What is privatisation?

Privatisation is when the government sells or transfers a state-owned business or service to private owners. In the UK it is most linked to the 1980s and 1990s. Telecoms, gas, water, electricity and the railways were all sold in that period. The opposite is nationalisation.

The big wave began in the 1980s. British Telecom was sold in 1984 and British Gas in 1986. The water companies in England and Wales followed in 1989, and electricity from 1990. British Rail was broken up and sold between 1994 and 1997. Royal Mail followed in 2013. Margaret Thatcher's governments sold many state firms, and later governments continued the process.

Governments sold shares to the public and to investors. Supporters argued private owners would be more efficient, attract investment and give customers more choice. Independent regulators, such as Ofwat and Ofgem, were set up to control prices and standards where firms held a monopoly. Shares were often sold cheaply to attract small investors, which boosted share ownership but led critics to say assets were undervalued.

Results have been mixed. Telecoms saw fast innovation and falling prices. Water has faced anger over sewage spills, bills and debt. Rail is now returning to public ownership as franchises end, under a 2024 law, with services moving into the new Great British Railways. Debate continues over which services work best in public or private hands.