The British Approach to Privatisation

Abstract

Thirty or so years after the 1945–51 Labour government nationalised the ‘commanding heights’ of the British economy, these enterprises were collectively losing the equivalent of £2 billion annually in today's money. In 1979 a Conservative government embarked on a programme of privatisation which handed out hefty inducements to managers, employees and investors and yielded total net proceeds of nearly £70 billion over 18 years. The introduction of competition (as well as regulation) reduced overstaffing and strike threats in state‐run industries and eliminated most of the losses.

Keywords: competition, politics, privatisation, regulation, statutory monopoly

JEL Classification: L33, L43, L51