Does a British government have the moral and legal right to sell off industries and property owned by the state? In Britain the answer m is that it can legally do so. Barring restrictions agreed to in treaties, most particularly the Treaty of Rome and its successor treaties, a British government may legally do what it wishes. It may also repudiate existing treaty obligations. Parliament may in principle pass any law it wishes. That demonstrates the danger of having a political system without any constitutional bars to government action.
But if privatisation is legal, it does not follow that it is morally justified. To begin with to sell that to which no legal title exists would be illegal in any circumstance other than the special circumstance of Parliament passing a law to make it legal. That governments have no natural; legal ownership of that which is privatized can be seen from the fact that these are enterprises and property which were either developed from scratch by government or were taken over by the state, often from municipal undertakings which were public developments in themselves. In each case taxpayers’ money was used to either start or acquire them and in every case they were sustained and developed with taxpayers’ money.
For Britons who bought shares privatisation was a form of taxation. They paid money for that which the state already held on their behalf. It was the greatest confidence trick in history, selling people what they already owned. Non-British taxpayers purchased that which was not morally the State’s to sell. But the deceit went beyond this. By selling that which was held in common for the British, they robbed those Britons who did not purchase shares and the future generations who would have no stake in that which was sold before they were born.
In many instances, especially after the first flush of Thatcher’s privatization bonanza, there has not been a public flotation , so that the public had not even the say of shareholders in how what was once held in common was managed. The British government moved from being confidence tricksters to fences, selling what they did not own for what they could get, which, as is the way when thieves sell to fences, was always far below the real value of that which was sold.
Privatisation could perhaps have been morally justified if every British citizen had been issued free shares in each privatized industry, which they could then have held or sold as they chose. The Government would not then have had the proceeds, of course, but it should be remembered that the prime reason given by Margaret Thatcher for privatisation was that it would modernise great British industries through the invigorating blast of free enterprise. Ostensibly at least the raising of money for the government was not the prime motivation.
The money received from privatisation has simply vanished into general government expenditure. Had the money been earmarked for particular projects dear to the public’s heart, such as new hospitals and schools or placed in a separate fund to help pay the state pension in the years when it is anticipated that those working will substantially decline in relation to those who are retired, at least the public would have something concrete and identifiable to set against the loss of public assets. As it is the public as a whole has nothing.
It is of course impossible to prove whether taxes would have been higher or that government expenditure would have been lower if there had been no privatisation proceeds, but it is a fair bet that extra money in government coffers has simply meant additional government expenditure without a proper regard to whether the expenditure was warranted. That is the common experience of governments and public money.
The money obtained through privatisation should not be viewed as pure gain in terms of government expenditure. Privatisation has caused a great deal of what private business euphemistically call downsizing”. The resultant unemployment costs – unemployment pay and other benefits - have to be set against the privatisation receipts. In addition, a large proportion of those who have gained alternative employment have found themselves earning a good deal less than they did previously. That equals less tax paid.
Privatisation has been a great cheat practised on the British people.