Since the 1980s, the UK has sold off many of its public services. These include water, energy, railways, buses, and the postal system. These services were once run by the government, but are now mostly owned by private companies. Since these industries were privatised, their shareholders have received nearly £200 billion. At the same time, customers are paying more, while service quality has often gone down.

A new report by the think tank Common Wealth shows that since 2010, UK households have been paying a hidden cost. This cost, called a “privatisation premium,” comes to about £250 per household every year. In total, over £114 billion has been paid to company shareholders from customer bills and fares in the last 15 years.

The report found that many of these companies make very high profits. For example, energy network firms, which run the wires and pipes that carry gas and electricity, had an average profit margin of 55% from 2020 to 2024. By comparison, the average profit margin for large UK companies is 15%. Almost a quarter of a typical household energy bill in 2024 went to profits. The rail industry received half of its income from taxpayers in 2023 and 2024, but profits still went to private owners. One in five bus routes has shut down since 2019. Companies that lease trains paid out more than 100% of their profits in dividends. Over the past four years, top executives across these industries earned over £662 million in pay.

Supporters of privatisation claimed it would lead to lower prices and better services. But the report argues that it has not worked that way. Instead, customers are paying more, and services are often worse. At the same time, shareholders are taking large profits from services the public still depends on.

The UK sold public services faster than almost any other rich country. Between 1981 and 1996, the country lost public wealth at a rate of 7.4% of national income each year. Only countries like Russia and Hungary, which were moving away from communism, moved faster.

Some experts say that returning key services to public ownership could help. It could allow better long-term planning and help meet climate targets. Public ownership might also lead to lower bills and better services. Professor Ewan McGaughey from King’s College London says most wealthy countries still own their energy, water, mail, and transport systems. He says the UK must choose between paying billions to private shareholders or getting faster, cheaper, and cleaner services.

Labour leader Keir Starmer once promised to bring services like rail, mail, water, and energy back into public ownership. He later changed his position and ruled out nationalising major companies. Still, the government has taken a few steps. It has brought some train services back into public control, created a new public energy company, and returned the national energy system operator to public ownership.

There are also examples at the local level. In Nottingham, the city council owns most of the bus company. In Manchester, buses are now run by the local government as part of a new public transport system.

Private companies say their investments help modernise the UK’s services. The water regulator, Ofwat, says companies must follow strict rules when paying dividends. If a company is not performing well or needs investment, it may have to reduce or cancel payouts. The head of the Energy Networks Association, Lawrence Slade, says private firms have invested £100 billion into the UK’s energy grid. He argues that this money supports clean energy goals without using taxpayer funds.

The report raises an important question: should essential services be run for profit, or for the public good? Many people now believe these services should return to public ownership. A recent survey found that most people in the UK think water, energy, transport, and mail should be publicly run. As prices rise and services continue to struggle, the debate over privatisation is becoming more urgent.
Source: The Guardian