Privatization System in Britain

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Words: 878 |

Pages: 2|

5 min read

Published: Jul 17, 2018

Words: 878|Pages: 2|5 min read

Published: Jul 17, 2018

Privatization has been part of a crucial debate ever since Margaret Thatcher took over the office in 1979. It has been the leading focus of British Conservative Party who were first to lay the roots of privatization in Britain economic welfare. However, first, we must discuss what is privatization.

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According to one of the most popular definitions, “ The transfer of ownership, property or business from the government to the private sector is termed as privatization. The government ceases to be the owner of the entity or business.” (economic times magazine/ 2004) Privatization is meant to bring about more efficiency and stability to a business which has been objected to being lacked by many government-run institutions. The profit-oriented approach of the owners of the company leads to better standards of living and efficient way of governing a business commute. Countries like India and Britain are foremost examples of privatized instituted countries that went under full-blown privatization due to a political reform. We will discuss in detail the effect of privatization on UK economy using the example of two main sectors mainly railway and water industry.

Description: In UK, even though many of the large stakeholder's companies are owned by foreign industries, many pro-privatization followers believe it has brought an increase in profit market and has increasingly fattened the purses of the government.

According to an article published by The Guardian, in 2013 which is named as “ Privatization: the Good the Bad and the Ugly”, the author argues that industries such as water industry and the BG (British Gas plc) have begun to run more and more efficiently ever since its shareholders were sold during the region of Margaret Thatcher. It efficiently quotes; “Some privatizations have brought improvements for consumers. According to the water and sewerage regulator Ofwat, since the privatization of the 10 state-owned regional water authorities in 1989, the number of customers at risk of low water pressure has fallen by 99%.” (The Guardian,2013).Not only this but also the efficiency of delivery and procedure time management has been reported to increase magnificently. Gas and water management system have foremost greatly benefited in the region of the privatized movement. The national debt has been claimed to be reduced during this increased economic development period which included the repayment of national debt and reduction of overall economic stress by 12% from 1989-1990.

According to the Harvard Business Review, John Moore writes the column “British Privatization: Taking Capitalism to the People” in which he openly advocates the pros of privatization terming it as “one of the most successful strategic reform by the British Conservative Party”. He discusses the change of attitude of people towards private property claiming it to increase commitment and responsibility and build of the work ethic of employees involved during the process.

This is, however strangely quite different from the studies discussed in many published articles and psychological evaluation which quote that such claims are nonetheless baseless and unproven. When the profit doesn't seem to return to the public, it can seem to disengage their interests towards the quality of production in an industry. The anti-privatization debaters openly partake in this discussion with the example of British Train Industry. British Train industry is one of the most popular examples of corruption in capitalism as per to date. While the actual process of its privatization did not take place until after Thatcher left the office there was increased discussion in the Transport Department. In a 1990 story party conference, her then transport secretary is found to have quoted "The question now is not about whether we should privatize it [British Rail], but how and when."Since then, the average fare for a ticket has risen by 80% leading to an increase subsidized spending of 1 Bn in 1980 and more 6 Bn from 2006-2007 according to public spending report from House of Commons. This has made the train travel in Uk one of the most expensive means of travel as compared to the entire world. There is no fear or control of elections or public opinion which might have governed the prices to a reasonable amount which would be possible if it was a government-owned institution. This has also led to fragmentation of large industries reducing individual responsibility. For example, the Hatfield rail crash was blamed on no one taking responsibility for safety. Privatisation also leads to the creation of private monopolies, such as the water companies and rail companies. This can eventually need regulation to prevent abuse of monopoly power.

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Therefore, there is still need for government regulation, similar to under state ownership. Conclusion: In the brief evaluation of privatization and its impact upon the economy, we must consider which industry is being focused upon before starting the debate or discussion. For instance, in a telecom industry, privatization can bring about an efficiency of services as it is a more or less profit-oriented industry. However, in the case of railway or health services, where profit comes second to public health and standards, privatization can lead to drastic uproar and mistrust of the users in a service. People depend upon the health services system and its low-cost programs. Insurance companies involvement can lead to unaffordability of this system for the general public.

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Privatization System in Britain. (2018, May 13). GradesFixer. Retrieved July 14, 2024, from
“Privatization System in Britain.” GradesFixer, 13 May 2018,
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