rivals etc.

    Obviously sometimes a small upstart outsmarts the big companies. But then they become big and the whole thing starts again…

    Being in a position to be inefficient is kinda like the object of the enterprise…

  10. @ Carfrew

    The NHS can be made much more cost effective, I dare say by a huge percentage, but it has nothing to do with the number of managers, but everything about managing the most complex organisation on Earth (unbelievable number of reciprocal relationships between departments and people). The nurse in the ward knows much more about his or her own work and whom they have to liaise – so? The machines are huge fixed cost, and they are replaced frequently, so they must be used 24/7. So? A ward needs a particular combination of professionals, and there are inevitable statistical fluctuations, so?

    Actually, if you talk to people at ward or department level, it’s fine, although with lots of expediating (due to outside influences). Higher up, well, goals get more and more confused.

    I would argue that if the NHS was given just a simple target – work to the professional norms, it would work (but it goes too far, and has some prerequisites).

    For various reasons there are so many KPIs in the NHS that gaming is inevitable.

  11. @ Carfrew

    For the last 20 odd years the only way of increasing revenue has been buying (other companies). So sales (much more important to the stock markets than profits) is dependent on the M&A.

    The sales/asset ratio has been stagnant in all the major Western economies (the UK was the last to join in) for this period. So, what a surprise, no productivity improvement, no efficiencies (furthermore, everybody knows that a large proportion – not all – of outsourcing was actually loss making).

    Will it change? Not without changes in the regulatory system. On the other hand it has been effective against monopolies.

  12. @Laszlo

    Thanks for your replies, interesting as usual. I’m tired and have posted a fair bit tonite so am gonna grab some kip and reply later if that’s ok.?

  13. @PeteB

    Nice debate – had never heard of Dilbert. An example of why I like this site.

    PB is correct, bureaucracy is much more likely to be encountered in the public sector: however, try dealing with BT or Capita! Or your bank.

    And I have posted previously that the NHS is a pretty efficient organisation.

    What I had not appreciated until quite recently was how fed up the public sector is with red tape and bureaucracy. My local authority, and its workforce, constantly complain about the costs and problems imposed by pointless compliance, central government interference, etc.

    I reckon those elusive shy Tories are all working in local government: public sector workers are more upset by bureaucracy, because they encounter it more often, and they don’t like waste and inefficiency any less than the rest of us.

  14. ROLY

    @”Isn’t this where we came in?”

    I think its where we nearly went out .

  15. I have had to bad experiences in recent weeks trying sort out a problem with very poor customer care.

    Easy Jet and I can avoid using them in the future unless I have no other options – I guess that is the market.

    Inland Revenue – I have no choice as there are no alternatives.

    That is the difference between Public and Private Sector at its’ purest but of course monopolies and oligopolies (or even Monopsonys), barriers to entry etc thwart the market operating properly.

  16. Choice is certainly a key difference. And since consumer satisfaction must be the objective , choice should produce competition unless the market has intrinsically high monopolistic features and/or Sector Regulation is failing.

    But another difference is customer “ownership”. If the customer is paying for the service/product , then the producer continues to exist only whilst customers continue to pay. There is a natural tendency to maximise producer interest. In the Private Sector this is countered by revenue streams being at the behest of customers.

    Where Producers’ income is not subject to the will of the customer , the tendency to Producer Interest is maximised. Customer interest relies on ethical behaviour by Producers.

  17. LASZLO

    @”For the last 20 odd years the only way of increasing revenue has been buying (other companies)

    a) M&A simply adds existing sales achievements together-it doesn’t increase them , unless the logic of the merger produces synergies which do so.

    Actually the record shows that 50% of M&As fail to make “=” = more than 4-ie the same as a coin toss.

    @” So sales (much more important to the stock markets than profits)”

    This is manifestly incorrect. Without Earnings there is no prospect of Dividends, or Share Price growth.

    That is why the key Stock Market measure of value /premium represented by Share Price is the P/E Ratio-Price to Earnings..

  18. typo error…….”.fail to make 2+2=more than 4 “

  19. Yes Colin,

    The complex area is when there is a natural monopoly and efforts to artificially introduce competition are problematic, energy being an obvious example.

    So what is best in natural monopolies?
    Private ownership with regulation which is not always effective or Public ownership with the lack of competition instilling inertia.
    In general Private Business will seek to control costs, although if they feel by doing so in monopolies the regulator will make them lower prices their incentive reduces.
    If the regulator doesn’t act then rip-off concerns rear their head.

