Few opinion polls that claim to detect a shift in public attitudes merit the ubiquitous label âlandmark researchâ, but hereâs one that does. The Legatum Institute, a thinktank, and Populus have found levels of support for nationalising large parts of the economy that would have been hard to believe a few years ago.
The big four industries in the sights of Labourâs Jeremy Corbyn and John McDonnell should all return to public ownership, according to a strong majority of respondents. Water topped the poll (83%), followed by electricity (77%), gas (77%) and the railways (76%).
Nationalisation fever also appears to be infectious. Royal Bank of Scotland, you might assume, is not a powerful advert for the delights of state ownership but the country is apparently evenly split on whether all banks should be nationalised. There was even 27% support for nationalising airlines, as if the budget airline revolution never happened.
Dig deeper into the figures and you will see a remarkable convergence of opinion across age groups for most sectors. This is not a generational phenomenon. Some 78% of 55-64-year-olds, who are old enough to remember the days of British Rail (unloved at the time), support public ownership of train companies.
When the winds have shifted this far, itâs no wonder that prime minister Theresa May felt the need last week to rally to the defence of free markets as the âonly sustainable means of raising the living standards of everyone in a countryâ. She can keep singing the same line, but the public seems to want to try something different.
The Legatum/Populus research did not seek to explain why public opinion is currently so pro-nationalisation, but a few reasons are easy to guess. First, almost a decade after the financial crisis, real incomes in the UK are still being squeezed, so an appeal to the power of capitalism to improve living standards feels limp. The market has not delivered lower housing costs for generation rent, for example.
Second, support for nationalisation seems to go hand-in-hand with a general collapse in trust in business. This statement gained the strongest support in another part of the polling: the pay of senior executives should be capped. Executives have brought that on themselves. Most of the working population never earn a bonus but quoted companies run âremunerationâ schemes that make it almost impossible for a top executive not to get one.
Sir Richard Lambert, former editor of the Financial Times and former director general of the CBI, said in 2010 that âit is difficult to persuade the public that profits are no more than the necessary lifeblood of a successful business if they see a small cohort at the top reaping such large rewardsâ. His speech made a splash at the time but seems to have had zero impact on executive pay.
Third, the utilities and the train companies are in the firing line because the supposed benefits of privatisation seem so feeble. Water companies do not compete with each other and, for those that have been taken private, opaque financial structures make it impossible for outsiders to follow the fancy financial engineering and sums extracted by the owners. The energy companies regard a 5% profit margin as a birthright whereas supermarkets, which compete intensely, survive on half that level. And, while privatisation may have produced a surge in journeys by rail, more demand has not led to lower prices.
The extraordinary part of this pro-nationalisation shift, however, is that Corbyn and McDonnell have barely bothered to explain how they would pay for the assets, or how they would run them better. If a company were contemplating a series of takeovers worth Â£200bn-plus, the shareholders would want to know the details. The prime minister, if sheâs serious about defending capitalism, might want to push that argument.
She could also try rewriting the regulatory system for the utilities to ensure consumers get a better deal. Youâd probably start with water â itâs hard to mess up and current owners enjoy a life of almost risk-free luxury.
Good news for generation rent
For the first time in eight years, house prices are falling in London. The annual decline, according to the Nationwide, is modest at 0.6% and not being replicated elsewhere in the country. But where the capital leads, the rest of Britain tends to follow and with the Bank of England signalling an increase in interest rates in November, a further easing of property prices looks inevitable.
Such is the enduring love affair of Brits with bricks and mortar, this will no doubt be seen as national tragedy. It isnât. For years, house prices have been supported artificially by ultra-low interest rates and quantitative easing. The upshot has been that those who own property have been the lucky and undeserved beneficiaries of a boom in asset prices, while those who donât own property have seen their dream of getting their home disappear further and further into the distance.
Booms sometimes end when interest rates go up sharply, as was the case in the late 1980s, when official borrowing costs doubled to 15% and unemployment hit 3 million. On other occasions, as now, they peter out when house prices become unaffordable to new buyers even when mortgage rates and the jobless rate are low.
This is the latter sort of market. In London, the house-price-to-earnings ratio for a first-time buyer â even assuming they can find the deposit â is running at around 10, an absurdly high multiple. You donât need to be a financial genius to see why the upward trend in home ownership stretching back a century has gone into reverse. Rising house prices have been good for the buy-to-let landlords of the baby boomer generation: they are terrible for the millennials of generation rent.
There are only two ways in which property can become more affordable: incomes have to rise or prices have to fall. There is precious little sign that wage inflation is picking up, so that means anyone seeking to sell a house in London has to be more realistic about the asking price. That, unambiguously, is a good thing.
Uber boss faces hot seat
The streets of London are paved with gold for Uber, so new boss Dara Khosrowshahi will be keen to get the appâs licence to operate in the city back with a minimum of fuss.
Khosrowshahi has some explaining to do at this weekâs sit-down with Transport for London boss Mike Brown, if he is to pull it off.
The bare minimum Khosrowshahi should offer is a commitment to tackle TfLâs list of concerns head on.
This could include detailed plans for more thorough background checks on drivers and a system for the timely reporting of passengersâ allegations of crime.
But TfL will have had unspoken concerns about Uber that werenât included in its official statement, not least driversâ minimal employment rights and Uberâs tax minimisation methods.
If Uberâs cars are to stay on the streets of London for good, Khosrowshahi should come bearing gifts designed to ensure that TfL will have no reason in the near future to take further punitive action that will reopen old woundsâ.