Christine Quigley compares the Government's rhetoric and actions on public ownership

Before the 2019 General Election, businesses across a range of sectors were watching Labour’s plans to nationalise rail, energy, water and Royal Mail with great interest. However, post-election, it looks like the Conservative Party may be taking forward at least some of these plans, with potentially significant implications for business.

The Boris Johnson government has so far proved to be more interventionist than previous Conservative administrations. Since Johnson became Prime Minister, the Department for Transport has pressed ahead with plans to bring Northern Rail back into public ownership, and has warned that the South Western Railway franchise could be next. The Environment Bill, when it was introduced pre-election, contained stronger powers for Ofwat as the water regulator to modify water companies’ licences to operate, a significant change from the previous draft legislation.

The PM’s key adviser Dominic Cummings addressed Conservative MPs in 2018 on his now-famous blog, saying that “lots of what Corbyn says is more popular than what Tory think tanks say and you believe (e.g. nationalising the trains and water companies that have been run by corporate looters who Hammond says ‘we must defend’).” More recently, his call for data scientists, project managers, policy experts and “assorted weirdos” demonstrates a faith in the power of the state to transform society and the economy that has been relatively unusual in Conservative thinking over the last decades.

However, this interventionist trend is not entirely new. Former Transport Secretary Chris Grayling made the call to take the East Coast Main Line franchise back into public control in June 2018. At the time, Grayling was keen to stress that the route was “not a failing railway”, and that “it continues and will continue to generate substantial returns for the government”, but was critical of the operator for getting its bid wrong and for losing millions of pounds through meeting its contracted commitments.

In the 2018 Autumn Budget, then-Chancellor Philip Hammond declared that the government would no longer sign new contracts under the Private Finance Initiative (PFI) or Private Finance 2 (PF2) schemes. He doubled down on the launch of the Infrastructure Finance Review in March 2019, making clear that not only would government no longer use these models for new projects, but that alternative proposals “demonstrating the same characteristics as PFI or PF2” would not be considered, ruling out a tweaked PF3 approach.

Together, these instances demonstrate that, while the Conservative Party is keen to remain the party of business, it is not willing to protect private sector operations at any cost, and is prepared to consider significant interventions up to and including nationalisation if it feels the situation merits it.

Businesses who believe that the imminent ‘threat’ of nationalisation has gone away following the commanding Conservative majority elected in December shouldn’t rest on their laurels. It will be as important in the months and years to come for private sector companies to demonstrate that they are doing their best for customers, taxpayers and the broader economy and that they are committed to helping government achieve its broader goals around achieving Net Zero, growing productivity and increasing prosperity across the nations and regions of the UK.