    So no panacea just a judgement call every time within sectors and these can be different at different times. Outcomes and value for money more important than ownership.

    It is not just New Labour but even Old Labour accepted the missed Economy although being wedded to producer interests became a major problem in the end.

    FWIW, the ‘best means of administration thereof’ part of the old clause 4 provided ample cover for using markets and private ownership but removing the clause was symbolic of course.

  20. TNS Scottish poll:

    TNS Scottish tracker poll


    Holyrood constituency

    SNP 62% +2
    Lab 20% =
    Con 12% -2
    LD 3% -2

    Holyrood regions

    SNP 54% +3
    Lab 20% -1
    Con 12% -1
    Green 8% +1
    LD 4% -1

    There are some supplementary questions about approval / disapproval of Scottish Government performance in four policy areas.

    Economy 25% good, 24% poor, 45% neither
    NHS 34, 29, 33
    Education 30, 19, 40
    Crime/Justice 23, 29, 40

    The only bad rating there I would say is crime / justice, probably due to the various Police Scotland cock-ups. The economy rating is low because Holyrood doesn’t have widespread economic powers (yet). I suspect the NHS rating is better than what the Tories would score in England (or Labour in Wales).

  21. Honestly the neither seems quite high; could be ground for Labour to push on NEW policies but not much ground for criticism of the current situation.

    Localism could work but Labour need to reform councils as part of the same plan which could be awkward (although this could get easier as they lose power in councils are effectly get an easy internal clean up).

    SNP have high figures but I would say their nationalism is stronger than their policy (although their success in government is partly down to competent running of current departments rather than big policy ideas).

  22. Fraser

    Not unexpectedly, the poorest ratings of SNP performance comes from intending Con voters. I doubt that that will worry the SNP strategists much.

    Perhaps of more interest are the responses from those undecided as to their vote.

    NHS – Good 27% : Neither 37% : Poor 30%
    Crime & Justice – Good 16% : Neither 43% : Poor 29%
    Economy – Good 17% : Neither 50% : Poor 25%
    Education – Good 24% : Neither 46% : Poor 17%

    Given that a fair proportion of these respondents will not vote at all, or are undecided as to which of the opposition parties to vote for, the potential pool of voters from which Labour might make inroads into the SNP vote seems rather limited.

  23. @Couper2802
    “If I was still in the Labour Party I would have definitely started out intending to vote for Corbyn but in the last few days I would have lost my nerve, realising the risk of a Corbyn win.I would have switched to Cooper about now.”

    Looks like the Labour folks in Glasgow may not agree wit you.

    “Jamie Ross @JamieRoss7
    Corbyn’s Glasgow event has been moved to a venue three times the size after Oran Mor sold out. “

  24. “with” not wit.

  25. For those who don’t understand why Corbyn would be a disaster for the Labour Party:


    But what does Alastair Campbell know about winning elections.

  26. I would be

    1: Burnham
    2: Cooper
    3: Corbyn
    4: Kendall

    The only reason for me to prefer Corbyn would be the anti-Austerity position, but the other positions are too left for this to tip him over.

    If my suspicion that we are in for economic trouble comes true, I would expect Burnham or Cooper to come round to a more Keynesian position, just as Brown did after 2008.

  27. @MILLIE


    “Nice debate – had never heard of Dilbert. An example of why I like this site.

    PB is correct, bureaucracy is much more likely to be encountered in the public sector: however, try dealing with BT or Capita! Or your bank.”


    Now see, things like “bureaucracy!!” and “choice” are frequently just trotted out by peeps who haven’t necessarily thought it through.

    Is there really more bureaucracy in the public sector. I’m I’ll, I just go to hospital. As opposed to having to fill in loads of forms, trying to prove I have insurance, spending ages beforehand comparing insurers and even when I pick one, worrying about whether I’m actually going to be covered in practice.

    There is no bureaucracy involved in getting an ambulance either. Rang one for a stranger the other day whose friend ran into the pub in distress because her friend was having a seizure outside. I stayed on the phone passing on the instructions from the health guy… No bureaucracy. Just efficiency.

    I go into a free museum in town, painless experience, no bureaucracy. Trying to get tickets for some private sector things is a nightmare of repeatedly trying online as other private sector peeps hoover them up to resell.

