In a new video for We Own It, John McDonnell explains Labour's promise to bring rail, water, energy and the Royal Mail back into public ownership.
10 reasons why privatisation is bad for you
1. Your services get worse
Public services involve caring for people. But private companies make a profit from public services by cutting corners or underinvesting.
There is a conflict between making a profit and taking the time to care. For example, private care workers often are only allowed 15 minutes for their visits. They barely have time to do the basics, let alone stop for a friendly chat with the older, vulnerable person they are caring for.
Privatisation often means job cuts and more casual workers, who are paid less and have worse conditions. Staff knowledge, skills and experience are lost - with a knock on effect on service quality.
2. Privatisation costs you more
You pay more, both as a taxpayer and directly when they privatise public services.
Have you noticed how your water bills, energy bills, train and bus fares keep on rising in real terms? And did you know that the US privatised health system costs double what we pay for ours?
In a privatised service, profits must be paid to shareholders, not reinvested in better services. Interest rates are higher for private companies than they are for government. Plus, there are the extra costs of creating and regulating an artificial market.
3. You can't hold private companies accountable
If a private company runs a service, they are not democratically accountable to you. You don't have a voice.
Contracts to deliver public services are agreed between private companies and government behind closed doors. There is very little transparency, public accountability or scrutiny. The companies are not subject to Freedom of Information requests because of ‘commercial confidentiality’.
When private companies fail to deliver, the public has no powers to intervene and government (local and national) doesn’t always have the time or expertise to force them to keep their promises.
4. Privatisation creates a divided society
Public services are important to meet everyone's basic needs, so we can all be part of the community.
Schools and hospitals are not optional extras. We all need and rely on public services - they are universal. That means they need to be accessible and high quality for everyone.
Privatisation often goes hand in hand with encouraging richer people to pay more and opt out of the services we all use. This leads to division, making it harder to provide excellent public services for everyone.
5. You don't get a democratic voice
When we go to the shops, we all make our own individual decisions about what we want. Public services are different – they give us a chance to come together to decide what kind of society we want to live in.
For example, we might want clean, green energy for our future – but the private companies control the energy ‘market’ and often invest in dirty energy, without giving us a say.
6. Public services are natural monopolies
Privatisation was introduced because of a belief in free markets and consumer choice. But public services are often what economists call ‘natural monopolies’.
For example, when you take the train, you don’t really have a choice about which one to use. There’s no real competition. Facebook is another, relatively new ‘natural monopoly’. If all your friends are using it, it's difficult for you not to.
Private monopolies often become the worst of all worlds. You don’t have consumer power because you can’t go elsewhere. But you don’t have power as a citizen to make the service better through democratic accountability.
7. Private companies cherry pick services
Private companies cherry pick the profitable bits of a service so they can make as much money as possible.
For example, bus companies will only run services in busy areas, so rural communities lose out unless government steps in with a subsidy. It's more efficient to run public services in public ownership so that profits can be reinvested across the whole network as needed.
In probation services, private companies are paid to manage medium to low risk offenders, while the state continues to take responsibility for high risk offenders.
8. Privatisation means fragmentation
When lots of private companies are involved in delivering a public service, this can create a complicated, fragmented system where it’s not always clear who’s doing what.
Private companies don’t necessarily have much incentive to work together and share information. This makes it difficult to provide an integrated service.
The cost of the internal market in the NHS is at least £4.5 billion a year.
9. Privatisation means less flexibility
Councils and government departments are responsible for meeting the needs of the public – but privatisation means less flexibility for changing circumstances.
If an outsourcing contract with a private company needs changing, government must pay more to make changes or improvements, add in extras or to opt out.
And selling off public assets (like student loans) or public land (like school playing fields) means we the public have fewer options and resources for delivering the services we’ll need in the future.
10. It doesn't have to be this way
Public ownership is really popular because it can save money, give us a real say and provide the great services we need. Privatisation is not the only game in town. There are many success stories of public ownership locally, nationally and across the world.