Privatization, investment, and the utility cash-cow problem

Could Britain's 1980s privatizations have been handled better?

Yes, with hindsight. Access to private capital was a defensible aim, but the organizations needed preparation to operate as viable companies and continue investing after sale.

Privatization can open access to capital that would otherwise add to national debt. With hindsight, Britain's 1980s sales could have been handled better, although their organizers lacked a clear precedent for how the transition would work. A national organization needs to become a viable company before sale; changing its label leaves it vulnerable to takeover and treatment as a cash cow. Essential utilities still need investment after ownership changes. Clarke recalls one or two cases in which foreign state-owned utilities loaded debt onto British acquisitions to finance investment in their own countries. He explicitly limits this recollection to past arrangements that had since been resolved.