Ch12 - Privatisation

• Privatisation

  Transferring public sector resources to the private sector
• Forms of privatisation in the UK

  • Sale of nationalised industries
  • Contracting out
  • The sale of land and property
• Nationalised industries

  Once private sector business organisations that were taken into public ownership
• Nationalised industries

  • British Rail
  • British Airways
• Contracting out

  Many government and local authority services have been contracted out to private sector businesses
• Contracted out services

  • Provision of school meals
  • Hospital cleaning
• To generate income

  The sale of state assets generates income for the government
• Public sector organisations were inefficient


  Nationalised industries lacked the incentive to make a profit and often made losses
• To reduce political interference

  In the private sector, the government could not use these organisations for political aims
• Consumers

  • Businesses are under pressure to meet customer needs and return a profit for the owners
  • Businesses will be efficient and try to provide good quality products
• Workers

  • Quite often in the run up to privatisation, quite large numbers of people are made redundant
  • Mass redundancies often weaken companies through the loss of experienced staff and make it more difficult and more expensive to scale up in the future
• Businesses

  • Many firms have increased investment following privatisation
  • There have been a number of mergers and takeovers involving newly privatised firms
  • Many private businesses have diversified into new areas
• Government benefits

  The huge amount of revenue that has been generated from privatisation