An energy policy for need not profit
Tony Benn on the privatisation of energy
This week marked eight years since the death of Tony Benn. Reproduced below is his speech in the House of Commons in December 1985 opposing the Conservatives’ privatisation of British Gas:
“It is corruption. There is no question about it. I have been here for 35 years and I have never seen a measure which so reeks of corruption as this one.”
It is reproduced here today for at least three reasons, in addition to remembering Tony Benn.
One, because as energy prices soar and we confront a cost of living crisis spiralling out of control, it is worth returning to the arguments about how privatisation would leave consumers exposed while energy companies’ profits rise. As he said, “to look to this industry as a way of making more profit, rather than of meeting a need, shows the real motivation behind the introduction of the Bill.” Far from being something we cannot or should not control, energy pricing, he argued, “is a central part of national policy.”
Two, because his detailed polemic over the Tories and big business is a sharp reminder of whose interests they represent – including during the present debate over energy.
Three, in making the case against privatisation he argues for accountable public ownership that goes beyond the Morrisonian model of the post-war Labour governments, a point that is still relevant to those of us who want to see privatisation rolled back.
Of course, this debate was just over thirty-six years ago and some elements have moved on – for example there is a whole passage on issues relating to the then-EEC, whereas we are no now longer in the EU.
But in the strength of its argument for a rational, publicly-owned and publicly-accountable energy sector, and in the power of his polemic against the interests the Tory party governs for, it still has relevance today.
One could not have a clearer description of the difference of opinion that divides the two sides of the House. Like a vulture, the Conservative party is already beginning to hover around the British Gas Corporation to see what rich pickings it can make for its own people.
So far there has been no mention of the fact that many people look to gas for security of supply, high levels of maintenance and repair and high levels of safety at a price that they can afford. During this winter, as with every other, many people will be wondering whether they will be able to pay their gas bill when it arrives later in the year. As is well known, people die every winter from hypothermia simply because they cannot afford to pay the price of fuel. Therefore, to look to this industry as a way of making more profit, rather than of meeting a need, shows the real motivation behind the introduction of the Bill.
The Secretary of State was totally unconvincing. His arguments for privatisation were not valid, and he never mentioned the real reason for this measure. In 1969–70 and from 1975 to 1979, I was the sponsoring Minister for the British Gas Corporation. Since the public ownership of gas there has been major investment, higher safety standards and a very good repair and maintenance record. The industry has bought British equipment, which has maintained employment, and there has been a sense of service. Successive Governments have taxed the industry, but one can also tax an industry in private ownership. For example, we tax petrol. Anyone who thinks that once gas is in private ownership it will be free from a predatory Chancellor does not understand how this works. For various reasons, any Chancellor will from time to time look at ways of raising revenue, and private gas could be taxed as easily as public gas. The only difference is that gas is now being taxed for a different reason—to make it more profitable to sell it off.
I happened to be Secretary of State when North Sea gas was brought ashore. Because British Gas was a monopoly buyer, it was able to get a good price from the oil companies because the oil companies could not play one customer off against the other. British Gas was able to say, "If you want to sell gas in Britain, you must sell it at the price that we offer." One reason why gas prices have been so low—in some ways too low, to make it easy for electricity and coal—is that British Gas was able to force oil companies to sell gas at a low price.
Massive investment in a new distribution network was set up and a programme to convert appliances was successfully established. The case for the common ownership of gas is unanswerable. It was not always and only in private ownership before nationalisation. Hon. Members might remember the phrase, "gas and water socialism." There was a proud municipal record of running town gas before nationalisation.
Gas is a vital national asset. Energy policy under any Government is bound to take account of depletion policy. It would have been possible for British Gas, if it had so chosen and if the Government had allowed it, to deplete at a massive rate and bring the gas ashore so that people converted to gas when it was cheap, only to be caught with equipment that they could not afford to use when more expensive gas came in because ours was starting to run out. Energy pricing as between gas, electricity and coal is a central part of national policy.
I should like to mention one consideration that has not come out so far, unless the Secretary of State dropped a hint. Once gas is taken out of public ownership, British Gas will be under the complete control of the Common Market Commission. I have warned the House about this before, and am speaking from knowledge. When I was Secretary of State, it tried to argue in Brussels that the continental shelf was under the Treaty of Rome. We said that it was not and were able to enforce our will because we owned the gas fields there. The Commission wanted the pipelines to take the gas straight to Europe rather than come through our system to the continent. We were able to say, "No, we do not accept that the continental shelf comes under the Treaty of Rome." Privatisation will enable the Commission to enforce its will under the competition articles of the treaty. Moreover, the record of buying British equipment will dissolve because the EEC requirement to put orders out to tender will be enforceable with a private gas corporation, whereas it was not when it was public, when we were able to have regard to the long-term security of supply of equipment.
The Bill hands over North Sea gas to Common Market control by the act of privatisation. It will lead to higher prices, greater fuel poverty, lower safety, a weakening of regulation, poorer maintenance, loss of control to the EEC and reduced demand for British equipment.
The real motivation for the Bill should be spelt out with absolute clarity, as the Secretary of State did not touch on it. It is to sell assets, which the Government do not own, to their business friends, who will buy the assets at knockdown prices. It is to pay City institutions enormous fees to sell the assets and to use the proceeds for a once-and-for-all tax cut to buy support at the next general election. It is important that we make it clear that business firms put up money to pay for Saatchi and Saatchi advertising to get a Tory Cabinet elected, knowing that a Tory Cabinet will put on the market, below their real price, assets the value of which comes from the labour of those who work in the industry concerned and public investment. They will buy them, make a large killing and support the Tory party again. It is corruption. There is no question about it.
