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Has privatisation ever brought prices down in the UK


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#1 RidingPie

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Posted 19 October 2012 - 02:37 PM

Their have been some discussions on here about energy, and its rising costs, and a couple of months ago about the rising costs of rail, and many similar ones before it, and basically its got me thinking. I understand the theory behind privatisation. Opening up an area to competition, driving down price, increasing customer services etc etc but, in the UK has it ever actually seemed to work?

Just a couple I can think of off hand:
  • Energy
  • Water
  • Railways
  • Directory enquiries
  • Telephone
I don't think I remember an instance where the price to the consumer has actually gone down. A few months back I heard someone justifying the directory enquiries price increases as "but we get more out of the services now" and that may be true, but as far as I can find none of the companies now operating go for a basic but cheap (or at least nowhere near as cheap as 192 was, even after inflationary price increases) service.

I'm not advocating a return to a bloated public sector which runs the phone, and utilities either. I'm just wondering why it doesn't actually seem to work, at least in the UK. Or am I completely wrong! Has privatisation brought better value to the consumers of the above, or other privatised industries?

#2 Johnoco

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Posted 19 October 2012 - 02:55 PM

What difference does it really make if the public utilities were 'bloated'?
The money just goes to shareholders now for a worse service.

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#3 gazza77

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Posted 19 October 2012 - 02:57 PM

Their have been some discussions on here about energy, and its rising costs, and a couple of months ago about the rising costs of rail, and many similar ones before it, and basically its got me thinking. I understand the theory behind privatisation. Opening up an area to competition, driving down price, increasing customer services etc etc but, in the UK has it ever actually seemed to work?

Just a couple I can think of off hand:

  • Energy
  • Water
  • Railways
  • Directory enquiries
  • Telephone
I don't think I remember an instance where the price to the consumer has actually gone down. A few months back I heard someone justifying the directory enquiries price increases as "but we get more out of the services now" and that may be true, but as far as I can find none of the companies now operating go for a basic but cheap (or at least nowhere near as cheap as 192 was, even after inflationary price increases) service.

I'm not advocating a return to a bloated public sector which runs the phone, and utilities either. I'm just wondering why it doesn't actually seem to work, at least in the UK. Or am I completely wrong! Has privatisation brought better value to the consumers of the above, or other privatised industries?


For the majority of them, it's probably difficult to compare, given the time that has elapsed since privatisation. Given advances in technologies, wholesale market prices, etc, there are a whole number of variables that impact upon pricing that have changed.

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#4 Griff9of13

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Posted 19 October 2012 - 02:59 PM

Privatisation only works where there is proper, meaningful competition. To me the only one in your list is Telephone.

Energy, as the other thread demonstrates, is a bit of a minefield to wade through to compare one product with another.

Water - no competition (for consumers), you are stuck with the supplier for your area.

Railways - almost the same as water, no meaningful competition. if i want to travel from my home town to London I HAVE to use Mersyrail then ostensibly have a choice between Midland and Virgin, but seeing that the Midland service means changing trains and takes almost twice as long no real choice.

Directory Enquiries - never use them so can't comment .

The same applies for other false competition models that they have tried to introduce into services such as schools, hospitals, elderly care etc.
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#5 Futtocks

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Posted 19 October 2012 - 03:18 PM

Telecoms was privatised at a time when mobile technology and widespread internet was just on the horizon, so it's hard to say for sure, but IMO that was the only one that has turned out to be as much of a success as promised.

Water: leaks go unmended while shareholders line their pockets and we get hosepipe bans.

Railways: lousy under BR, lousy and extortionate post-BR.

Energy: if you're willing to wade through a world of faff, you can find good deals, but these are always subject to change.

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#6 Johnoco

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Posted 19 October 2012 - 04:12 PM

I think I preferred it when we just had the leccy board, gas board and post office.

How it worked then was you used your gas or electric, they told you what it cost and you went to the shop and paid it. Now you pay in advance and they tell you when you will pay. Its a rip off and if you see Sid, chin the tw@.

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Pull off that cover, I will too, and learn to understand

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#7 Griff9of13

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Posted 19 October 2012 - 04:17 PM

I think I preferred it when we just had the leccy board, gas board and post office.

How it worked then was you used your gas or electric, they told you what it cost and you went to the shop and paid it. Now you pay in advance and they tell you when you will pay. Its a rip off and if you see Sid, chin the tw@.


You've just reminded me that the best part of the scam was selling these things off to us, who owned them in the first place. Nice work if you can get it. :rolleyes:
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#8 John Rhino

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Posted 19 October 2012 - 04:25 PM

Their have been some discussions on here about energy, and its rising costs, and a couple of months ago about the rising costs of rail, and many similar ones before it, and basically its got me thinking. I understand the theory behind privatisation. Opening up an area to competition, driving down price, increasing customer services etc etc but, in the UK has it ever actually seemed to work?

Just a couple I can think of off hand:

  • Energy
  • Water
  • Railways
  • Directory enquiries
  • Telephone
I don't think I remember an instance where the price to the consumer has actually gone down. A few months back I heard someone justifying the directory enquiries price increases as "but we get more out of the services now" and that may be true, but as far as I can find none of the companies now operating go for a basic but cheap (or at least nowhere near as cheap as 192 was, even after inflationary price increases) service.

I'm not advocating a return to a bloated public sector which runs the phone, and utilities either. I'm just wondering why it doesn't actually seem to work, at least in the UK. Or am I completely wrong! Has privatisation brought better value to the consumers of the above, or other privatised industries?


