The privatisation promises of the 1980s have soured as public services falter. At the height of Margaret Thatcher’s “Great Flog-off”, the government spent vast sums on television and billboard advertisements urging the public to “tell Sid” that he could buy shares in British Gas. The vision was of a “shareholding democracy” in which private ownership would deliver efficiency, innovation and dividends. Four decades on, that sheen has worn away. In 2026, the argument for private ownership of public essentials looks increasingly threadbare, with passengers struggling to find an Avanti West Coast train that runs on time and rivers in England and Wales blighted by sewage discharges. As Dr Simon Griffiths, reader in politics at Goldsmiths, University of London, puts it, nationalisation is not “a magic wand”, but the public mood has shifted decisively against the model inherited from the Thatcher era.
The legacy of the 1980s
The 1980s privatisation bonanza aimed to create a nation of shareholders. Key industries – telecommunications, gas, water, electricity and rail – were sold off with the stated objectives of increasing efficiency, improving labour productivity and expanding share ownership. For a time, the policy enjoyed broad acceptance. But by 2026, that acceptance has evaporated. According to polling gathered by the campaign group We Own It, support for public ownership has increased substantially between 2017 and 2024. Some 66% of people want buses in public ownership, 64% want care homes in public ownership, 64% want energy in public ownership, 55% want more services run in-house by councils and 76% want to nationalise the railways. The research briefing notes that the figures are even higher for water and sewerage, where support ranges from 63% to 82%, and for Royal Mail, where 75% favour public ownership. The support is not confined to Labour voters; polling indicates significant backing across the political spectrum, including among Conservative voters, suggesting a broad consensus on the perceived failures of privatisation. The primary drivers appear to be a desire for services to be accountable to taxpayers rather than shareholders, and a perception that the private sector has prioritised profit over delivery, leading to high bills, poor quality and environmental damage. As Dr Griffiths observes, “The demographic of the electorate who associates inefficiency with nationalisation is a shrinking one.”
What Labour has done so far
During the 2024 general election campaign, Sir Keir Starmer’s Labour pitched a vision of “national renewal” that included significant moves toward public ownership. The pledges were specific: a state-owned Great British Energy, the renationalisation of the railways as private contracts expired, and a “tougher” stance on the water companies. In government, the results have been mixed. The railways represent the biggest win: as contracts for Great Western Railway and others lapse, they are being folded back into public hands under the banner of Great British Railways (GBR). Cambridge South station will open shortly, the first to be badged with the GBR name, and trains in the new livery have been seen on the network. Derby is set to host the new GBR headquarters, and Aberdeen will gain a headquarters for Great British Energy. The plan is to complete the renationalisation of passenger rail within Labour’s first term, though rolling stock is not included in that process.
Elsewhere, the government has been forced into more “activist” roles. The Steel Industry (Nationalisation) Bill, introduced this month after Starmer promised another government reset following the disastrous May elections, gives ministers the power to bring British Steel into public ownership to prevent a total collapse at Scunthorpe. It is not an ideological choice – it is a “break glass in case of emergency” measure. On water, Labour has opted for a “tougher” stance and stronger regulation rather than immediate renationalisation, unless a company such as Thames Water fails entirely. Reforms include a new integrated water regulator and a “prevention-first” approach to infrastructure. The state of the waterways remains dire: in 2020, no river in England and Wales was classed as being in good overall health, with sewage discharges, agricultural runoff and industrial pollution all playing a part.
The cautious centre
Despite the public appetite for nationalisation, Labour’s hand remains hesitant. This caution is the central puzzle of the government’s approach, and it requires the most explanation. During his leadership campaign, Starmer had positioned himself as a more radical figure, but as Dr Griffiths notes, “as his position became more secure he became increasingly cautious.” Nationalisation has been increasingly framed through a lens of “pragmatism” and “fiscal responsibility” to appease the City. Optics play a role: “Nationalisation implies a left-of-centre government rather than the centrist one Starmer is leading,” Dr Griffiths says. “It also costs an awful lot of money. With the exception of rail – which you can do as the contracts run out, a sort of ‘nationalisation on the cheap’ – nationalising steel or water would be a massive financial commitment when money is very tight.”
The decisive factor, however, is the memory of the Liz Truss mini-budget of September 2022. The unfunded tax cuts triggered a sharp fall in the value of the pound, a collapse in gilt prices and a surge in government borrowing costs, forcing the Bank of England to intervene. That trauma is “baked into the Labour psyche”, Dr Griffiths says. “It demonstrated that there were limits to what you could do without the market getting involved and pushing up interest rates.” Even if the details of bond markets feel abstract, the reaction is terrifyingly real. Labour fears that “seizing” assets or ignoring shareholders would trigger a crisis of market confidence. “They are governed by a fear of the markets that exists perhaps for very good reason,” Dr Griffiths adds. For decades, the ghost of the 1970s was used to scare the public away from public ownership. Now the ghost of 2022 haunts Downing Street.
A challenger emerges
Andy Burnham is all but certain to join the contest for the Labour leadership, and therefore Number 10, if he wins the Makerfield by-election on 18 June 2026. The by-election was triggered by the resignation of the sitting MP. Burnham has suggested that a programme of mass renationalisation would be central to his policy platform. “We need a different path completely. Put more things back under stronger public control: energy, housing, water, transport,” he said earlier this month. He has pointed to his achievements in uniting Manchester’s public transport into the Bee Network as evidence that public ownership can work in practice. His pitch is a direct challenge to the “ultra-caution” that has defined Labour’s first two years in government. Yet the question remains whether the supposed “King in the North” can persuade the bond markets that his vision will not replicate the Truss disaster. The £40bn price tag attached to some renationalisation proposals is a stark reminder of the financial stakes. Thames Water has already said that Burnham even floating the idea of nationalisation is damaging its prospects for recovery.
