The privatisation of British Telecom: a case study of the extended process of legislation

Abstract

Abstract. One of the main ingredients in discourse about British politics concerns the extent to which, and under what conditions, central government can get its own way. Since 1979, the country has been ruled by a prime minister and a government placing at least rhetorical emphasis on the ‘politics of conviction’. At the same time we have a well established academic literature giving emphasis to the various hurdles in the policy‐making process which face even a government with a working parliamentary majority. The purpose of this paper is to trace the steps in the process towards the government achieving one of its manifesto commitments; the sale of 51 per cent of British Telecom shares to the private sector. In so doing, it is intended to analyse this example of the policy process in terms of the predominant British policy style.

Regulatory reform in Britain and France: Organizational structure and the extension of competition

“…Further change in 1981 included the privatization of Cable and Wireless, which supplied telecommunications services overseas, notably in Hong Kong. But the most important organizational change came with the 1984 Telecommunications Act, which established a new organizational structure for the telecommunications sector (Hills 1986: 122-30;Moon et al 1986;Cawson et al 1990: 95-7; for a detailed legal analysis of the 1984 Act, see Long 1988). BT was converted into a private limited company and 'privatized' by the sale of 50.2 per cent of the shares in November 1984 (Newman 1986).…”

“…Moreover, BT lobbied strongly against 'over-sweeping' change. It argued that it was unfairly constrained in meeting competition by government rules on public corporations, notably those limiting investment and borrowing; hence BT claimed that greater competition would endanger its financial health and/or require large price increases, especially for residential customers (Moon et al 1986). The force of these arguments was felt in discussions, particularly over unrestricted resale of spare capacity of leased lines.…”

“…It thus focuses on whether and how differing national institutions affected policy-making, rather than the processes of institutional reform, which in telecommunications have been examined elsewhere (Moon et al 1986;Hills 1986: 122-30). The telecommunications sector offers an excellent case study to test the claims for the importance of differing national organizational structures for policymaking.…”

Information technology and economic recovery in Western Europe

“…Further in Britain, the measures of liberalisation in telecommunications, as well as the privatisation of British Telecom appear to be increasing competition for some products and services. (Moon et al, 1986) At the national level, government initiatives have been especially important with regard to the capital market, inspired by the success of venture capital support for IT firms in the United States and by the growing awareness that encouraging private sector financial support for small and medium-sized firms is often more effective than government funding. The venture capital market in Britain is the most advanced and well-established in Europe, but both France and West Germany have attempted to encourage their own venture capitalists by setting up unlisted securities markets and by creating a favourable fiscal environment.…”

Evaluating Thatcher: Sceptical versus Synthetic Approaches

“…Thatcher's government tended to exclude unions which other governments had consultedindeed many commentators had considered unions to be veto groups par excellence (Brittan, 1975;Beer, 1982). However, Thatcher's government brought in groups not usually consulted (Moon et al, 1986;Richardson et al, 1992) and thus did not reduce consultation but merely changed the dramatis personae. Marsh and Rhodes observe that Thatcher's government depended on privatised company managers and that this inhibited the extension of competition, thereby impeding the success of privatisation.…”