Beatriz Cuadrado-Ballesteros and Noemí Peña-Miguel
Privatisation may be defined as the sale of shares of state-owned enterprises (SOEs) to private investors, resulting in the transference of the property and the decision-making capability from the public to the private sector. Privatisations have always been controversial reforms, from the first ones developed by the Thatcher government in 1979, until now, when the Troika has pushed through privatisation programmes in EU member states that suffered financial problems during the last crisis. Continue reading →
Huanming Wang, Bin Chen, Wei Xiong and Guangdong Wu
Over the past three decades, many developed and developing countries have witnessed the increasing provision of public goods and services through private firms. With the New Public Management movement, state monopolies in many infrastructure sectors have been relaxed and privatization has been utilized as an alternative way of delivering public services. Private-capital investment has been allowed to build, operate and maintain components of the infrastructure through various types of cooperation between the public and private sectors. As a result, public-private partnerships (PPPs) have become a prominent part of the local government landscape. Advocates have emphasized the advantages of private investment in PPP infrastructure projects: enhanced efficiency, cost savings, improved effectiveness, better quality of services, and reduced government overheads.
Since the late 1970s, governments in many countries have adopted privatisation reforms, including contracting-out public services, transferring functions and responsibilities to the private sectors, and selling enterprises to private interests. The practice of privatisation in some developing countries has led to the problem of unequal treatment. For instance, many local governments in China outsourced their public services (e.g. public bus services, water supply and waste disposal services) to private companies. This included the delegation of operations entirely to these private entities. Government subsidies were allocated to the private operators, but these subsidies could not cover the full costs incurred by those private operators.. In this context, the private operators had to concentrate their services in densely populated areas and neglect the needs of more sparsely populated areas, resulting in the inadequate provision of services in the latter areas. As a result of this, some local governments withdrew from these privatised arrangements in order to ensure a more equal provision of services.
Our recent Policy & Politics article explores whether and to what extent privatisation and its reversal influence public service equity in China. Our paper focuses on public bus services in China, the provision of which has been subject to both privatisation and subsequent re-nationalisation, and draws upon an extensive programme of research that covered 245 cities. The Coefficient of Variation (CV) method was used to measure equity, and the multiple-regression method was adopted to test the relationship between privatisation and equity. Continue reading →
The idea of ‘consumer engagement’ has become a central theme in UK economic regulation. Regulators are demanding it, regulated companies are claiming to be pursuing it – but nobody quite knows what ‘it’ (i.e. consumer engagement’) might actually represent. So what does research on consumer engagement tell us?
In our recent Policy & Politics article on Customer Engagement in UK water regulation, we argue that the idea of consumer representation in UK utility regulation is, of course, not particularly new. The ‘old’ age of publicly owned utilities was characterised by a range of consumer representative bodies. While some managed to survive into the age of privatisation, the key emphasis has been on relying on regulatory bodies themselves to play a consumer representation function since the 2000s. But since the late noughties, putting the consumer at the heart of regulation has become a central theme in UK utility regulation and water regulators in the UK have recently experimented with different mechanisms of customer engagement. Continue reading →
In a post sub-prime mortgage induced financial crisis, another financial tool that risks increasing precarity for those most vulnerable is becoming increasingly popular in a political climate of austerity.
Social Impact Bonds (SIBs) are a social policy tool that claims to solve complex policy problems, such as homelessness, unemployment, and recidivism, through the scientific methods of financial modelling. Actively supported by several governments worldwide – there are currently 54 projects in 13 countries – SIBs provide a mechanism to turn the risky behaviours of vulnerable individuals into a form of profit making for private impact investors. SIB projects target population groups, such as the homeless, troubled youth, and obese, whose problems result in costly use of emergency-oriented public services such as shelters, prisons, and hospitals. In this way, SIBs are positioned as preventative, allowing future savings on costly public programs. These savings, also known as impacts, outcomes, or results are measured for their social value created (Dowling & Harvie, 2014). The SIB instrument places a current price on anticipated social value based on the assessed future risk that participants will not be reformed. Risks become a reward as investors bet on the extent to which vulnerable people will be transformed.
Britain’s public assets are now the subject of a giant boot sale. The great rolling privatisation juggernaut not only includes the £4bn Green Investment Bank, and the bailed-out Lloyds Bank but is now eyeing up assets like Channel 4 and the Met Office. The government hopes that together they will deliver £32bn in revenue this year alone from the sell-off.
Privatisation was originally sold as the route to Mrs Thatcher’s much vaunted ‘popular capitalism’. Yet shares bought by the public through privatisation have mostly been sold immediately. Far from spreading wealth, decades of sell-offs have merely skewed the economy even more heavily in favour of a few private owners helping to fuel Britain’s widening wealth and income gap.
No longer able to claim it will spread popular capitalism – always a myth – the government has a new defence: sales will help pay down the deficit. Yet it makes little sense to use long term capital assets to finance a temporary revenue gap. Continue reading →