A short history From the first experiments with British Aerospace

through British Telecom, water and electricity to the

of privatisation NHS and Royal Mail

in the UK: 1979-

2012
Richard
Seymour
Royal Mail is being auctioned, and not
necessarily to the highest bidder (and
stamp prices are going up). The London
fire brigade is outsourcing 999 calls to a
firm called Capita, at the behest of the
oleaginous chair of the capital's fire
authority, Brian Coleman. Multinationals
are circling hungrily around NHS
hospitals. Schools are already beginning
to turn a profit. In the technocratic
nomenclature of the IMF, this would be
called a "structural adjustment
programme", but that doesn't really
capture the sweeping scale of the
transformation. We can see this through
a potted history of privatisation in the
UK.

1979-81: Experimentation
Photograph: Martin Keene/PA
Margaret Thatcher inspects a Sea Harrier aircraft at a British
Aerospace factory, 1982. Photograph: John Downing/Getty
Images

The Tories had long been committed to some policy of de-nationalisation. In

response to the prolonged crisis of the 1970s, in which the Tories had struggled to
maintain their parliamentary dominance, the Ridley report devised for the Thatcher
shadow cabinet recommended a policy of breaking up the public sector and
dismembering unions. Privatisation was at first subordinate to other policy themes,
above all wage suppression to control inflation. But the first Thatcher administration
did successfully introduce a degree of privatisation in some large public sector
companies, above all British Aerospace and Cable & Wireless. At this stage, however,
the focus was on privatising already profitable entities to raise revenues and thus
reduce public-sector borrowing.

1982-86: Lift-off

A still from the 'Tell Sid' ad campaign, which you can view
here Photograph: screengrab

Amid the early 80s recession, the Tories had begun to propose privatisation as a
potential panacea. Conservative MP Geoffrey Howe extolled the "discipline" of the
marketplace. The emerging doctrine was that privatisation would make the large
utilities more efficient and productive, and thus make British capitalism competitive
relative to its continental rivals. In this period, the government sold off Jaguar, British
Telecom, the remainder of Cable & Wireless and British Aerospace, Britoil and British
Gas. The focus had shifted to privatising core utilities.

This policy did not emerge out of nowhere; it was fully embedded in the Hayekian
ideas that had guided Thatcher and her cohort in opposition. But it did develop in
relation to specific policy objectives. It was not just a question of stimulating private
sector investment, but also of culture war intended to re-engineer the electorate
along the lines of the "popular capitalism" vaunted by Thatcher, and announced in
the infamous "Tell Sid" campaign.

1987-91: Leaps and bounds

British Steel flotation, 1988. Photograph: The

Independent/Rex Features

Following the Tories' third election victory, they were sufficiently confident to roll
out their most aggressive privatisation programme yet. British Steel, British
Petroleum, Rolls Royce, British Airways, water and electricity were among the major
utilities for sale. These privatisations provoked serious opposition, perhaps sufficient
to curb any tendency toward privatisation in the NHS. Nonetheless, market-driven
measures continued to be imposed in the public sector, from the "internal market" in
the health service to Major's ill-fated citizen's charter.

1992-96: Weakness and retreat

Ex-miner Harry Malkin near the remains of Glasshoughton

Colliery near Castleford. Photograph: Don Mcphee for the
Guardian

The fourth consecutive Tory administration was weak, and quickly divided over a
range of policies, above all European monetary union. But the neoliberal premises of
policy embedded by Thatcher remained intact, and the government continued to
push privatisations in those areas where it felt able to. Inflicting a second defeat on
the miners, the government proceeded with the final sell-off of British Coal, as well as
electricity generating companies Powergen and National Power, and British Rail.
Michael Heseltine's attempt to privatise the Post Office was abandoned, however, due
to public opposition and resistance from a backbench fearful of electoral wipeout.

1997-2001: New Labour's compromise

The Cumberland Infirmary in Cumbria, the first hospital built

under the private finance initiative (PFI). Photograph: Loftus
Brown/PA

New Labour had made electoral capital out of the Tories' unpopularity over
privatisation, but only pledged to stop the sell-off of air traffic control. Even this
minor promise was betrayed. For, if Thatcherism had not won the argument on public
services, it had so comprehensively demolished the militant left and trade unions
that there was nothing to prevent Labour from adapting to neoliberalism. The major
privatisation policy introduced in this period was thus an awkward compromise
between a managerial leadership and Labour's electoral base, known as the Private
Finance Initiative (PFI) – a fudge originally pioneered by Norman Lamont. Introduced
into the London Underground, the NHS and schools, these policies raised money in
the short-term without the need for higher taxes. But there was also a streak of pro-
market evangelising involved. Both Peter Mandelson and his successor at the
department of trade and industry believed it was the role of government to foster
entrepreneurial culture.

2002-8: Aggressive PFI

Northern Rock customers queue outside the Kingston

branch, 2007. Photograph: Cate Gillon/Getty Images

The second and third New Labour administrations pressed aggressively for further
state down-sizing and privatisation. Blair had based his 2001 re-election campaign on
the extremely unpopular PFI. The calculation was that even if the measure wasn't
popular, his victory would prove that there was no realistic alternative. Though there
were few major sell-offs, the government's policies on the Royal Mail and the NHS
had, as their logical conclusion, the privatisation of these services. Even the fiscal
crisis in the NHS, resulting from the high costs of PFI initiatives, did not dampen the
ardour. It was not until the credit crunch and the ensuing crisis that the pendulum
began to swing, if only temporarily, in the opposite direction when Brown was forced
to belatedly nationalise a string of failing banks. But even then, it was clear that the
intention was to restore these companies to private ownership as quickly as possible.

2009-: Thatcherism Mark II?

Students protest against the rise in tuition fees and

privatisation in universities, 2011. Photograph: Oli
Scarff/Getty Images

The Tories took office without a mandate, but with no lack of confidence. Their
agenda, which had emerged since 2008, was to represent the crisis of global
capitalism as a crisis of public sector spending. Having already privatised the Tote and
announced the sell-off of Northern Rock, with other nationalised banks to follow,
they have indicated that Royal Mail will be sold off, along with probation services,
roads, large sectors of education and the NHS. Even sections of the police,
traditionally an ally of the right, will be privatised. Outsourcing will be extended into
every possible area.

But, as in the 1980s, the aim is not primarily to reduce public-sector borrowing. The
Tories know that ongoing economic crisis is not just a fiscal or financial problem. The
private sector is utterly stagnant. Globally, there are trillions of pounds being retained
by corporations who see no viable avenue for profitable investment. US companies
are holding on to $1.7 trillion, eurozone firms sit on 2 trillion euros, and British firms
have £750bn doing nothing. Accumulation-by-dispossession is one way to get that
money into circulation as capital. And while the Conservatives are not as
ideologically confident as in the 1980s, the scale of their proposed privatisations
suggests they expect to over-ride any opposition.

In historical context, privatisation seems to answer a number of dilemmas for the

Tories. By spreading market incentives, it erodes the public sector basis for Labourist
politics. By opening the public sector to profit, it gets a lot of capital into circulation.
And by reducing the power of public sector workers, it suppresses wage pressures,
thus in theory making investment more appealing. Above all, perhaps, in shifting the
democratic to market-based principles of allocation, it favours those who are
strongest in their control of the market, and who also happen to represent the social
basis of Conservatism.

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Topics
• Privatisation
• Opinion
• Private finance initiative
• Utilities
• British Airways
• Royal Mail
• NHS
• Margaret Thatcher
• comment