nationalized and privatized industries

   After its 1945 victory, Clement Attlee’s Labour government immediately began bringing transport (most notably the railways) and key industries such as coal mining, gas and electricity into public ownership. Developing the ancient state monopoly of the Post Office (extended to telecommunications in 1912) and the municipal ownership of many utilities, the programme was carried through all the more readily because state control had applied throughout the Second World War and because private finance was unavailable for postwar reconstruction. Labour thinking was based on socialist convictions. Consumers and workers alike would, it was argued, benefit from the replacement of capitalist exploitation by public ownership dedicated to ensuring that the means of production and transport operated for the good of all within a planned economy. The various nationalized industries’ day-to-day operations were entrusted to quasi-independent boards. These, however, were required to work within financial guidelines laid down by government.

   Apart from the steel industry, whose status changed with successive governments, nationalization went forward steadily until reversed by Margaret Thatcher’s Conservative government after 1979. Arguments for privatization, as denationalization was soon called, were that lack of competition bred inefficiency in nationalized industries, especially those hampered because the state had difficulties funding them and yet persisted, despite its scant business experience, in interfering with management; this in turn impeded responses to market forces. Ideals of employees’ identification with whichever nationalized industry they worked for had not been borne out by experience and were contrasted with the benefits of wider share ownership. The proceeds of selling nationalized industries and cutting subsidies and other payments would also reduce public spending, resulting in tax cuts.

   When shares in privatized industries were offered to the public, sales were brisk, even hectic, leading to accusations that prices were pitched too low. Complex regulatory machinery was set up to prevent abuse of monopolies, promote competition and ensure standards of service. Complaints were voiced about corrupt ‘fat cats’, directors and managers in the new companies who paid themselves excessive salaries (see corruption in the City). Though controversial, the privatization programme was carried through. The Labour Party accepted its irreversibility when, before the 1997 election, it was persuaded by its leadership to abandon ‘Clause 4’, its traditional pledge to strive for nationalization. Since 1979 many other countries have followed the UK and embarked on privatization programmes.

   See also: CBI; Conservative governments

   Further reading

    Neuberger, J. (ed.) (1987) Privatisation: Fair Shares for All or Selling the Family Silver? London: Macmillan (three essays presenting opposing views).

   CHRISTOPHER SMITH