Effects Margaret Thatcher had on privatisation?

Answer 1

Margret Thatcher invented privitazation, it was a horrible brilliant idea. Selling things to the public that they already owned.

Two effects, some industries suffered such as the rail network however others such as energy suppliers benefited the public by no longer having a monopoly and driving prices down.

The same is true of BT and water companies.

It did ruin some areas such as coal mining and steel manufacturing towns as the need to be profitable made industry look abroad for cheap imports seen as the government no longer subsidised them.

A mixed bag really, I made quite some money buying Eastern Electricity shares that got bought out by the hanson group. However I will always remember that thatcher women for stopping our free milk in primary school.

Answer 2

Errr...John, she stopped a lot more than free milk.
We are ALL suffering from the effects of Thatcher's regime.
From mass unemployment to social deprivation to a massive under-class, most of this was expanded through Tory policy.
It made some people very wealthy but most others were poorer for it.
The whole evil enterprise was funded by North Sea oil and The Sun told people it was good for them.
A lot of people, mostly English it should be said, swallowed the lies.
But even that disgusting newspaper turned on Thatcher.
In Scotland she was very much hated and now it looks as if England is returning to the bosom of the Tories, their traditional political masters.
If you are under thirty, you have no idea of how bad a thing this would be.
Greed is greed and the Tories stand for this and not much else.
Do not be fooled.

Answer 3

Privatization began against a background of steadily poorer performances from state industries. The Thatcher government started with the 1979 sale of a batch of shares in British Petroleum (BP), the state oil giant. The sale reduced the government's holding to below 50 percent. By British Treasury rules, this made BP a private company, and free to behave accordingly, seeking capital for investment on the market and making its own decisions on a commercial basis. The government sold more blocks of its BP shares later.

The military and civilian aeroplane manufacturer, British Aerospace, was sold in February 1981, followed by the radiochemicals group, Amersham International, and the state trucking group, National Freight Company, a year later. After this the pace began to accelerate. Britoil was sold in 1983, the British Ports in 1983, and Jaguar Cars in 1984, which also saw the sale of British Telecom, the state monopoly telephone service. It was sold as the largest company ever floated on a stock market, and attracted 2.3 million shareholders, many of them buying shares for the first time.

The Telecom sale demonstrated the government's desire to satisfy the various interest groups involved in public-sector operations. The previous management became the new board of the private corporation. The workers were given an allocation of free shares and were allowed to buy more from a reserved block on a basis that offered free matching shares. The telephone-using public was offered a choice if they bought shares: a share bonus if they held their shares for three years or reductions on their telephone bill. Rural dwellers were satisfied by a requirement that the new company continue its remote country services. Urban dwellers received assurances about the number of pay phones. Special services to the disabled were to be continued.

In short, the government "bid" for the support of virtually every group that might have objected. This pattern was to be repeated and refined in subsequent privatizations. The Thatcher government could take this tack because the private sector performed so much better than the state sector that the gains could be shared among many groups while still leaving a huge bonus for the government. Not only were subsidized losses converted into taxable profits, but the revenue from the sales accrued to the public treasury.

The policy of identifying and satisfying various groups made privatization a popular strategy, and a difficult one for subsequent governments to reverse. The opposition Labour party in Britain opposed every privatization, pledging itself to reverse each one, but later abandoned its pledge. The fact that share offers to employees were taken up by over 90 percent of the work force undoubtedly contributed to this about-face.

The British government usually aimed to set the opening share price at 10 to 20 percent below its expected market price. This was done for two reasons: to deal with the difficulty of pricing companies that had never properly kept accounts, and to encourage ordinary people to invest. Over the decade the number of private stockholders in Britain more than tripled. In 1979 there were four times as many people in labor unions as there were stockholders. By 1989 the stockholders outnumbered the union members (though in many cases they were now the same people).

The British privatization of nearly four dozen major businesses and several hundred small ones set an example not only of the techniques that could be used, but also of the success that could be anticipated. The formerly underachieving state-owned British industries outperformed the market average once they entered the private sector. With the exception of the oil businesses, which were marketed to professional investors because of their high-risk nature, the privatized stocks rose in value faster than the stock market average, as shown by periodic surveys in London's Financial Times and Privatization International.

The sale of public housing in Britain to its tenants attracted little international attention because there was no public flotation. But the purchase of their homes by people who had been living at subsidized rents made major economic impact. In 1979, 35 percent of Britons lived in state-owned homes at rents that failed to cover the government's costs. The annual expenditure from 1979 to 1988 of $8.6 billion was not met by the income of $4.5 billion.

The homes were offered at discounts based on the number of years of residence, starting with 20 percent below market price for a two-year tenant and rising to 50 percent for those who had lived there for twenty years. The largest discount was later raised to 80 percent. Turning tenants into homeowners brought major social changes in Britain, including the upgrading of the quality of houses as people began to invest in and protect their new assets. By 1988 the total revenues that accrued to government from housing sales alone surpassed those of all other sales combined.

By the late eighties the British Treasury was receiving annual revenue from privatization sales averaging $8 billion, while total government revenue was roughly $300 billion. The revenues from privatization helped the Thatcher government cut income taxes over the decade from a bottom rate of 33 percent down to 25 percent, and from a top rate of 98 percent down to 40 percent.