Electricity Deregulation in England and Wales

Abstract

In June 1987, Mrs Thatcher won her third General Election, on a manifesto which contained a pledge to privatise the electricity industry. Large-scale privatisation had been a major discovery of the previous five years, starting almost by accident with the sale of British Telecommunications (BT) in 1984. The company had become a privatisation candidate largely because the Treasury did not want its investment to be counted as public spending, and had been sold to small investors because the sale was too big for the financial institutions alone. The revenue from the sale appeared to allow lower taxes, while the policy was popular with those shareholders who saw their investment rise in value. Economic theory also suggested that a private company might be more efficient than a public one, although there was little firm evidence on this by 1987. In fact, BT had become extremely unpopular, given the belief that its quality standards were falling, and there were concerns about British Gas, which had also been privatised as a virtual monopoly, and was exploiting its position.