Recently viewed 0 Save Search. Users without a subscription are not able to see the full content. More Britain led the way for much of the world with industrial privatisation during the s. Authors Affiliations are at time of print publication. Your current browser may not support copying via this button. Show Summary Details. Subscriber Login Email Address. Password Please enter your Password.
My visitors pressed for increased government subsidies to the coal industry so it could buy more equipment. Their mind-set was typical of much of British business at the time: to do more business, you had to do more business with the government—not in the marketplace. These three factors—the subordination of commercial to political objectives, the fact that survival is not dependent on success, and the failure to harness the power of self-interest—are the root causes of the poor performance of nationalized industries Because these ills cannot be cured as long as the industries remain in government hands, the only solution is to privatize them.
At Associated British Ports, labor disruptions common in the s and early s have now virtually disappeared. At British Telecom, the overall call-failure rate has dropped from 1 in 25 to 1 in , and there is no longer a waiting list—as there always was before privatization—to have a telephone installed. It used to be a real challenge to find one that worked. The U. But improved performance is only the first of three arguments for privatization that the British experience illustrates The second is the extension of individual ownership and the transformation it produces in public attitudes.
The third, which I will return to in a moment, is the way privatization induces government to reassume its proper regulatory function. In theory, it would have been possible to privatize state-owned industries in Britain without extending direct equity ownership to the massive numbers of ordinary people who have in fact bought shares.
The industries could have been sold to the big institutional investors who formerly made up virtually the whole of the U. But spreading ownership as widely and deeply as possible was an integral part of our privatization policy—and for several good reasons. On the most obvious level, a visible change comes over workers when they become part owners of their companies through employee share-ownership plans. The National Freight Consortium is an interesting example.
Shortly after the employee buyout, charts went up in NFC depots all around the country showing the movements in share price.
When people have a personal stake in something, they think about it, care about it, work to make it prosper. People want to own property, and they fully appreciate the value of equity ownership as a flexible capital asset.
Most people own very modest numbers of shares, but whatever they own often represents their first source of income beyond an otherwise total and, for many, frightening reliance on their weekly pay. Yet one of the more revealing aspects of the privatization process in Britain was the bitterness with which opponents resisted all attempts to spread ownership. Trade unions in particular tried to dissuade their members from buying shares in the companies they worked for.
Personal ownership assumes even greater importance in former socialist and communist states where individuals have never owned assets. If I were a privatization consultant to any nation, particularly an ex-socialist nation, I would recommend that the widest possible extension of individual ownership be a central part of their program.
Owning private property has an unrivaled power to teach the responsibilities and rewards of a free society.
But I would also advise against giving shares away free. This suggestion is made repeatedly as a quick way to put public industries into private hands with a minimum of fuss. If we look at parliamentary records for the year period after World War II—when nationalization was at its peak—we see that debates on the state-owned industries all focused on such things as investment needs, losses, debts, labor relations, and strike records.
Beyond the debates, however, the entire parliamentary process—indeed, government itself—focused on the management of industry. It could not be otherwise when departments were the actual sponsors of particular companies, when individual ministers had to champion their industries against the Treasury, when whole teams of civil servants had to work full-time dealing with industrial problems and arguing with managers: Should this shipyard in an area of high unemployment be closed?
Where can we find more money for investment? How can this damaging strike in the auto industry be settled? The pressures on the state-as-owner were immediate and very visible. Individuals complaining of poor service simply did not generate the same urgency.
When a constituent had a problem with a nationalized industry and brought it to me—or to any other member of Parliament—our procedure was to take the matter up with the responsible minister or directly with the head of the industry, who would almost invariably respond that of course they could easily resolve this particular problem at once, if only their industry were not hamstrung by the stinginess of government in terms of investment-subsidy-expenditure.
All of which simply goes to illustrate a fairly obvious truth: the owners of an industry are more interested in their own problems than in those of the electorate. Now parliamentary debates are about service to customers, not the needs of the industries. Now my letters to the executive officers of privatized industry about constituent problems receive answers aimed directly at the problem raised, usually with solutions.
Now when the government is called upon to make decisions affecting these industries, it consults the interests of consumers first. Would the government as owner of British Airways have allowed United and Delta to fly into Heathrow and sharply increase competition and consumer choice? In my view, the argument about state versus private ownership of industry in the U. Private ownership has won, and debate has come to center instead on the theory and practice of regulation. The reason that the political contest over privatization came to an end is simply that implementation succeeded.
Facts overtook the debate. In the course of successful implementation, however, we confronted innumerable problems and joined several heated disputes that have useful lessons to teach those now fighting or about to fight similar battles. To begin with, any government thinking of moving important industries from the public to the private sector will confront a number of specific anxieties expressed as concerns for the national interest.