    Refuse collection, it just gets taken away like magic. I don’t have to compare half-a-dozen providers and worry about the small print. Parking. I live in a city so spaces are restricted, but if I need a couple of extra temporary permits for visitors, I just ring a guy at the council who issues a couple of e-permits in a few minutes, painless and free, so don’t need to use the extortionate private parking.

    Libraries, those that are left are also a painless process. Let’s contrast this with my recent attempt to upgrade my mobile phone. They already have my details so ought to be painless, right? Still takes over an hour. I want to pick it up from my local store but they don’t let you arrange that bit over the phone, has to be via email. They have my email address and checked with me it was correct which it was. So I wait for the email…

    …Which never came. I ring the next day and they tell me they have no record of my order on the system at all. But they’ll happily take my order again!! I asked what could they do to ensure it wouldn’t happen again? Answer came there none… they couldn’t figure out what had happened.

    I worked it out for myself later: someone not-too-bright had designed the system as per usual. But it’s not much use trying the other mobile phone companies because there are horror stories with those too. And with my broadband. Landlines virtually unusable because plagued by telesales. Companies these days will not only inflict you with their own pointless bureaucracy and upselling, they will sell your details on to let others inflict more of their wondrously efficient misery.

    At times one deploys the efficiency of the public sector to counter the “bureaucracy”, or more accurately, relentless hassling of the private sector. Like when you ring trading standards and they politely and efficiently tell you what to do to stop the private sector madness. For the private sector has many ways to try and inflict themselves upon you, like when they pretend to be your gas or phone provider to try and get into your home and try and con you into switching…

    Not that there is never bureaucracy and hassle in the public sector. Sometimes it’s a political decision, e.g. to make benefits claims more onerous, sometimes it’s necessary. The health and safety stuff may seem a burden at times but try running a school like my partner does, and you will see how important it is. Also, if you want to see needless bureaucracy try contracting private sector services in education. I could fill a blog with it.

    This is an abridged version Millie, I can give many more examples besides these and the BT and bank stuff you mentioned. And online you can find much, much more. From proper sources, not anecdote. But maybe you’ve had a miraculous experience of hassle-free nirvana with the private sector and somehow your council doesn’t do anything like magicking away refuse etc….

  28. A wonderful discussion here about the technicalities of private versus public ownership/ private versus public management. I actually share a lot of the ‘pro public’ points being made.

    But the discussion has completely overlooked one key salient point: this is an issue of image/ and issue of overall message not specific/ the mood music if you like.

    Stating we are going to reinstall clause 4 or- clever wheez this- an updated clause 4 for the 21st century” will consign us to the 20-30 per cent election result as people middle of the readers will not trust us and older voters will see us as unnecessarily retro.

    A better tactic- and some of the other candidates are tacking his way- would be to make the case for ‘forms’ of public ownership in specific sectors. There are many different types of ‘public ownership’ from command and control/ direct provision all the way through to minority golden shares.

    Pleasing the far leftys with talk of resurrecting clause 4 was the first serious misstep of corbynmania thus far. It is just the first of many along the road to him giving up or being forced out.

    Much fun along the way though!!

  29. Great iOS typing errors there so numerous I will leave to people to translate if they so care!


    NB the idea that because Kinnock got 35% of the vote in 1992 (clause 4 intact) is another straw man argument.

    Aside from the fact the Tories- at that ‘clause 4 election’- got the most votes ever by any political party in any UK GE…(!!)…

    ….this was an election fought on the first serious manifesto since 1979: no far leftymanifesto commitments to broad sweeping re-nationalisation/ massive tax hikes on “middle income” families/ CND and pacifism etc etc er, the basis of the Corbyn ‘offer’ ! The mood music was of a Labour Party slowly dragging itself back to the centre and common sense…but not quite there. Hence the necessary music post Brown-Blair ascendency of taking theatrical steps like calling a special conference to change the constitution and dump the glorious clause.

    But Kinnock- as Ed would discover himself- 20 years later was not deemed photogenic or ‘English enough’. And Labour were still deemed too left wing who held up alongside a centre right Tory leader in the post Thatcher epoch.

  30. Carfrew

    You make some good points, though I’m sure there are many counter-examples (Don’t get me started on pre-privatisation British Gas!). However I think you went a bit too far with this bit –

    “For the private sector has many ways to try and inflict themselves upon you, like when they pretend to be your gas or phone provider to try and get into your home …..”

    I think you’re confusing the private sector with the criminal sector, though I see from your post that you probably don’t think there’s much difference.

