John Harris

Journalist & Author

Road privatisation is the latest step in the stripping of Britain’s assets | John Harris

If you wonder where David Cameron’s plan to sell off our roads will end up, look at how wealth is torn out of the heart of America

Welcome, once again, to the great British garage sale. What with the outsourcing of the police now a serious prospect, and the deeply strange spectacle of Richard Branson bidding for NHS work, today’s announcement from David Cameron about selling off our roads is one of those things which is simultaneously shocking, and no great surprise.

In fact, this particular wheeze has been on the agenda since the time of George Osborne’s last autumn statement, when the chancellor talked up the government’s “national infrastructure plan”: proposals for 500 projects that would be funded by private sources to the tune of £20bn. Pension funds were the focus of most of the resulting news coverage, but there was also a big projected role for sovereign wealth funds, those ever-growing interests that represent one of the 21st century’s strangest quirks: the fact that nationalisation is back with a vengeance, but it tends to involve assets in the supposedly free-market west being bought up by foreign governments.

Cameron’s speech today, then, represents one of those occasions when the government announces something it has actually announced already, as proved by a Financial Times story from November last year. “‘For sale’ sign goes up over UK infrastructure projects” was the headline, and the opening paragraph ran thus: “George Osborne will next week hang a ‘for sale’ sign over British infrastructure projects worth tens of billions of pounds, as he attempts to tempt UK pension funds, oil-rich Gulf states and other sovereign wealth funds to pay for new roads, railways, housing and other projects.” There was a brief flurry of comment (from me, among other people), but the issue duly quietened down, while ministers and civil servants got on with making the plans a reality.

George Osborne has been to China to push the proposals; as the FT piece reported, the treasury minister Lord Sassoon has been to the Gulf, where he discovered a “huge appetite” for investment in British infrastructure. While there, he also underlined the watershed nature of what was being proposed, by harking back to the glory days of the Thatcher and Major years. “As an asset class,” he said, “UK infrastructure is generating about as much interest as there was with the privatisation programme of the 1980s and 1990s.”

I bet it is. Whatever this move represents, it has nothing to do with capitalism: it’s all about trading years-long monopoly contracts for a short-term fillip to the Treasury, with the hope that while extracting a profit, our roads’ new owners will somehow improve and expand them (they might, but surely on terms akin to the eyewatering arrangements of PFI deals). The government claims that tolls will only be charged by roads’ new owners for new capacity, but that sounds distinctly like one of those weedy assurances given by politicians that, once yesterday’s lunacy has become today’s accepted practice, is swiftly forgotten (to these ears, it has a similar ring to all those early New Labour claims about strict limits on private involvement in the NHS, or what the likes of Nick Clegg have said about profit-making schools).

The whole wheeze points in only one direction, as evidenced by a 2007 piece in Time magazine about American road privatisation: “Tolls often skyrocket under private owners, though with the blessing of elected officials, who avoid the political costs of raising tolls or taxes themselves. That’s how privatised roads deliver double-digit returns for investors.”

More generally, all this highlights things that the political class is too sold on neoliberalism to acknowledge. It may be hopelessly old-fashioned to point it out, but there is such a thing as a national economy. In that sense, it’s right to make a distinction between assets and businesses that may suit being traded for speculative purposes, and ones so central to our national wellbeing that they ought to be left well alone (water privatisation is apparently the government’s ideal model – doesn’t that make you feel better?). While we’re here, you might also like to ponder on how you’ll feel about your vehicle excise duty and/or tolls going to some of the most oppressive regimes in the world.

Some of the best writing on these issues has come from Matt Taibbi of Rolling Stone magazine, whose 2010 book Griftopia contains a sobering section about exactly the kind of plan the prime minister is now proposing, and its history in the US. Taibbi makes mention of no end of infrastructure already flogged off, and the cynical reasons for doing so: “A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for 50 or 75 years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.”

But he also zeros in on why all this is bad news for millions of Americans, in a passage that focuses on the Pennsylviana turnpike, almost sold by governor Ed Rendell after a bidding war that included the Spanish corporation Abertis and Goldman Sachs.

Taibbi quotes a friend who worked for a Gulf-region sovereign wealth fund, apparently offered a stake in the turnpike by American investment bankers, and also makes reference to a small Pennsylvanian businessman called Robert Lukens. He points up that the latter’s trade is already declining “thanks to soaring oil prices that have been jacked up by a handful of banks”. He highlights the fact that rising petrol prices mean that even more of Lukens’s money is going into “the pockets of Middle Eastern oil companies”. At the same time, his suffering business means that he’s paying less tax, with the result that cash-strapped state governments are now selling off toll roads, parking meters and ports, often to those self-same oil-rich states.

Taibbi concludes thus: “It’s an almost frictionless machine for stripping wealth out of the heart of the country, one that perfectly encapsulates where we are as a nation.” Here, as in America, it certainly does.

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