A State Without Ownership: The Welfare Impact of British Privatisations 1979-1997

This paper offers a comprehensive evaluation of the welfare impact of a policy usually regarded as highly successful and vastly imitated worldwide: The privatisation policy pursued in the UK by Mrs Thatcher's government (1979-1990) and subsequently by Mr Major's government (1990-1997) The British case history is particularly relevant for several reasons: Britain was the first developed country to embark on large scale public divestitures; the time span is long enough to see some long run effects; Conservative governments were able to consistently implement their policy with limited effective opposition; and there is already a wide body of scholarly literature and good data sources on British company performances, price trends and other relevant variables. The paper considers the impact of privatisations on five types of agents: Firms, employees, shareholders, consumers and tax-payers. The main conclusion is that British privatisations had modest effects on the efficiency of production and consumption. On the other hand, privatisations did have important effects on the distribution of incomes and wealth. Thus the outcome of privatisation in the UK was modest and not unambiguosly a Pareto improvement.