1
Q
examples of privatisation
A
- Sale of public companies to the private sector (e.g. British Airways)
- Contracting out - The Government often contracts out services to private companies (e.g. contracting out school meal catering to private companies in the UK)
- The Sale of Land and Property - Giving people renting council houses the chance to buy it
2
Q
What is privatisation
A
involves transferring public sector resources/businesses to the private sector
3
Q
Effects of privatisation on consumers
A
- Private firms main objective is to make a profit, so these firms will be very efficient meaning consumers may receive a better service and better price
- However, due to monopoly power, some firms that were privatised now have higher prices e.g., UK Rail
4
Q
Effects of Privatisation on workers
A
- After an organization moves into the private sector, they aim to reduce costs, to increase profits, and so many workers are made redundant
- In order to cut costs, privatized firms may try to strongly encourage employees to increase their productivity, leading to extra stress
5
Q
impact of privatisation on businesses
A
- Many firms will have increased investment after privatisation from shareholders and investors (compared to Government funding). Firms can use this money to improve their business. E.g. improving quality/buying machinery
- The objectives change from providing a high quality service to making a profit
- Privatised firms often diversify into new areas e.g. British Telecom investing in broadcasting Premier League and Champions League
6
Q
effect of privatisation on government
A
- Huge amounts of revenue is generated from the sale of the business
- The Government can now focus on more important areas e.g. education, health care, defence
- However, advertising the business for sale is funded by the tax-payer and some believe the businesses are sold off too cheaply
Economics
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