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topic A boost for state ownership

26th June 1970, Page 51
26th June 1970
Page 51
Page 51, 26th June 1970 — topic A boost for state ownership
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Which of the following most accurately describes the problem?

by Janus

ARGUMENTS on the virtues and follies of nationalization will no doubt continue indefinitely. There is no way of resolving them; for, however much progress a nationalized industry may make, it is impossible to tell whether it would have done even better had it been left alone.

Obvious difficulties such as this have not stopped people from undertaking the task. A recent attempt has been made by Mr R. W. S. Pryke, of Liverpool University. in a booklet entitled Moorgate and Wall Street. He sees the obstacles clearly. There are probably only two ways. he suggests, in which an industry's efficiency can be assessed. He does not pursue the first approach of a comparison with the progress of that industry in other countries. The alternative is to compare productivity in the public enterprise sector with what is happening elsewhere in the economy.

Itt R PRYKE'S conclusions are not

palatable to the diehard supporters of free enterprise. He pays particular attention to the decade between 1958 and 1968 and examines the gains in output per man-hour in the air corporations and electricity (114 per cent); in gas (71 per cent); in BRS (about 62 per cent); in coal (57 per cent); and "even in the much-criticized railways" (52 per cent). Even taking into account a decline of 13 per cent for the publicly owned buses there was an overall rise of about two-thirds in the productivity of the nationalized industries.

In most of the industries, including the railways, the rate of increase has been much greater since the war, especially in the latest decade, than during the period between the two wars. Over the whole of the post-war period output per man-hour in BRS increased somewhat faster than in manufacturing as a whole, although for the railways the increase was significantly slower. Only buses during the period beginning in 1958 failed to keep pace with manufacturing, but the performance of the bus industry's private sector, says Mr Pryke, has been no better.

All this is very much in conflict with what Aims of Industry describes as "the poor performance of public undertakings". The phrase comes from a pamphlet Galloping Nationalization which includes a roll call nearly three yards long of the various undertakings owned or controlled by the nationalized bodies, Government departments and other State-fostered interests.

Aims of Industry suxests that the State should ,divest itself of the industrial holdings which it has acquired over the years. Competition would then be greater, resources would be more efficiently used and "public sector capital would be released to improve the economic and social infrastructure of the country". A start should be made with some of the peripheral activities. The examples given in the pamphlet are the hotel and travel services of Thomas Cook and Son Ltd and Tartan Arrow (Service) Holding; both should be transferred from the Transport Holding Company to private ownership.

There is perhaps cause for concern at the way in which largely extraneous activities are attracted to the State-owned organizations sometimes largely by accident. The bits and pieces which have come over to the transport bodies seems almost to have been an embarrassment to successive Governments which have passed them desperately from hand to hand like an unwanted parcel in a party game. On the other hand it may seem unfair that nationalized bodies alone should be deprived of whatever benefit is derived from associated or subsidiary companies.

THE inequity is notably evident in transport, which offers the best field for a straight comparison between public ownership and free enterprise. In the first place there is on the one side nationalized rail and on the other a mainly independent road transport industry. In both goods and passenger transport by road there is a State-owned sector.

What Mr Pryke makes of this opportunity accentuates his difficulties. He has to accept that too much weight cannot be attached to a better productivity performance under public than under the previous ownership. He criticizes the railways for neglecting opportunities before the war; but it could still be argued on the other side that the railway streamlining and have been forced on the industry whether or not it had been nationalized.

Mr Pryke has greater hopes of a like-with-like comparison between public and private road transport. Over the period 1958 to 1968, he finds, output per man-hour "appears to have risen" by 57 per cent in what he calls road haulage contracting, as against an increase of 62 per cent for BRS. Although the figures on which these estimates are based are not wholly reliable, Mr Pryke claims for them a certain negative value in that they "make it seem unlikely that productivity has been rising faster in the private than in the public sector of the industry". ERE is a bitter pill for some operators. They need not accept the conclusion blindly. The comparison may be as exact as Mr Pryke can make it and still not on all fours. Road haulage as a whole covers a far wider range of activities than BRS. To be accurate the comparison would have to concentrate on, for example, long-distance traffic or the carriage of parcels and smalls. It may be that the necessary statistics. at least for the last two or three years, are already recorded in the results of the survey undertaken for the Road Haulage Association by the Centre for Interfirm Comparison. If so they are not available for curious eyes, including those of Mr Pryke.

The field of the discussion may be enlarged. If BRS has been getting better more quickly over the last decade the reason may be that it had considerable leeway to make up. Elsewhere in his article Mr Pryke almost makes this point. He notes the slow rise in BRS productivity during the years following 1950. This he attributes to the adverse effect of partial denationalization. It has been argued just as convincingly that the disposal of a large number of mainly superfluous vehicles was one of the best things that could have happened to BRS. The subsequent spurt in productivity seems to lend support to this view.

PROBING even further one may ask whether, taking all points into consideration, road haulage would have been better or worse without nationalization. In the decade before 1958 in which Mr Pryke finds so little progress there was a series, of convulsions starting with nationalization in 1948 and continuing, through a storm of abuse from the dispossessed and other afflicted hauliers and of complaints from trade to industry, to a return of part of the BRS to free enterprise following the Transport Act 1953.

BRS had its difficulties hut those of many other hauliers must have been much greater. They may have lost the whole of their business or an important part of it. If they hung on there were restrictions to be faced. Denationali7ation was welcome but it brought the disadvantages as well as the possible benefits of making a fresh start.

Politicians were treating road haulage with no more sensitivity than a biologist dissecting a specimen. They chopped it into pieces to suit their own purpose and left it to chance whether the prime cuts they selected for nationalization were viable and whether the odd pieces left over were capable of joining and continuing as before.

In 1947 the industry was plentifully provided—possibly too plentifully—with independently minded people who believed they were running highly successful and progressive businesses. Some of them accepted positions in BRS; others took their individual qualities elsewhere, in many cases abroad. Nobody can know how the industry would have developed if their services had been retained.


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