Recent worker protests against the privatization of the London Underground have revived the controversy surrounding England’s successful privatization process. Since Tony Blair´s Labour Party victory last year, the privatizations started during the Thatcher-Mayor periods, have been hardly criticized by the Labour ministers. According to The Economist, the deputy prime minister, John Prescott criticized the privatisation of British Rail, accusing the rolling-stock companies of "having grown fat at the taxpayer’s expense".
The changes in England’s administration, have left the government with the problem of what to do with state-owned companies that could benefit with methods and financing from the private sector. Blair´s government has tried to find a "third way" that would incorporate private investments avoiding outright privatisation. This formula is being studied for industries such as air traffic control and London´s Underground, where a complex formula that would lease track, stations and signals on 30 year contracts to as many as three private companies is being proposed, leaving the operation of train services in the hands of the existing public-sector management. Other industries such as The Post Office, the Forestry Commission, the Crown Estates, the Crown Prosecution Service and a group of semi-governmental organisations such as the Metereological Office are also subject of quasi-privatisation formulas. Critics to this Quasi-privatisations argue that they have significant drawbacks because they fudge responsibility and blunt incentives.
Even though the financial successes found with the privatization of state-owned enterprises like British Steel, now-a-days one of the lowest-cost steel producers in the world, and British Airways, the world’s most profitable airline, the English public is driving away from its support for this kind of solutions. Polls evidence that public support for privatisation has decreased from a 43% of support in 1983 to a 24% in 1997 according to a study cited by The Economist. "Many people believe that the most recent privatisations do not make sense, because it is hard to introduce competition in some industries, such as rail", The Economist says. Besides, the privatised industries, particularly gas and water, played into their critics’ hands with their inept management of boardroom pay. Stories of huge share options for directors, at a time when thousands of redundancy notices were being handed out to lowly paid employees, were a public-relations disaster. The problem was exacerbated because some of the privatisation sales were, with hindsight, seriously underpriced—a matter highlighted by repeated government reports. The result was that share options dished out to directors proved excessively generous as share prices shot up after privatisation. Not surprisingly, the regulators found it hard, particularly in the early days, to maintain a proper balance between the interests of consumers and shareholders. Also, people have found that the service under some of the newly privatised industries has not improved and some times has even worsened. This is clearly shown in the case of Virgin Rail, where complaints over train delays overwhelm the company. As the debate heats up and the country ponders its failures and successes with privatisation, the Labour government promises to inaugurate a new era of privatisation that aims at keeping the best of the many times antagonistic private and public worlds.