The opponents of privatization will raise fears about foreign involvement and possible foreign control, about endangered revenues and strategic supplies, about the survival of uneconomic but socially necessary services. The list will be long, and most of the issues raised will be perfectly legitimate matters for a responsible government to worry about. The mistake made by those who raise these fears as obstacles to privatization, however, is in assuming state ownership to be the only remedy.
It is entirely possible for a government to protect and defend any aspect of any industry without owning it, either through provisions in the privatization legislation or simply through the use of normal government powers. Revenue is an obvious example. Government does not need to own a successful industry for the nation as a whole to benefit.
Taxing its profits is an even more effective expedient, especially since state ownership can make those profits disappear. A democratic government that correctly decides it is inappropriate to own a particular industry has in no way abdicated its responsibilities as guardian of the public interest.
Often such scrutiny will reveal, as in the case of revenue and tax, that ordinary government procedures are already sufficient to deal with the supposed problem. When they are not, the solution in the U. Amersham International is a case in point. At the time we privatized it, Amersham was the only company in the world supplying certain radioactive medical and industrial products, and many people were worried about a possible immediate takeover.
Special shares of this kind have proved to be a useful mechanism. They are not a form of disguised state control. But they are an effective way to resolve concerns about the national interest. They also underline the need to pass individual legislation for each privatization. Some countries have tried to pass omnibus bills covering the transfer of all state-owned industries to the private sector, but catchall bills cannot allow for individual provisions and prove to be hopelessly unwieldy in parliamentary terms.
Legislatures must tailor each privatization not only to protect the national interest but also to ensure that only matters of national interest are made subject to state control. The point of the entire exercise, after all, is that ownership should actually pass from the public to the private sector. Engaging the Public on Climate Change We believe individuals and communities should be at the heart of shaping a place-based transition to net-zero by Building more generative relationships around regulation in the UK Working with Easier Inc to co-create spaces for building generative relationships around regulation.
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About Us What we do What we do, how we work, who and where we are. Go back. The Thatcher government that came to power in with privatisation as a minor part of its manifesto, but it became a central part of its ideology as the s progressed. Many industries and utilities that had been nationalised in the Attlee government of were made into private companies: in industries, steel, railways, airways, airports and aerospace; and, of the utilities, gas, electricity, telecoms and water.
The process has continued to the present day, with the privatisation of the Royal Mail. The initiative The government decided to begin a programme of privatisation, transferring nationalised entities from the public sector into private ownership and operation. The objectives of privatisation were to: Make the privatised firms more efficient. Increase labour productivity and proper regulation of the industries.
Increase share ownership in society. The public impact By the time Margaret Thatcher was ousted from office in , more than 40 UK state-owned businesses employing , workers had been privatised. Political commitment Margaret Thatcher strongly supported the initiative, as did the majority of her government, and considered it as a fundamental to improve the economic performance. It is worth noting that the former Director of John Lewis spoke of the impossibility of competing with companies that do not pay tax.
Other formerly British owned newspapers have been acquired including the Financial Times bought by Nikkei Corp and the Evening Standard bought by a Russian oligarch. It is worth noting also that Waterstones, the only surviving national book chain in UK, is also Russian owned.
Google dominates the browser market and pays derisory UK taxes, and Facebook is now the main source of news for most British people despite its biases and its inadequate constraints on the dissemination of fake news. Both of these companies are effectively unregulated despite their critical social media roles, and both make enormous sums of money from advertising that goes untaxed.
Starbucks has effectively out-sourced their UK tax liabilities through various off-shore arrangements and scandalous high internal charges for management fees and inputs purchases of coffee from subsidiaries overseas. These tax avoidance mechanisms make it difficult for independent companies to compete and survive. Apple has shifted its tax liability in the UK to Ireland. The EU has rejected Irish claims that corporate taxation is a national matter and have instructed Ireland to impose some 13bn euros of unpaid taxes on Apple — so far uncollected.
The key national airports in the UK — Heathrow and Gatwick — are both in foreign ownership despite their strategic role in the national and international transport system Similarly, UK ports are now more or less all in foreign ownership having been privatised. The BBC estimates that there are currently no less than 97, properties owned by foreign firms in England and Wales. A quarter of all foreign owned property in England and Wales is registered to companies in a British tax haven, the British Virgin Islands, and the rest in other off-shore tax havens such as the Isle of Man and the Channel Island].
Until April non-residents owning property in UK through offshore companies were exempt from inheritance tax — a nice arrangement for avoiding UK taxation and further concentrating inherited wealth.
Foreign demand for property simply bids up the costs to residents in a housing market where prices are among the highest globally, and helps to increase already high levels of rents. The NHS, which is thought of as the great British innovation, is also increasingly being infiltrated by American health providers. Indeed, the government seems to welcome the possibility of further growth of US health providers as part of any free trade arrangements with the US post Brexit.
This is something that most commentators see as highly undesirable given the generally poor performance of the US health care system, with its unjustifiably high administrative and other costs.
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