University 18 Yrs + | Thatcherism
Thatcherism and Privatisation
There was no mention of privatising nationalised industries in the 1979 manifesto but Cecil Parkinson, a junior minister from 1979, is clear that it was an objective from the beginning for ministers on the right of the Party.
Between 1979 and 1981 profitable state owned companies such as British Aerospace and Cable and Wireless were privatised to reduce the Public Sector Borrowing Requirement.
In 1984, British Telecom and, in 1986, British Gas were privatised with the argument that the utilities could be made more efficient and that it would create a popular capitalism by allowing new groups of the population to buy shares.
After 1987 the programme was extended to water, steel, British Airways, and electricity and railways, under the Major Government.
A system of public regulatory agencies was set up for each of the utilities, initially with very light touch regulation. The Governments, keen to get privatisation through, did not do much to liberalise the markets in each area and ensure that they were competitive.
Contracting Out Services
The contracting out of areas of services provided by both central and local government was another objective. Services had to be put out to tender though in many cases the tender was won by teams of public sector workers who already did the work.
In the mid-1980s, in the National Health Service this focused on hospital catering, cleaning and laundry services. Mrs Thatcher pushed for its extension.
One minister earned her disapproval when he explained that he had not been able to give out the contracts for the cleaning of trains because no one had yet come up with a definition of what a clean carriage meant.
Compulsory Competitive Tendering was gradually imposed on local authorities, firstly in manual areas such as street cleaning and refuse collection and later in professional services.
Liberalisation of the Markets
The liberalisation of markets was another policy and was carried out most notably in the financial services in 1986.
Called the big bang, these reforms introduced computer trading into the Stock Exchange and broke down the traditional networks that had operated in the City of London.
The system of stockbrokers dealing with clients and then giving their business to jobbers who traded in shares was broken up and replaced by investment banks.
Many of these were American owned because British deregulation had gone further than in the United States, who did the whole process.
In other areas, Government promoted liberalisation was more limited and far more important was the Thatcher Government’s promotion of the single European Market.
This started the process of removing regulations in each member state that had made it difficult to sell goods and services from one to another.
Reduce the Role of the State in Providing Services
The most successful policy was the sale of council houses to tenants at a discount. This was followed by allowing councils so transfer their housing estates to housing associations or private landlords and most Conservative councils did so.
Introducing the private sector into education and health was politically much more contentious and Mrs Thatcher was very cautious given the priority voters gave to these two services.
Nevertheless the Education Reform Act, 1988, started the process of competition between schools for pupils, while schools were able to opt out of local authority control. City Technology Colleges could be set up with private sector sponsorship. A National Curriculum reduced local authority control of teaching.
Kenneth Clarke’s National Health Service and Community Care Act, 1990, introduced an internal market in health by grouping provision into competing NHS Trusts able to decide where they purchased services from.
The final area of privatisation was in spatial policy. The approach to the inner city problem was a land and property one. Although there were still local authority programmes, increasingly they had to compete for funds, for example, through the City Challenge projects.
Urban Development Corporations such as those in the London Docklands and Liverpool, appointed by central government, were given control over the main areas to be regenerated and tasked with bringing in private investment, while Enterprise Zones were areas where planning control was more limited.
Government funded Regional support was wound down and, by the late 1980s, the European Regional Development Fund provided more support to areas such as North-East England than the British Government.