Why Britain accepts foreign state ownership but resists public ownership at home

By Benson Daniel

Britain has spent decades telling itself that public ownership is inefficient, expensive and outdated. Yet there is an obvious contradiction at the heart of that argument: the country has been perfectly willing to allow foreign state owned companies to control important parts of its economy.

Nowhere is the contradiction more visible than in the energy sector.

Britain once operated major gas and electricity industries under public ownership. The system was later dismantled through privatisation, with successive governments arguing that competition and private investment would deliver greater efficiency, innovation and better value for consumers.

But ownership did not disappear. It changed hands.

Some of the companies operating important British infrastructure are now owned, wholly or partly, by foreign state backed organisations. This has created an unusual situation in which Britain can be uncomfortable with its own government owning strategic assets, while accepting ownership by governments from other countries.

The question is straightforward: if public ownership is inherently inefficient, why should it become acceptable simply because the owner is based overseas?

The answer is partly historical and partly political.

Privatisation became deeply associated with the economic philosophy that dominated British politics from the 1980s onwards. State ownership was portrayed as a symbol of an outdated economic model, while private ownership became associated with competition, efficiency and modernisation.

That approach transformed the British economy. But it also created a system in which strategic assets could be bought by international investors, including foreign state owned companies.

Energy is particularly sensitive because electricity and gas are not ordinary consumer products. They are essential services, and decisions about infrastructure, investment and pricing can affect the entire economy.

The debate has therefore shifted from the old question of public versus private ownership to a more important question: who should ultimately control essential infrastructure and in whose interest?

Supporters of public ownership argue that the objective should not simply be maximising returns for shareholders. They believe essential services should also deliver long term value for consumers, communities and the wider economy.

Critics respond that state ownership does not automatically guarantee lower bills or better management. Public companies can also suffer from political interference, weak investment decisions and bureaucratic inefficiency.

That criticism is legitimate. Public ownership is not a magic solution.

But neither is private ownership.

Britain’s experience has demonstrated that privatisation does not necessarily eliminate the need for government intervention. The state remains responsible for regulation, subsidies, infrastructure planning and protecting consumers when markets fail to produce acceptable outcomes.

That raises another uncomfortable question. If taxpayers ultimately have to support or regulate essential infrastructure, why should they have little or no ownership stake in it?

The issue has become increasingly relevant as Britain struggles with high energy costs, weak economic growth and concerns about energy security.

The argument for greater public involvement has gained fresh political momentum under Prime Minister Andy Burnham, who has promised to expand public control over essential services including energy and water.

The proposal represents a significant departure from the assumptions that shaped British economic policy for decades.

Yet the debate should not be reduced to an ideological battle between capitalism and socialism.

There is room for a model that combines public ownership of critical infrastructure with private investment, competition, professional management and strong regulation. The objective should be to determine which ownership structure delivers the best outcome for citizens.

Britain’s experience with foreign state ownership provides a useful starting point.

If public ownership can work when the owner is a foreign government, there is little economic logic in declaring that it must fail simply because the owner is the British public.

The real test should not be the nationality of the owner. It should be whether the system delivers reliable services, affordable prices, investment, innovation and long term value.

That is the question Britain now has an opportunity to answer.