The privatization of British Energy: Risk transfer and the state

Abstract

Following the development of the New Right Agenda, Conservative Governments in Britain introduced incrementally an extensive privatization programme. This paper focuses on the failure of the last privatization of the Conservatives: British Energy, the company established to run the eight most modern nuclear power stations. A key argument used to justify the privatization of British Energy is analyzed, that of the transfer of risk from the state to the private sector. The privatization led to the apparent transfer to the company of three interrelated risks: downsizing risk; market risk; nuclear liabilities risk. New Labour's rescue of British Energy confirmed the reality, which was that residual responsibility for risk, especially the nuclear liabilities risk, remained with government. Despite the company's collapse the Labour Government sought a market-based outcome, and in 2008 British Energy was sold to EDF, the French state-owned energy company. The paper concludes with a discussion of the implications of the failure of risk transfer for public policy.

Using investment appraisal models in strategic negotiation: The cultural political economy of electricity generation

“…Significantly, power stations have long lives, and current industry assets have survived many changes in government. In particular, much of the generating capacity available today originates from the pre-privatization era (Jupe, 2012;Warren, 2014;Warren et al, 2018); a time when decisions on particular power stations could be framed by political concerns, such as maintaining employment in the deep coal mining industry. As Miller (1991) pointed out, DCF was promoted as a calculative device in the government's economic imaginary during the 1960s, but as part of an interventionist, rather than a neoliberal, pro-market, economic policy.…”

Entrepreneurs of the self: The development of management control since 1976

“…Accounting can serve as a crucial technology of neo-liberalism (see for example, Arnold, 2009;Arnold, 2012;Covaleski et al, 2013;Jupe, 2012). It enables the rationalities of neo-liberalism to pass through and thereby transform the organisation and create new organisational practices (Hopwood, 1987) targeted at the workforce.…”

Risk transfer and stakeholder relationships in Public Private Partnerships

“…The modernisation of the public sector was central to the ideology underpinning New Public Management (Connolly, Reeves, & Wall, 2009;Demirag, Khadaroo, & Clark, 2009;Lapsley, 2009), with the emphasis on achieving closer cooperative relationships between the public and private stakeholders (Wettenhall, 2007). Relationships between stakeholders from both the public and private sector, particularly in terms of sharing risk, were a cornerstone to Labour's 'Third Way' philosophy in the United Kingdom (UK) (Broadbent & Guthrie, 2008), with the Private Finance Initiative (PFI) 1 a prime example of where this occurred (Jupe, 2012). Implemented in the 1990s to improve roads, schools, prisons and hospitals, PFI was pivotal in terms of modernising the UK public sector.…”

“…In order to obtain VFM, risk should be allocated to the party most adept at managing it (Department of the Environment, Heritage & Local Government, 2003;Department of Finance, 2006;Demirag, Khadaroo, Stapleton, & Stevenson, 2012) therefore it is important to understand how risk is allocated, transferred and managed in PPPs. In terms of understanding these risk related issues in PPPs, recent research concentrates primarily on public sector and financiers' perceptions of risks (Akinyemi, Ojiako, Maguire, Steel, & Anyaegbunam, 2009;Asenova & Beck, 2010;Demirag et al, 2010;2012), which only provides a partial understanding of risk in PPPs. Prior work has generally focused on relations developed between the public and the private sectors in risk transfer and/or its management (Edwards & Shaoul, 2003;English & Baxter, 2010;Iseki & Houtman, 2012;Demirag et al, 2012).…”