Privatisation

• Thatcher saw the scale of state-owned companies, the removal of government monopolies and the contracting out of services as key parts of her crusade to cure Britain's economic stagnation
• Privatisation would cut government expenditure on loss-making industries and cut the number of civil servants by replacing them with private employees
• Privatisation would also strengthen the UK economy by promoting competition and innovation
• The revenue generated by the sale of state assets would also fund a reduction in tax, allowing entrepreneurs to invest more wealth in job-creating ventures
• Lastly, the sales would help to create a wider ownership of shares; ordinary people would have a greater incentive to work harder, knowing that they owned a slice of the company for which they worked
• While there is no doubt that Thatcher was successful in terms of the pace and extent of privitisation, historians are divided over the long-term success of this policy
• Privatisation proceeded slowly at first, but then gathered speed and pace in Thatcher's second term in office
• Before 1983, British Aerospace, British Sugar and British Petroleum had been sold off
• Yet it was the sale of the British Telecom in 1984 and of British Gas in 1986 that really saw the launch of what Thatcher called 'popular capitalism'
• Shares were sold cheaply to ensure a quick sale and wide take-up; between 1979 and 1990, the number of shareowners increased from 3 million to 11 million
• However, the distribution of these shares was far more uneven than the Conservatives made out in their 1987, election manifesto
• The manifesto spoke of the start of 'a profound and progressive social transformation - popular capitalism', only 9% of unskilled male workers owned any shares, compared to half of all professional males
• More damaging to the long-term success of popular capitalism was the rapid sale of most shares for a quick profit to large pension or investment firms: individuals owned 38% of shares in 1975, but only 20% in 1990
• By far the most successful aspect of 'popular capitalism' was the sale of council houses: over a million were sold between 1979 and 1988
• The long-term impact of privitisation is disputed and it is clear that the process has had more success in certain sectors than in others
• The sum of £19 billion was raised by the sale of state assets, Harold Macmillan compared this to 'selling off the family silver'
• This money made from the sale of state assets was used to pay for tax cuts
• While competition has driven innovation and better customer service in telecoms
• Privatisation of British Rail between 1994 and 1997 led to a highly confused situation where the government continued to subsidise private firms that operate the trains; government spending on trains has doubled since 1994 while most commuters would agree that the service has not improved
• The launch of the Private Finance Initiative under Thatcher's successor, John Major in 1992 led to an increase in privatisation after Thatcher's departure in 1990
• Public-private partnerships were designed to inject private funding and expertise into traditionally state-run concerns such as hospitals and schools
• While the iniative led to the construction of some impressive buildings, it became clear that by 1997, the future generation of taxpayers would have to pay a huge amount of money to the private firms who put in the initial investment