Privatization in the UK

To be, or not to be, that is the question

–  Hamlet, William Shakespeare

Recently I have been reading about how the government should tackle our debt problem, many are clamouring for privatisation, citing Mrs Thatcher as an example a champion of free markets, a heroin, which we know the present Prime Minister wishes to emulate, selling our public companies to raise money to pay off the debt.  I thought country must be in deep trouble to start thinking about selling family silver.

I decided to look at the problem and came across an interesting chart given below which gives the scale of UK’s national debt on Wikipedia.

800px-UK_GDP

 

Major Peaks

1812 – Britain is fighting war with US and France. Period of Napoleonic Wars 1803 to 1815.

1912 to 1952 – Debt taken to fund the two world wars

If you take a moment you will notice that during the last 300 years our debt levels have been over the present levels for most of the time.

Then why so much clamoring about cost cutting about privatization about job cuts about austerity.

Arguments for Privatization

In favour Against
Raise government revenue Yes, it is like killing the golden goose and taking all the eggs in one day. As the sale proceeds received one year and all dividends lost for ever.
Pay off public sector borrowing Good deed but will this reason suffice for the public inconvenience for higher charges charged by private players in their pursuit of ever increasing quick rich schemes.
Efficiencies which will be pass on to the consumers in forms of lower prices and better service As our experience suggest, utilities privatised , indeed create better services but higher prices as well and if not regulated properly, will soon become a menace to society

 

What it seems like it is a matter of choice.

 

Major companies privatised and then what happened to them

British Petroleum October 1979 – While in government hands, British Petroleum paid too little attention to profitability, constrained by its need to please elected officials who often cared more about keeping energy cheap and employment high. But in private hands, it may have cared about profits far too much, at the expense of other objectives. “BP veered from being a company that made sure nothing blew up to one focusing on cost-cutting at all costs,” Professor Fisman #.I read somewhere that BP came up with a concept called self insurance
British Aerospace February 1981 Still struggling, even after year on year support through Government contracts. Last I heard about this company was regarding a failed deal with EADS of France.
Cable & Wireless October 1981  Sucked by all, lastly by John Pluthero and at last sold to Vodafone
Amersham International  February 1982 It went all right, acquired by GE in 2003.
National Freight Corporation February 1982
Britoil November 1982 Bought out by BP
Associated British Ports February 1983 No news
Enterprise Oil July 1984 Bought out by Royal Dutch Shell
Jaguar August 1984 Loss making for a longtime, turnaround in 2008 under ownership of Tata Motors an Indian Company.

#“The Org: The Underlying Logic of the Office,” a book by Ray Fisman, a professor at Columbia Business School, and Tim Sullivan, the editorial director of Harvard Business Review Press.

 

 

 

British Telecommunications December 1984 Doing alright now
British Shipbuilders 1985 onwards Ceased , in 2013 all liabilities passed back to the Government
British Gas December 1986 Doing well
British Airways February 1987 
Rolls-Royce May 1987 Doing well
BAA July 1987 Under Spanish ownership
British Steel December 1988 Did badly, ultimately bought by Tata Group of India , many plants closed or mothballed.
Water December 1989 Majority in private ownership, customer suffering from low service and increasing bills
Electricity 1990 Majority in private ownership, customer suffering from low service and increasing bills

 

All the privatisations focused on cost cutting mainly by cutting staff numbers and their benefits mainly pensions and sky rocketing in executive pay.

What’s next

Royal Mail                               German’s have showed us that it can be successful in form on DHL

NHS                                           Private sector wants a pie of this, PPP experiement shows that                                                                private partnership in not viable

Courts and Police               Cannot think how this will work !

 

Paradoxes

Young are unemployed and old are suffering for want of care !

Only if we could convince our government that money , savings and debt are just Maya all to be utilised and manipulated in a way to create full employment and to increase the standard of living of its citizens rather than safe guarding the indefensible mark of AAA from some obscure rating agencies which have already shown their competency in the fore play of financial crisis.

That we will again proceed on a path of recovery and happiness.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s