Abstract
This paper examines recent developments in U.K. utility regulation from a business ethics perspective. The regulatory framework that facilitated privatisation of the utility companies has foundations based upon free market principles involving a transfer from regulation to competitive markets wherever possible. Where competition is not feasible, continuing economic regulation is relied upon, designed to mirror the competitive market to induce, through comparative competition and the price capping mechanism, incentives for greater efficiency. The New Labour Government, having fundamentally reviewed this framework when it came to office, has surprisingly endorsed its basic tenets. However, it wishes to superimpose social responsibility regulations designed to achieve social policy rather than economic objectives. This interventionist approach is in itself in conflict with the free market inspired regulatory framework but additionally, the imposition of social policy objectives creates fundamental ambiguities within the framework for the key stakeholders. The paper concludes that the Government's policy, by eliciting stakeholder confusion and perverse behaviour, could be counter-productive but that ethical theories and frameworks can contribute to thinking in this vital area of the economy.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Ansoff, I.: 1965, Corporate Strategy (McGraw Hill, New York).
Battle, J.: 1999, Parliamentary Question and Answer — Utility Regulation (DTI (http://www.dti.gov.uk/urt/pqans)), 27 July.
Blundell, J. and C. Robinson: 1999, Regulation Without The State, Occasional Paper 109 (Institute of Economic Affairs, London).
Bowie, N.: 1991, ‘New Directions in Corporate Social Responsibility’, Business Horizons 34(4), 56–65.
Brigley, S. and P. Vass: 1997, ‘Privatised Ethics: The Case of the Regulated Utilities’, in P. W. F. Davies (ed.), Current Issues in Business Ethics (Routledge, London), pp. 153–169.
Carroll, A. B.: 1987, ‘In Search of the Moral Manager’, Business Horizons 30(2), 7–15.
Carroll, A. B.: 1991, ‘The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders’, Business Horizons 34(4), 39–48.
Carroll, A. B.: 1998, ‘The Four Faces of Corporate Citizenship’, Business and Society Review 100(1), 1–7.
Cowe, R.: 2000, ‘Against the Flow’, The Guardian (London), 21 June.
Department of the Environment Transport and the Regions: 2000, Competition in the Water Industry in England and Wales (DETR), 13 April.
Department of Trade and Industry: 1998a, A Fair deal for Consumers — Modernising the Framework for Utility Regulation (HMSO CM3898).
Department of Trade and Industry: 1998b, A Fair Deal for Consumers — Modernising the Framework for Utility Regulation — The Response to Consultation (DTI), 27 July.
Department of Trade and Industry: 1999a, A Fair Deal for Consumers — Modernising the Framework for Utility Regulation — Consumer Councils — The Response to Consultation (DTI), 8 April.
Department of Trade and Industry: 1999b, A Fair Deal for Consumers — Modernising the Framework for Utility Regulation — The Future of Gas and Electricity Regulation — The Response to Consultation (DTI), 13 October.
Director General of Electricity and Gas Supply: 1999, Social Action Plan: Discussion Paper (OFFER/Ofgas), May.
Financial Times Lex Column: 1997, ‘Blair's Airs’, Financial Times (London).
Freeman, R. E.: 1984, Strategic Management — A Stakeholder Approach (Pitman, London).
Friedman, M.: 1970, ‘The Social Responsibility of Business is to Increase its Profits’, New York Times Magazine (13 September).
Giddens, A.: 1997, ‘Centre Left at Centre Stage’, New Statesman (1996) 126(4332 (May)), 37–39.
Giddens, A.: 1998, ‘After the Left's Paralysis: The Third Way can Provide a Framework for Political and Economic Thought that Cuts Across the Old Divides of Social Democracy and Neoliberalism’, New Statesman (1996) 127(4383), 18–21.
Gow, D.: 2001, ‘Water Deal Blocked: Whitehall Departments Link up to Halt Not-for-Profit Firm Taking over Welsh Water’, The Guardian (London), 10 January.
