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CBI director-general proposes reform of UK’s infrastructure and services

CBI director-general proposes reform of UK’s infrastructure and services

Carolyn Fairbairn suggested alternatives to renationalisation during her Roscoe Lectures speech in Liverpool.

Words by Natasha Young

The Confederation of British Industry’s (CBI) director-general has suggested ways to get UK infrastructure, utilities and public services back on track.

Carolyn Fairbarn proposed “concrete proposals for reform” during a recent visit to the North West, as she delivered the second of Liverpool John Moores University’s 2019 Roscoe Lectures series.

Addressing audience members during the event at the city’s Royal Court Theatre, Fairbarn suggested that whilst it is right to question the current running of the likes of the rail network and water companies, renationalisation isn’t the way forward.

“During last year’s crisis on the railways, Northern Rail was forced to cut 170 trains services a day,” said the leader of the influential business organisation.

“Energy bills are likely to increase, despite the government’s price cap. And though water companies have cut leaks by a third since privatisation, we still lose three billion litres a day. Water ultimately paid for by us, through our bills.

“What if, instead of letting customers pay more than they need to, they were automatically moved to the deal likely to be best value for them?”

“So, we agree. These industries are not always working as they could and should.”

According to Fairbairn though, renationalisation would harm “anyone who pays into a pension, donates to one of our big charities or participates in an employee ownership scheme” as those are often the investors behind such companies as opposed to “unaccountable fat cats of fiction”.

“Take the water company that supplies Liverpool,” said Fairbairn, who took the CBI position in 2015. “It’s 70% owned by pension funds, charities and employees.”

In her address, Fairbairn went on to say that whilst the privatised system “doesn’t get it all right,” doing away with competition all together “would be like throwing out the baby and keeping the dirty bath water”.

“First, an idea to make things work better for consumers,” explained the director-general, putting forward the CBI’s proposals for reform. “What if, instead of letting customers pay more than they need to, they were automatically moved to the deal likely to be best value for them at the end of their contract, based on how they’ve used the service in the past? Many would benefit, and it would be a powerful tool for driving efficiency.

CBI director-general Carolyn Fairbairn with Mark Power, interim vice-chancellor and chief executive of LJMU.

“Rail companies pay automatic compensation – a full or partial refund for a journey that went wrong. Perhaps our utilities sector can pay automatic compensation for power cuts or water shortages? It would help put things right. But it would also provide another incentive not to let things go wrong in the first place.

“Second, it isn’t right when shareholders are paid at the expense of investment that would benefit consumers. Dividends to shareholders should be stopped when a company fails to meet its commitments to customers or anyone else, and the cash should instead be diverted to address the areas where customers are being let down, until things improve.

“Third, I always believe that the best business decisions are local decisions. Where a company is providing a service in a region, town or city it should also draw upon the talents of that town or city.

“Perhaps a train company bidding for a franchise should have to demonstrate how they will work with small businesses in the places the line serves; contribute to the local environment; and provide apprenticeships and other opportunities for local people.

“It would be the precise opposite of the centralised, nationalised model in which the big decisions are taken not in the area where they have their effect but in a distant arm of the state in Whitehall.”