I have been here for 35 years and I have never seen a measure which so reeks of corruption as this one. We should consider the figures. British Gas is valued at £16 billion. The Government have already sold £4.7 billion of public assets and lost £1.4 billion by under-pricing. That is statistically established. British Telecom shares, for example, rose 93 per cent in value before night fell and the Government lost £1.3 billion in a single day —money that would have solved the problem of inner cities, made the Archbishop of Canterbury happy and ended the tragedy in the Broadwater Farm estate or in Brixton or in Liverpool or in Sheffield.
That money could have been used to meet needs, but it was used to pay an electoral debt incurred by the Government, who gained support from business companies. If the House doubts that assertion, the figures are public. The City institutions received getting on for £300 million in fees for selling assets. That is four or five times as much as Band Aid and Live Aid raised in one year of concerts for the starving of Ethiopia. The City of London was rewarded with six times as much as the generosity of the public could provide for the starving of Ethiopia. But here is the rub. Of the City underwriters, 33 of the 55 who got the business contributed to Tory party funds. I have some figures to prove it. Baring Brothers gave £25,000 to the Tory party in 1983 and shared in fees of £5 million to sell off Cable and Wireless. Kleinwort, Benson paid £30,000 to the Tory party and shared in more than £5.5 million for selling British Aerospace, £190 million for selling British Telecom, more than £5 million for selling Cable and Wireless and £9 million for selling Enterprise Oil. That investment of £30,000 in Tory party funds was pretty good. Hill Samuel paid £28,000 to the Tory party and shared in £5.5million of fees for the sale of Jaguar. Lazards put in £20,000 and shared in £1.75 million for the sale of Wytch Farm. Morgan Grenfell put in £30,000 and got a share of £3 million for the sale of Amersham International and Sealink.
When I think of the district auditor chasing councillors in Lambeth on the ground that they were a bit late fixing a rate and compare that with the massive sums of money given, in effect, in return for political support to City institutions that have contributed nothing to raise the quality of service of British Gas or to provide safety for those who use it, I can only call it corruption. The public should know how it all works.
I am glad that my right hon. Friend the Member for Salford, East - Mr. Orme - said that an incoming Labour Government would deal with this matter. The precedents for legislation set by the Tory party are many. I have gone through the legislation of the 1970–74 Tory Government who took powers under the Counter-Inflation (Temporary Provisions) Act 1972 to control prices, to demand information, to amend statutes, to control profits, to vet investment and to control multinationals. They introduced the Insurance Companies (Amendment) Act 1973 which gave powers to veto directors, to inspect books, to issue directives and to define unfair practices. The fair trading legislation gave powers which included entry and seizure. The classic case was the one-clause Rolls-Royce (Purchase) Act 1971. Through one clause, they brought Rolls-Royce into public ownership. My right hon. Friend need have no fear that he will not be sustained by Tory precedents when dealing with this abuse of public trust, which is a denial of the fiduciary responsibility to taxpayers and the public of whom the judges are so ready to speak when they criticise Labour councillors.
There will need to be changes in the nature of public ownership. Over the years, for my sins, as Postmaster General and as an Energy Minister I have been responsible for many public corporations. There must be real accountability to Parliament. I have never believed it right for the Secretary of State of the day—I had many years of experience of this—to have no explicit authority over a chairman such as Sir Denis Rooke, but always to have to twist the chairman's arm and then not be accountable to Parliament. There should be explicit powers of direction, subject to parliamentary approval.
Secondly, we should get away from the crude patronage of appointments of board chairmen. In the United States, an ambassador cannot be appointed without the approval of the Senate in committee. Parliament should have to approve the chairpersons appointed to our public corporations so that people can give evidence about them before they are confirmed.
The third point bears a little on the question of regional boards. I was doubtful about centralisation, but it was thought necessary because of North sea oil. Local authorities should have power over local managers of nationalised industries and be able to seek their removal if they are not sensitive to local needs.
A final precedent from the Tory party is the Trade Union Act 1984. Many Ministers have talked about the need to restore the power of union members over the unions. A minor amendment to the Government's own Act would allow workers in industry to choose by ballot the boards of directors of the companies for which they work. The alteration of one word —from "union" to "company"—would secure a measure of power for those who have invested their lives in the gas industry comparable with the power now supposedly enjoyed by those who have invested their money in it.
The party of which I am honoured to be a member, which still lives under the shadow of and perhaps affection for the Herbert Morrison legislation after the war, must look again at these matters. There must be accountability to Parliament. There has never been proper accountability. Parliament must be able to vet the chairmen of these great corporations. There must be accountability to elected local authorities to see that the big bosses in the public sector do not ride roughshod over local needs. Those who work in the industry must have powers over their own industrial management —based, perhaps, on the legislation introduced by the Conservatives to deal with trade union democracy.
I have long urged those changes. When the history of all this comes to be written, for this privatisation will not last long, it may be that by breaking the Morrison mould the Government will be remembered for having paved the way to a form of common ownership which entrenches service to the public and not the pursuit of profit which is the Government's sole interest in introducing this measure.
The text has been edited, such as to remove interjections, and I have therefore wherever possible adhered to the version in Tony Benn’s anthology ‘Fighting Back, Speaking Out For Socialism In The Eighties’ (Hutchinson, 1988).