“Competition is always a good thing. It forces us to do our best. A monopoly renders people complacent and satisfied with mediocrity.”
Nancy Pearcey, American Author
We've been invited to celebrate the anniversaries of two ‘great’ British monopolies this year: the BBC’s 100th and the National Health Service’s 75th. Public reverence abounds for these two substantial quangos (Quasi Autonomous Non-Government Organisations), but in truth they've both become bloated, inefficient and consumed with their own self-importance.
The BBC has demonstrated that latter characteristic in abundance over the past week, with the ‘unnamed presenter scandal’ taking the lead position on the main news night after night. With so many major issues calling for our attention — the NATO conference in Lithuania, the climate-change-induced extremes of temperature in both the United States and southern Europe, the ongoing battle with inflation — how can the BBC justify prioritising the woes of its own newsreaders?
Meanwhile, the NHS now consumes 41% of current public expenditure, but still has record waiting lists and a thoroughly unresponsive service for patients, particularly in GP surgeries.
It's time Government learned that monopolies only work if they are properly outsourced and regulated firmly, preferably with set contract and re-tendering periods.
Another emerging monopoly failure is the UK water utility sector. Much has been written about the iniquity of Thames Water paying out huge dividends and building up a mountain of debt — but where has OFWAT been in all this? Strong regulation would have avoided these excesses and re-tendering would have given scope for transfers to more efficient businesses, in order to ensure efficient operations and good customer service.
Government itself, of course, is by definition a monopoly, and the way we keep it on its toes is by regular elections. We'll see this in action during this week, with three by-elections prompted by the Boris Johnson investigation and resultant report from the Privileges Committee.
Without the regular discipline of elections, the combination of poor decision-taking and increasing inefficiencies gradually takes hold. Russian communism has emphatically proved this over the past century, whereas Chinese communism is not only much younger but has also benefited thus far from several decades as manufacturer to the world. However inefficiencies are multiplying within China too, for example in its provision of swathes of excess housing.
Adam Smith was therefore right to extol the benefits of free market competition: individual choice ensures that organisations respond to demand by focusing on customer service. Subservience to monopoly suppliers not only denies individual freedom but it also embeds organisational inefficiency — another reason why we put so much emphasis on disintermediation in our quest for a more egalitarian form of capitalism.
75 years of NHS provision has led to all the worst traits of monopoly. No reasonable person would question the fact that health services should be available and accessible to all citizens, whatever their financial situation. However, this does not rule out the use of an insurance-funded system, and the most disadvantaged would, of course, need their health service insurance premiums to be covered by Government. This would enable them to attend facilities of their choice, not as driven by Government mandate.
The road back from NHS dysfunctionality will be long, and we have set out how it should start in our commentary of 17 October 2022. This was sent to HM Treasury recently, and the response to the proposal was understandably non-committal but certainly not rejected out of hand: “ Thank you for your interesting proposals to help reduce the future costs of the NHS, recognising the importance of ensuring the long-term sustainability of the health system. I have passed these on to policy officials to consider as appropriate alongside other policy choices, but you will understand that I cannot commit to a decision in this letter”.
Meanwhile the BBC is already in an existential fight to retain its privileged monopoly of commerce-free broadcasting. Its substantial licence fee is under considerable pressure, not only from Government but also from those who prefer to get their entertainment elsewhere (e.g. from Netflix) and their news from social media and broadcasters such as CNN. Its attraction to younger generations is falling fast, and the quality of its output is deteriorating year-on-year.
Our experience in operating Share Radio as a DAB broadcaster run by a traditional editorial team demonstrated the substantial handicap with which quality speech broadcasters have to contend; on 6th January 2020 our commentary set out this challenge, a couple of years after our transition to 100% online operation. It's not just a financial handicap: for example, the fact that OFCOM requires commercial broadcasters to adopt the same political neutrality as the BBC is astonishing, particularly when there is no equivalent constraint placed on the printed media.
BBC News content is, however, becoming depressingly parochial in its coverage, and the emphasis placed on the Huw Edwards affair last week was a real disgrace.
We should therefore avoid creating monopolies, whether provided by the state, as quangos or as standalone businesses, wherever and whenever possible. If it is unavoidable to resort to single-supplier provision — in areas such as water provision and treatment — there should be tough regulation, just as the finance industry has operated since the 1990s. Meanwhile, if operational services need to be contracted by Government, this should be on the basis of fixed-term tenders with regular reporting and Key Performance Indicator targets.
It's time to overhaul these time-expired monopolies which we have inherited.
Gavin Oldham OBE
Share Radio