  31. @Pete B

    “I think you’re confusing the private sector with the criminal sector, though I see from your post that you probably don’t think there’s much difference.”


    Well, some stray too far, but some of it is just very carefully scripted to create an illusion, but is not necessarily illegal.

    Meanwhile, unpleasant as hominem sneaked in there, Pete. If you read my posts, you will see that for me it’s a case that there is a range of outcomes from both private sector and public, ranging from brilliant to soul-crushing.

    But those ideologically blinkered in favour of private will ignore my critiques of the public sector, sensitive only to anything that might shatter their fragile certainties, and assume I’m just down on the private, and those totally committed to the public sector may think I’m some raging right-winger. I’ve had people on these boards and elsewhere assume I’m of the left or of the right.

    I mean, despite having been to private school, and defended them against some charges on here (though can’t defend them against everything), I’ll still get someone assuming I’m down on everything private.

    That’s the irony if you try and be non-partisan, everyone one else may think you partisan…

  32. @Pete B

    I mean, it should be obvious from my posts that I’m a fan of the private sector when done right. I am not campaigning for state coffee houses. Big fan of Apple. As I have said numerous times, the idea of having to buy my HiFi from some state behemoth would fill me with dread…

  33. Carfrew
    Sorry, I didn’t mean to cause offence, it was just that that particular post seemed to be very much in favour of public over private operations. My first statement was meant to give the meaning that you made some very good points, not all of which had occurred to me. I should have made that more clear.
    Like you, I try to be non-partisan though my instincts are for a small state. You made some very good points about some of the public services though.
    Growing up in the aftermath of Nazi Germany and during the hegemony of Soviet Russia over much of Europe has coloured my approach to over-mighty bureaucracies.

  34. @Pete B

    That’s OK, but I was just countering a specific point, claiming public sector to be far more bureaucratic. Obviously this requires me to give examples that show problems with the private sector. But you cannot fairly conclude from this that I am anti private sector.

    Because I am just as liable to be critical of the public sector in other contexts. I would defend Colin if he complains of issues in the health service. We might simply differ a bit as to the solution.

    If someone said state education was all perfection, I could go on for hours pointing out the flaws. And they might think me partisan. Until they see me doing the same to private sector schooling. Or alternatively, talking about the strengths of both.

    Ya dig? I do try and telegraph this stuff…

  35. @Carfrew

    Enjoyed your post, and as Pete B suggested, good to be reminded of so much that the public sector does well. And your examples were entirely valid, both of good public services and shoddy private business practices.

    I did in fact say much the same.

    However, might I tentatively suggest that where public and private have operated in the same sector, the private has generally out-performed the public? But let’s not trade examples, it could go on a long time.

  36. I obviously have many thoughts on the public vs private debate but I think I’ve made my point of view pretty clear in other posts and I’ve been acutely aware that my posts have been somewhat partisan of late.

    Instead I’ll ask a totally unrelated question. I’ve been doing some research into boundary changes (a little pet project at the moment) and I was thinking that I often see posters here talk about how “x party carried x ward in 2010” or whatever and was just wondering were is this data coming from because it would be very useful to me. At present I’m using a combination of local election results (which obviously are totally different from general elections) and EU election results (which as far as I can tell only provide results by authority and not by ward) so basically does anyone know where this detailed ward breakdown for general elections comes from?

  37. @Millie

    Lol, I don’t mind proffering examples Millie!!

    Has US Healthcare outperformed ours?

    When I was at school, the top-performing school in the country was Manchester Grammar, which is private now but wasn’t then.

    But of course, easier when private sector can cherry-pick. As I pointed out earlier, it needed the State and voluntary sectors to sort out education for the masses, and the State to ensure universality.

    Is water fabulously better now it’s private? Ask Alec about that. What about rail? Etc. What kind of banking industry would we have, if the State hadn’t stepped in following the Crunch? Or even, what kind of economy…

    Also, when you first privatise, with more initial competition, may initially be OK. But look what happens to energy prices over time as the energy companies consolidate and hoover up suppliers etc. Is the itself gas any better? Nope, it’s just more expensive.

  38. @Millie

    Examples abound. You have to work pretty hard at it not to see them. Look at outsourcing. Was out-sourcing hospital cleaning and the MRSA that followed better performance?

    What about the headlines concerning the likes of G4S who even had to change their name it got so bad.

