Britain and privatisation: has it worked?

Margaret Thatcher%VIRTUAL-SkimlinksPromo%As Margaret Thatcher continues to divide opinion even after her death, the privatisation movement that she started also remains a controversial subject.

Here, we investigate whether privatising the public sector has had a positive or a negative effect on Britain today.

A potted history of privatisation in the UK
Privatisation began in the UK during the 1979 Thatcher administration, which introduced a degree of privatisation into British Aerospace and Cable & Wireless.

In the early 1980's, the movement gathered pace, leading to Jaguar, British Telecom, the remainder of Cable & Wireless and British Aerospace, Britoil and British Gas being sold off. And they were followed by British Steel, British Petroleum, Rolls Royce and British Airways, to name but a few.

These privatisations provoked serious opposition, perhaps sufficient to curb any tendency toward privatisation of the NHS at that time.

However, the Conservative government nonetheless proceeded with the final sell-off of British Coal, Powergen, National Power and British Rail - but not the Post Office due to even greater resistance from the electorate.

And when New Labour came into power under Tony Blair in the 1990s, it too continued the movement via the Private Finance Initiative (PFI), which affected the London Underground, the NHS and schools.

Then came the credit crunch, which forced a reversal of policy that saw Gordon Brown nationalise a string of failing banks.

That was more of a blip, though, with the Coalition government currently in power once again stepping up the pace by privatising the Tote, selling off of Northern Rock and now plotting the demise of Royal Mail, as well as potentially large sectors of education and the NHS.

The impact of privatisation on the UK
There is no doubt that the privatisation of public sector institutions has made the government a lot of money over the last 30 years or so. It is thought that about £67 billion of revenue was raised between 19080 and 1997 alone.

The fact that the Labour Party even changed its constitution, which included a commitment to "the common ownership of the means of production" until 1995, to follow the privatisation path also indicates how important the movement was as a source of revenue.

But how has privatisation affected British consumers? Basically, it depends which company you look at.

BT, for example, is something of a privatisation success story, successfully moved into newer hi-tech markets and cutting broadband charges to compete with its private sector rivals.

However, while prices have - until recently at least - fallen in industries such as gas, electricity and telecommunications, the privatisation of British Rail is not thought to have been a success.

There are also serious concerns about the potential impact of privatisation on Royal Mail and, of course, the NHS.

How the UK compares to the rest of the world
The UK is not the only country to follow a policy of privatisation over recent decades. Many countries have followed the same path.

Argentina, for example, privatised its water, gas, electricity and telecoms companies, as well as the entire rail network, in the 1990s.

Other countries where privatisation has taken place include France, Italy, Japan, Russia and Australia. And even developing economies such as India and China are now embarking on privatisation programmes.
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