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#9 JohnM

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Posted 19 October 2012 - 04:42 PM

In three years time you'll be able to add the NHS to your list.

Be afraid, very afraid.


Don't be so daft. Have you had a bad day at the office/factory/pub?

Re the GPO/PostOffice/BT I used to have to work with them prior to them joining the real world. A slower, more unresponsiveness, more protective, more archaic and union-paralysed monopoly I have yet to meet.

At every turn, we were prevented from connecting newer , better , cheaper and more efficient technical solutions. Working with the CEGB was no better. Good riddance to all state monopolies!.

#10 Severus

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Posted 19 October 2012 - 05:37 PM

Privatisation is all about profit, not improving services or reducing costs. The problem is once an industry is privatised there is no going back.

Edited by Severus, 19 October 2012 - 05:37 PM.

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#11 Maximus Decimus

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Posted 19 October 2012 - 07:17 PM

Don't be so daft. Have you had a bad day at the office/factory/pub?

Re the GPO/PostOffice/BT I used to have to work with them prior to them joining the real world. A slower, more unresponsiveness, more protective, more archaic and union-paralysed monopoly I have yet to meet.

At every turn, we were prevented from connecting newer , better , cheaper and more efficient technical solutions. Working with the CEGB was no better. Good riddance to all state monopolies!.


Surely you cannot suggest that rail is in a better state now.

It is ludicrously expensive and in reality you have zero choice regarding your journey. I fail to see how it has improved the quality or efficiency of journeys.

I'm not arguing for nationalising industries I just think that the idea that competition always brings down prices is a myth. Take something like car insurance, they fought to ensure that men and women pay the same. If competition were always true, it should produce an evening out. After all, insurance companies would be making more money from women drivers, meaning that other insurance companies would be able to lower their prices to make them attractive to customers. This should then drive down prices to the same average as previously just balanced between men and women.

Instead, the prices will just rise for women and men will see little or no benefit. Makes you wonder.

Edited by Maximus Decimus, 19 October 2012 - 07:18 PM.


#12 Northern Sol

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Posted 19 October 2012 - 08:05 PM

Privatisation is all about profit, not improving services or reducing costs. The problem is once an industry is privatised there is no going back.


You could it's just that there are usually reasons why nobody wants to.

Not that I like the rail industry as it is now but people forget that we originally had private railways like Yorkshire & Lancashire railways and Great Western as well as London, Midlands and Scotland. It is possible to renationalise the railways.

As for not reducing profits. Profit is revenue - costs. You increase profit by increasing revenue or lowering costs.

#13 Padge

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Posted 19 October 2012 - 08:08 PM

Nationalised industries were inefficient because they were used as a means of soaking up unemployment* there was no real excuse for not having a job as the NI's soaked up the slack. At least to get your dole you had to get up go somewhere for eight hours and do a bit of something.

*They were also also held back from investment by unions reluctance to change and governments failure to invest, private industry had the exact same problems but worse, worse in the sense that owners refused to invest anything at all in their business as long as they could cream of a profit.

The only privatised industry I can see a price reduction in is telecoms, that has been subject to massive competition the rest have just been given a licence to rip-off Joe public and put nothing back.

I love this excuse that "we have to put pricess up to invest", how come other industries invest without putting prices up (they have to stay competitive) but former publicly owned utilities year on year seem to have to not bother about improving services through investment whilst maintaining prices at 'competitive' levels.

How do you privatise them again, simple put a massive tax on them and pass a price control law until they want to give them back.

Edited by Padge, 19 October 2012 - 08:08 PM.


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#14 Severus

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Posted 19 October 2012 - 08:08 PM

You could it's just that there are usually reasons why nobody wants to.

Not that I like the rail industry as it is now but people forget that we originally had private railways like Yorkshire & Lancashire railways and Great Western as well as London, Midlands and Scotland. It is possible to renationalise the railways.

As for not reducing profits. Profit is revenue - costs. You increase profit by increasing revenue or lowering costs.

Profit for a privatised industry is money that would've been invested back into the service as opposed to the shareholders.
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#15 Padge

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Posted 19 October 2012 - 08:10 PM

Profit for a privatised industry is money that would've been invested back into the service as opposed to the shareholders.

not quite true, governments used profits when there were some as a means to subsidise other government spending, reducing investment. Without legislation to prevent it, the same would happen now if form NI's were brought back to their rightful ownership.

Edited by Padge, 19 October 2012 - 08:11 PM.


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#16 Northern Sol

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Posted 19 October 2012 - 08:16 PM

Profit for a privatised industry is money that would've been invested back into the service as opposed to the shareholders.


The nationalised industries never had any profit to invest anyway.

#17 Severus

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Posted 19 October 2012 - 08:17 PM

The nationalised industries never had any profit to invest anyway.

So where has this profit come from then?
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#18 Padge

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Posted 19 October 2012 - 08:18 PM

The nationalised industries never had any profit to invest anyway.

Not true.

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#19 Northern Sol

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Posted 19 October 2012 - 08:20 PM

Not true.


They were loss making and subsidised by the government - that's why they were privatised.

#20 Northern Sol

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Posted 19 October 2012 - 08:22 PM

So where has this profit come from then?


The same place any profit comes from. You sell something for more than it cost you to make or source.

When you make a profit, you can pay dividends to your shareholders, this is where you get your capital from to invest in new technology.




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