This stance bore fruit during the 18 years of Conservative Government (1979-97) when large swathes of state-owned businesses were privatised, including telecoms, gas, water, electricity and many forms of transport.
However, as the IEA’s latest publication – Sharper Axes, Lower Taxes – makes clear, the privatisation cupboard is far from being bare. Indeed, over £100 billion of proceeds could accrue if a renewed programme of privatisation were undertaken.
A substantial part of these putative proceeds arise from the government’s two major bank shareholdings – an 84% stake in Royal Bank of Scotland – the recipient of an unbelievable £45.5 billion of taxpayers’ money – and a 41% stake in Lloyds, which received over £20 billion of public funding.
With the worsening EU financial crisis, shares in both banks are currently weak so immediate action to reduce these stakes is unlikely. However, when their share prices recover, a progressive selling down of the government’s bank shareholdings should be undertaken.
Aside from these shareholdings, there is a raft of other major businesses that should be transferred to the private sector. Prominent amongst this category are Network Rail, the Royal Mail and Scottish Water. Furthermore, many smaller state-owned businesses would benefit from the disciplines of the private sector.
Importantly, there remains considerable scope for the government to sell off parts of its vast property estate, which could raise a considerable sum. In particular, the Ministry of Defence owns an extensive portfolio of land and building assets, some of which are outside its core operations – and could be readily sold off.
Whilst the raising of funds from privatisation is a major benefit of the policy, it is not the only one. Indeed, the experience of privatisation since the early 1980s has brought about many other benefits, including more competitive and efficient markets, better customer service, lower prices (in some cases) and a higher tax-take.
Perhaps, the greatest compliment to the policy of privatisation is the extent to which it has been copied around the world since the UK’s ground-breaking initiatives in the early 1980s.
And it is not just in countries with right-wing governments where privatisation has been adopted. Even Cuba, which remains wedded to communism, has undertaken some privatisations. In fact, irrespective of future UK privatisation initiatives, the policy has now become a core element in improving the finances of those countries struggling to remain within the Euro.
A highly ambitious €50 billion privatisation programme by 2015 has recently been specified for Greece. And in Ireland, whose banks are in a desperate financial state, several state-owned companies seem set for disposal. A similar scenario applies in cash-strapped Portugal.
One way or another – providing there is sufficient political will – privatisation seems set for a second coming.