Fishburn Hedges

23.06.2010

So we’ve had confirmation this week of plans for the sale of High Speed One – the rail link between St Pancras and the Channel Tunnel – as the wider 12 month programme of transferring state-owned assets to the private sector gathers pace.

Is this the start of the return of the good (or is that bad?) old days of privatisations, when those landmark sales of BT, BA and British Gas, to name just a few, were sold to the public at what appeared at the time to be knockdown prices?  Will we see once again headlines about the fat cats of the business world getting, well, fatter at the public’s expense?

I think not.

At a time when public trust in both business and government is at or near an all time low, it is to be hoped that this round of privatisations is made rather fairer for the taxpayer.

This time around, it is to be hoped that we have learned the lessons from the past and that we will have a far more measured approach that sees assets passing to the private sector at realistic prices and with terms that ensure an acceptable return for all stakeholders.

We now have a far better understanding of the mechanics of the financial and operational regulation of monopoly businesses.  We know that there is a way of structuring the transfer to and management of these assets in the private sector that ensures that the interests of customers, owners and wider stakeholders are appropriately addressed.

At a time when access to capital for buyers is rather more limited than for many years, we will need financing structures that capture value for the taxpayer for the longer term.  These structures should not inflate returns to the new owners predicated on the current state of capital markets but allow for a fair deal over the life of the asset, with no windfall gains for the new owners.

Above all, we need these companies, management and owners alike, to communicate clearly about the impact of the change of ownership on all stakeholders.  Be clear that the new owners have every right to expect an acceptable return on their investment by all means, but be clear also that the interests of all affected parties will be protected.  Give customers, staff, unions and local communities a genuine opportunity to consult and to be heard and we may see the emergence of a new model of privatisation; private ownership but genuine public benefit.

Now that really would be something to see.

Posted by Andy Berry