Thursday, 10 May 2012

Once it had an empire, now Britain is a colony

WHEN I was growing up, learning about the world, there were certain facts that just had to be accepted. The sky is blue, grass is green; you shouldn’t put earthworms in your mouth, and it’s better not to use the best silver spoons to dig them up with.
Later, when I got to study A-level economics, came slightly more advanced stuff. China and India were full of very poor people; Brazil had terrible inflation. Some things – water and electricity were the classic examples – were so essential they could only ever be supplied by the state, not by private companies.
My textbooks were quite explicit. The necessities of life could not be trusted to the vagaries of free enterprise. Providing them was what the state was for.
If I had suggested in my 1975 A-level paper that within 15 years the British water and electricity industries would have been privatised, I would undoubtedly have failed the exam.
But if privatisation was unthinkable, how would our 1970s selves have viewed the situation we’re in today?
Water and electricity haven’t been re-nationalised. Those of us who think they should be are probably in a very small minority. But power has been taken back into state hands. It just isn’t the British state that owns it.
The largest generator of electric power in Britain is EDF Energy. It has two coal-fired and two gas power-stations, two wind farms, and eight nuclear power-stations (including Sizewell), with four more planned. It employs more than 20,000 people and handles 5.7million customer accounts, selling gas as well as electricity. It is, to all intents and purposes, the largest and most successful of Britain’s private power companies.
Except that it isn’t private. And it isn’t British.
It is wholly owned by √Člectricit√© de France, which, as its name implies (unlike, for example, British Telecom or British Gas, whose names are now in this sense misleading), is state-owned. By the state of France.
Ultimately, Margaret Thatcher and her Union Flag-waving followers have done what Napoleon Bonaparte tried and failed to do – put British power in French hands.
British water – the rain that falls from our sky – is sold to us by mostly foreign businesses. Several of the privatised British water companies have also been French-owned, though trading on the international markets has moved most of them on.
Essex and Suffolk Water, for example, is now owned by Cheung Kong Infrastructure Holdings, a private company based in Hong Kong. In 2010 Cheung Kong also took over three UK electricity networks. From EDF.
The old Ipswich Water is now part of the French company Veolia. Wessex Water is owned by a Malaysian company.
Britain’s biggest water-supplier, Thames Water, is ultimately owned by an Australian firm. Last month, though, part of it went back into state ownership. Chinese state ownership.
The China Investment Corporation, controlled by the finance ministry in Beijing, bought an 8.7 per cent stake in Thames’s parent company, Kemble Water, for an estimated £600million or so.
Small stuff for now, perhaps. But it means the bills paid by 14m British households will help pay for the continuing rapid growth of the Chinese economy, just as ours is in such trouble.
Many, perhaps most, of China’s people are still poor – though not generally at the mass starvation level of the years when I was growing up. Your iPhone – famously and controversially sweatshop-built – and probably many other things you own, from your shoes to your telly, may have been made by Chinese workers toiling in dismal conditions for little money. As a country, though, China these days is anything but poor.
Who do all the indebted western economies – Greece, Italy, Ireland, the US and ourselves – owe all that money to? China mostly. And India, and Brazil.
Countries still with a lot of poor people, but also a rapidly increasing number of rich ones, and a fast-growing middle class.
China has always been a land of eye-watering statistics. A third of the world’s population; more than 20m peasants starved to death from 1958-61.
Today the stats of the world’s oldest paper-based economy are of a different sort.
China has £2trillion in the bank, and foreign currency reserves 20 times those of the USA. More than 400 British businesses, including Superdrug, MG Rover and Canary Wharf, are owned, or part-owned, by the Chinese.
If the proposed high-speed rail link from London to Birmingham or the controversial Thames estuary airport are built, it will be with Chinese money.
Symbolically, China is the biggest market for Rolls-Royce cars.
Maybe the argument over Britain’s place in the world – in Europe, or in a ‘special relationship’ with the US – is outdated. Perhaps, like 17th-century India being taken over by a British company, Britain is becoming a colony in a new Chinese empire.

No comments: