Business Report Opinion

London's privatisation mess could spill over to SA

Published

The words of an old ballad - the political version, not the bawdy one - struck me as I arrived at London's Heathrow airport last month to an underground railway strike and newspaper headlines castigating the Rail Maritime and Transport (RMT) union.

The chorus goes: "It's the same the whole world over/ It's the poor that get the blame."

I wasn't alone with this perception. Also in London at the time was Roger Ronnie, national organiser of the SA Municipal Workers' Union.

Speaking from his office in Cape Town yesterday, Ronnie said: "The strike raised similar problems to those we have faced here, with companies not delivering on their initial promises, with taxpayers often being left to clean up the mess and unions being blamed for taking action."

These are among the problems raised in recent years by union protests from Brazil to Indonesia to Tanzania, mainly with regard to public-private partnerships (PPP) for the provision of water and sanitation services.

Such underlying causes for protest often tend to be lost in arguments about the protest action itself. So it was with the London strike: debate about the underlying causes was swamped by a general media frenzy about "commuter chaos" caused by union action.

"Dinosaur tactics" was the most common media assessment of the action. One newspaper headline called RMT general secretary Bob Crow "the most hated man in London".

The fact that RMT members, in an example of informed democracy in action, had voted overwhelmingly for the strike was either ignored or, in several cases, denigrated as the sort of behaviour to be expected of a "macho union".

There was also little reference to the fact that Metronet had declared bankruptcy in July, just two days after being awarded an additional £121 million (R1.7 billion) of public money towards £1 billion of cost overruns.

Yet RMT members, from train drivers to barrier attendants, were clear that the blame lay squarely with the policy of privatisation in its PPP garb and the bankrupt Metronet consortium.

The consortium, comprising engineering companies Balfour Beatty, Bombardier and WS Atkins, together with power provider EDF Energy and the controversial Thames Water, was to have upgraded and renovated much of the underground network.

When it declared bankruptcy, worker's wages, pensions and their very employment were under threat.

The union promptly demanded the same apparently cast-iron guarantees of workers' conditions and employment as Metronet had for its massive £2.6 billion in debt financing.

Whether it was necessary to go on strike to achieve such guarantees could, perhaps, be debated - but this was how the costly mess came about in the first place. And it contained an echo of similar deals done in South Africa in recent years in the provision of water and sanitation.

Metronet financed all but £350 million of the underground railway venture through loans.

But the companies involved were not at risk in the case of any defaults, the banks demanded - and got - guarantees from Transport for London, the city's transport authority, that, effectively, the taxpayer would foot 95 percent of the debt should the venture fail.

The companies stood to lose very little, if anything. This was one of the reasons that London's mayor, Ken Livingstone, and a former Transport for London boss, Bob Kiley, publicly opposed the deal.

So it is that working people, the bulk of taxpayers, will bear the economic consequences of a company failure. And it was working people who bore the consequences of the strike action.

Only three of London's 11 underground railway lines were affected by the strike, but the disruption it caused was massive.

And while there seemed to be some public understanding of - and even support for - the union position, most commuters appeared to agree with the overall union bashing stance of the popular media. Said Ronnie: "It certainly illustrated the importance of public services and also how they tend to be taken for granted." He felt this situation highlighted another lesson that should be hammered home to public service unions the world over: "We should relate directly and collaborate with the communities we serve."

The objective would be to win mass public support for actions taken by the unions - actions that are all too often misrepresented and misunderstood.

With good communication, the London public, for example, might have seen the Metronet consortium companies as the villains of the piece.

After all, these companies seem to have paid to and through themselves £3.6 billion, nearly all of which will have to be made good from the public purse.

Perhaps the words of the ballad should be amended to read: "It's the same the whole world over/ working people have to pay."