Former UK prime minister Margaret Thatcher was famous for her political conduct at the helm of British politics. She established Thatcherism, a model used to rule a nation; she left a permanent footprint on the European political scene.
At the core of her worldview after she assumed office was the need to privatize certain entities to boost the economy and put some economic players in check. She exerted a lot of effort to privatize things while claiming to aid development and progress that had been stagnant for a long time.
Main things Thatcher Privatised
Since privatization was an economic tool, Thatcher targeted major businesses, corporates, and industries that were pillars of the British economy. She believed that a new form of these economic drivers would change the trajectory of revenue and income, thus influencing progress. Her privatization reforms incorporated industries, steel, railways, airways, airports and aerospace, gas, electricity, telecoms, and water utilities.
Under the privatization model, Thatcher “oversaw the sale of many major businesses, including British Airways, British Telecom, British Steel, and British Gas” [Source]. She also privatized the British water and rail industry.
Thatcher privatization timeline
It is recorded that “Many industries and utilities that had been nationalized in the Attlee government of 1945-51 were made into private companies: in industries, steel, railways, airways, airports and aerospace; and, of the utilities, gas, electricity, telecoms, and water. The process has continued today, with the 2013 privatization of the Royal Mail” [Source].
The Iron Lady started a model which survived from the 90s and leaped into the 2000s. She touched on the vital components of an economy and wanted to bring a new system necessitated by her reforms.
Rail and Water Privatisation
Despite shining through privatization in other areas, this model did not work well for rail and water. In 1944, the government split up state-owned British Rail and sold it in sections. The Railtrack assumed control of the tracks and stations. Three different firms were assigned rights over rail freight, and 25 companies were granted licenses to run passenger services. Following this, several incidents occurred. It was partly blamed on the privatization structure, which eventually led to the renationalization of Railtrack in 2002.
However, the passenger services boosted after privatization “with passenger journeys per employee increasing 37 percent since the reforms”. The British railways improved because of these reforms and were deemed well maintained by a European Commission.
When it comes to water industry reforms, Thatcher’s government privatized “10 regional water and sewer agencies in 1989 and created a new regulatory authority to oversee them”. A huge outcry was heard from citizens because of increased prices by the new owners. The water industry provides a basic commodity to people. It was hard to get services for a daily entity after paying huge funds; hence there was backlash on this issue.
The British water industry benefited from privatization as supply was increased and interruptions reduced.
Fear for the NHS
Cameron and Lansley pushed for the privatization of the NHS. It was the biggest movement ever proposed for the healthcare system [Source]. Thatcher suggested “the concept of the internal market and fundholding in the NHS.” The aim was to create a “more cost-effective NHS,” which was done through the National Health Service and Community Act of 1990.
Thatcher’s administration encouraged people to use private medical services during her reign. Cameron tried to dissolve the NHS as a publicly provided and publicly financed body. But critics said if this was done, then “the chronically and terminally ill, the mentally ill, those from lower socio-economic groups and the elderly are likely to lose out” while on the “young and able and the privileged who have ease of access to health.com will be the likely winners.”
Many parties oppose the NHS being privatized because it will lose focus on helping the masses and concentrate on making profits.
Issues with Privatisation
State-owned businesses are usually favored because they look after the masses, as this is the primary duty of every government.
Private firms focus on making money at the expense of people, which happened with the privatization of water, whereby people complained of hiked prices. The government had lower prices as compared to the private sector.
Firms wanted to upgrade outdated systems used by their government, so they needed capital to do so. Hence prices were increased at the expense of ordinary citizens. Private players tend to prioritize profits over serving the public, which is the main flaw of privatization. All privatized entities became expensive and required more money. Also, privatization would give fruits after periods of intense suffering as people try to adjust to it. Low-income earners suffered the most, and the number of poor people increased.
Upside of Privatisation
Due to the effects of privatization during Thatcher’s reign, it is noted that “Spurred by the success of Thatcher’s reforms, privatization swept through developed and developing nations in Europe, Latin America, and elsewhere.” In explaining why other countries followed suit, the Organisation for Economic Cooperation and Development noted that “other nations followed Britain’s lead because of ‘disillusionment with the generally poor performance of state-owned enterprises and the desire to improve the efficiency of bloated and often failing companies” [Source].
In his book titled ‘The Financial Economics of Privatisation, William Megginson argued that Thatcher’s reforms “massively increased the size and efficiency of the world’s capital markets” [Source], and many of the world’s thriving businesses are privatized.
Has privatization been successful in the UK?
A contemporary analysis of the achievements of Thatcher through her legacy shows that privatization was successful in the UK, to a greater extent. She faced multiple challenges when she assumed office, including a deep recession, high inflation, labor union strife, and the Falklands War. All these problems had a negative effect on the economy, and she had to start by implementing minor reforms such as the ‘Right to Buy’ law that allowed citizens to purchase government-owned council houses.
This was very successful and motivated her to continue privatizing other things. Despite accidents witnessed, the British passenger rail improved significantly after privatization, and the safety record was also enhanced. A European Commission in 2013 proved these facts. It revealed that Britain’s railways were the “most improved” compared to another system in Europe.
Surveys show that the efficiency and service quality of the British water industry increased since privatization. Also, wasteful leaks declined, and supply interruptions decreased.
So, was privatization good for Britain? Harvard Business Review wrote that “In fact, privatization has shown itself capable not only of rescuing individual industries and a whole economy headed for disaster but also of transforming public attitudes toward economic responsibility and the concept of private property” [Source].
Despite the downside of privatization, it did produce good results in the UK, especially when the people were willing to apply austerity measures to gain more.