Hutton, W.: 1997, ‘The Stakeholder Society’, in Stakeholding and its Critics, Choice in Welfare No. 36 (The Institute of Economic Affairs, London).
Jones, A.: 2000a, ‘Making Water Competition a Reality’, Economic Affairs 20(2), 53–57.
Jones, A.: 2000b, ‘Privatized Utilities and the “Third Way”’, Public Money and Management 20(3), 27–34.
Jones, M. T.: 1996, ‘Missing the Forest for the Trees: a Critique of the Social Responsibility Concept and Discourse’, Business and Society 35(1), 7–41.
Law Commission: 1998, Company Directors: Regulating Conflicts of Interest and Formulating a Statement of Duties — A Joint Consultation Paper (Law Commission Consultation Paper No. 153 and Scottish Law Commission Discussion Paper No. 105, The Stationery Office).
Lea, D.: 1999, ‘Corporate and Public Responsibility, Stakeholder Theory and the Developing World’, Business Ethics: A European Review 8(3), 151–162.
Littlechild, S. C.: 1983, Regulation of British Telecommunication's Profitability (Department of Industry, London).
Littlechild, S. C.: 1986, Economic Regulation of Privatised Water Authorities (Department of the Environment, London).
Mahoney, J.: 1994, ‘What Makes a Business Company Ethical?’, Business Strategy Review 5(4), 1–15.
Metcalfe, C. E.: 1998, ‘The Stakeholder Corporation’, Business Ethics: A European Review 7(1), 30–36.
Nelson, M. T.: 1998, ‘An Aristotelian Business Ethics?’, Journal of Applied Philosophy 15(1), 89–104.
Office of Electricity Regulation and Office of Gas Regulation: 1998, The Social Dimension: Action Plan (OFFER and Ofgas), June.
Office of Gas and Electricity Markets: 2000, Social Action Plan: Improving Social Obligations (OFGEM), January.
Office of Telecommunications: 1999, Management Plan for 1999/2000: Statement Issued by the Director of Telecommunications (Oftel), May.
Office of Water Services: 1999a, MD152 — Approval of Companies Charges Schemes in 2000–2001 (Ofwat), 13 September.
Office of Water Services: 1999b, Final Determinations — Future Water and Sewerage Charges 2000–05 (Ofwat), November 1999.
Reilly, B. J. and J. M. Kyj: 1990, ‘Ethical Business and the Ethical Person’, Business Horizons 33(6), 23–27.
Sternberg, E.: 1994, Just Business (Warner Books, London).
Sternberg, E.: 1998, Corporate Governance: Accountability in the Marketplace, Hobart Paper 13 (Institute of Economic Affairs, London).
Stiles, P.: 1997, ‘Corporate Governance and Ethics’, in P. W. F. Davies (ed.), Current Issues in Business Ethics (Routledge, London), pp. 39–49.
Taylor, A.: 2000a, ‘Shareholders Could Receive £1.8 bn from Utility Mutuals — Kelda Water Group Sets Ownership Trend’, Financial Times (London), 16 June.
Taylor, A.: 2000b, ‘People's Group Bids Again for Water Supplier: Glas Cymru Set to Offer £1.8 bn in Attempt to Keep Utility in Welsh Hands’, Financial Times (London), 3 November.
The Economist: 1998, ‘Goldilocks Politics’, The Economist (U.S.) 349(8099 (19 December)), 73.
Van Duyne, A. and M. Jones: 2000, ‘Kelda Abandons Plans to Sell Assets to Mutual Company’, Financial Times (London), 26 July.
Yarrow, G.: 1996, ‘Dealing with Social Obligations in Telecoms’, in M. E. Beesley (ed.), Regulating Utilities: A Time for Change, Readings 44 (Institute of Economic Affairs, London), pp. 67–83.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Jones, A. Social Responsibility and the Utilities. Journal of Business Ethics 34, 219–229 (2001). https://doi.org/10.1023/A:1012571120178
Issue Date:
DOI: https://doi.org/10.1023/A:1012571120178