  39. @Millie

    There are some things the private sector just couldn’t do at all, because couldn’t marshall the resources or stay in the game long enough. Thus it took the State to put man on the Moon and kickstart the satellite communications industry. And in the process assist the private sector by providing a market for computer chips.

    Or GPS, which came via State funding, or the internet you are using now.

  40. JIM JAM


    I’m not at all convinced that “energy” is a “natural monopoly”. The panoply of fuel options , not to mention different approaches to generation should make electricity supply capable of multi-supplier competition . Gas is perhaps closer to a “natural monopoly” -and water seems a pretty clear candidate.

    Natural monopolies suffer from my primary bugbear-producer interest biase-whichever sector delivers their output. If the producer has no competition, inertia does indeed set in-and the customer comes second to those employed to supply.

    Of course non of these services are paid for out of general taxation-and no one is suggesting that customers stop paying for their own usage-so introducing a State run supply simply guarantees an income stream to a bunch of Public Sectror Employees instead of a bunch of Private Sector Employees.-from a captive cohort of customers.

    I think the result will be unchanged-the customer comes last.

    There are so many more factors to consider-Capital Investment; Strategic significance, etc. And then you have the range of delivery options from State Funded & Supplied , through State Funded & Private Sector Supplied to Private Sector Funded & Supplied with State regulation.

    Its a complex subject -and one needs to lay out sensible criteria for choosing a given delivery option.

    Political dogma & ideology just militate against sensible decisions.

  41. @Colin

    “I think the result will be unchanged-the customer comes last.”


    Well there is a silver lining in such circumstances Col., in that if it’s state-run, all the profits come back into the public purse, instead of just a bit of tax on the profits, with the rest squirrelled away somewhere. (Perhaps used to try and secure another monopoly!!)

  42. Mike Smithson @MSmithsonPB has tweeted
    “Sharp move to Corbyn on Betfair so he’s now clear favourite. I wonder if new YouGov poll coming out.”

  43. Carfrew
    “… if it’s state-run, all the profits come back into the public purse,…”

    Except when nationalised industries make losses, which are subsidised by the taxpayer. If memory serves me correctly, nationalised industries often lost money in this country, particularly in the 1970s.

  44. @Pete B

    It seems to me the tax payers are subsidising private industries all the time. Tax credits, rail subsidies and bailing out the banking industry are some examples of this.

  45. I agree that the banks should have been allowed to go bust. That’s how capitalism is supposed to work. When governments interfere with the markets (other than necessary regulation) it causes distortions and economic problems.

  46. @Pete B

    Colin and Jim Jam are talking about natural monopolies and stuff, Essentials that don’t tend to make losses.

    The Seventies saw the State also propping up Industry during an intensely difficult time: the Stagflation – swingeing inflation AND recession – caused by the massive oil price hikes that caused economic difficulties in many nations.

    Bit much to expect summat like a car industry to make profits during an oil crisis, so the order of the day is to try and save your industry during the difficult period ready for better times.

    Like the Americans recently did with their car industry, like we did with the Banks. Unfortunately, post 1979 we turned our back on that and decided to make cuts, upping interest rates to higher than they had ever been, on business already suffering from recession, AND nearly doubling VAT during a period of already high inflation, thus making burdens for much industry intolerable.

    Once oil prices fell back sharply in the mid-eighties, we enjoyed a worldwide boom, but too late for many of course.

  47. @PETE B

    “I agree that the banks should have been allowed to go bust. That’s how capitalism is supposed to work. When governments interfere with the markets (other than necessary regulation) it causes distortions and economic problems.”


    Lol, the freezing up of the banks took out nearly seven percent of the economy in short order. Scary quick. If we hadn’t intervened, Jesus.

    Letting Lehman’s go bust in the first place precipitated disaster throughout the system.

    Modern economies are too intertwined for the Libertarian dream to work in practice.

  48. @Pete B

    Sure, a big State can be summat to dread. But a small state can let our corporate masters fill the vacuum…


    I see that as no silver lining at all. Particularly if I’m a neglected customer of this outfit.

    And of course there are no public sector “profits”. If they existed under the private sector alternative they would indeed have brought in taxation-now I merely contemplate its loss , plus my general taxes going up to pay for this service-and I’m still treated like dirt as a customer.

  50. Carfrew
    “But a small state can let our corporate masters fill the vacuum…”

    True, that’s why I said that regulation was required. However if you keep lame duck companies going, whether they be banks or anything else, it drags the whole economy down because resources are tied up in loss-making operations.

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