PRIVATIZATION - LESSONS FROM THE BRITISH-EXPERIENCE

The privatization programme in the United Kingdom is the oldest and largest endeavour of its kind in the world. This article examines it in detail, beginning with a brief description of the background and criticisms of nationalized industries in the UK. The social, political, macro-economic and managerial reasons for and results of privatization in the UK are then analysed. This analysis includes details of the major privatizations to date, special arrangements made to encourage employees and small investors to become shareholders, the performance of privatized firms, net proceeds received by the government from the sale of public corporations, and the effect privatization has had on encouraging wider share ownership among the general population. This article also notes the different methods of privatization used in the UK, including trade sales, private placements, public flotations, and employee and/or management buyouts. The typical steps in each stage of the privatization process are then explained. Finally, a model of the privatization process is developed from an examination of the British privatization experience. This model may be useful to governments and their advisors in transforming publicly owned enterprises into privately owned enterprises and to increase understanding of the strategic issues of privatization among academics, business practitioners, consultants, government officials, etc.