Public ownership of gas and electricity is destined to become a cherished aim of the Labour Party. For years under privatisation, the swindling of the consumer has gone hand-in-hand with outrageous profit-taking by the corporate giants, to the loss of the public purse. Far from helping customers through keen competition, the main effect of energy privatisation has been – like austerity – a redistribution of wealth from the have-nots to the well-to-do.
What a pity, therefore, that Labour cannot renationalise it! Britain is a member of the European Union (EU) and as such bound by the EU Treaties. Indeed, every British court is duty-bound to enforce every EU law in preference to any conflicting British statute. Under Article 106, the EU prohibits public monopolies exercising exclusive rights where this violates EU competition rules. The EU’s Court of Justice has interpreted Article 106 as giving private companies the right to argue before the national courts that services should continue to be open to private-sector competition. Nationalised services are prima facie suspect and must be analysed by the judiciary for their “necessity”. Thus the EU has given companies a legal right to run to court to scupper programmes of public ownership.
The fact that EU law has this effect may seem astonishing. Many on the Left seem unaware of it. Those fond of the EU tend to go into denial over it. Despite Greece, there is a tendency to displace the EU’s neoliberalism onto the nascent CETA deal that allows American company’s with bases in Canada to sue the British government under the ISDS provision: “EU good, CETA bad”, so the chorus goes.
Yet the consensus that EU law really does preclude renationalisation is pretty overwhelming. Legal scholars regard the jurisprudence surrounding Article 106 as “revolutionary”, since it reverses “the decades-old presumption…that Member States are free in principle to determine their preferred system of property ownership”. Even Polly Toynbee endlessly reiterated that EU competition law would make NHS privatisation irreversible, though curiously this didn’t dampen her pro-EU ardour in the long term.
Furthermore there is scant prospect of Article 106 ever being repealed. To do so would require the common accord of all the governments of the EU Member States. You’d only need a single neoliberal government to veto such a Treaty change.
For good measure, from the 1990s onwards there was a surge of EU liberalisation directives opening up gas, electricity, transport, telecommunications etc to private sector involvement. Fat chance of a Labour Britain getting these repealed either: to do so would require a “qualified majority” of Member States.
Labour therefore faces a choice: dump the EU or dump renationalisation. Whatever choice it makes, the fact that EU membership outlaws renationalisation needs to be fully understood throughout the Party and labour movement.