I’m a former power engineer: “top-down” nationalised electricity is a myth

Keir Starmer made it plain in a recent interview on LBC that he doesn’t believe in the “top-down” nationalisation of electricity. But the Labour leader is ignoring history. Rachel Reeves recently expressed similar views, declaring that a “big swathe of nationalisation” would not be the priority of a future Labour government because she is not convinced it would represent “good value for money” for either taxpayers or service users. In this, she’s ignoring the examples of other countries.

If Keir had spoken to people who were there at the time, he’d have known that it was never the case that it was “top-down”, and I don’t understand how Rachel thinks investing in profitable businesses is bad “value for money”. If a nationalised business is profitable, that’s an income that can be used to reduce taxes, improve services or increase government investment. Other countries manage it: the French government owns 15% of Renault, which in turn owns 43% of Nissan. Renault Group regularly turns a profit and in 2021, after a difficult year in 2020 due to Covid, bounced back to produce a group profit of €654m (2.8%).

Of course, there have been bad examples of poorly run nationalised industries in the past, but they weren’t all like that. Private businesses can be badly run too, and the current crop of bankruptcies in the electricity supply industry shows an appalling lack of planning for the vagaries of an unstable energy market. It’s almost as if they’ve forgotten the 1973 oil crisis when, following two years of shortages, the Organisation of the Petroleum Exporting Countries (OPEC) decided to collectively raise prices. At the time, our electricity prices were largely protected from this because the nationalised Central Electricity Generating Board (CEGB) had been changing back to domestic coal having seen the potential for such an event occurring. Today, we have no such strategic thinking.

I worked in power station management for 11 years, before leaving when I could see privatisation coming, so I speak with some experience. Electricity generation, transmission and distribution was nationalised in 1947 under the direction of Lord Citrine (a former TUC general secretary), when the then minister for energy Mannie Shinwell appointed him as chair of the British Electricity Authority. Walter Citrine had started from humble beginnings and worked as an electrician before his career in the trade union movement. (He is, of course, best known for his ABC of Chairmanship, first published in 1952 and still highly regarded today as a straightforward practical guide to this important role.)

Citrine devised a very clever group structure for England and Wales, and different but equally clever structures for Scotland and Northern Ireland. Scotland had two electricity boards, one for the South and the other aptly named the North of Scotland Hydro Electricity Board. Both boards owned all the infrastructure, including the generating stations, the high voltage transmission and the lower voltage distribution, and sold direct to customers. A similar arrangement was put in place in Northern Ireland, but with the Grid jointly managed with the Republic.

In England and Wales, the Central Electricity Generating Board (CEGB) was established to run the power stations and the National Grid and 12 regional electricity boards distributed the power and supplied it to the consumers. Many of these regional boards also ran shops, selling electrical appliances as well as accepting bill payments and giving free energy advice.

This structure gave a considerable amount of independence to individual power stations. There was a national wage agreement, and each power station was encouraged to buy routine spares and supplies from the UK-wide central stores, but otherwise local management were free to purchase locally and contract out all major repairs, renovations, modernisations, etc.

The CEGB was responsible for running the National Grid, planning forward up to 25 years, anticipating future demand and always considering the possibility of war or civil disaster. Some power lines were even duplicated to ensure we had resilience should we suffer a terrorist attack to the system, but nowadays all such planning decisions are made on cost alone.

The regional electricity boards bought electricity in bulk from the CEGB to distribute across their region and sell on, but were otherwise free to plan, build and operate the distribution system, employ staff and set tariffs. These transactions were carefully monitored, and one of my regular duties was to take the monthly meter readings accompanied by an engineer from the regional board. With millions at stake, both sides wanted to ensure the readings were correct!

Each power station was called by Grid Control to generate electricity according to a ‘running order’, which was dictated by price (except in exceptional circumstances to maintain Grid security). Each power station had an ‘efficiency department’ to monitor energy efficiency, optimise costs and calculate the price at which they could sell to the National Grid. This sale was the power station’s sole source of income, so in many ways the efficiency engineer was the most important person on the payroll. If costs rose, they would generate less and this in turn would make them become less efficient, as energy was wasted every time the generators were started up. It was a slippery slope, and everyone knew it ended with closure and possible redundancy.

This local autonomy produced team spirit, pride in the job and camaraderie. It was nothing like the myth of centralised control and a lazy inefficient workforce put out by our opponents. From my time, I remember a whole 12-hour shift in 1969 working without stopping struggling to keep pumps running, knowing if we failed the entire West of England would be blacked out.

Similarly in February that year, high voltage lines in Kent came down under the weight of snow, and the line gang there worked for 48 hours non-stop to restore power, stuck in 20-foot snowdrifts with food and equipment helicoptered in. These were not the actions of staff working under a ‘top-down’ regime, but of engaged workers with a public service ethos.