Privatisation Review Lesson

Title: Privatisation
Lesson objective: To investigate the case for privatisation

-The ability to create new ideas through building on existing 90 seconds
ideas or diverting
from them
Assessed skills: The ability to monitor, evaluate and self-correct
AO1: Communicate knowledge

AO2: Apply knowledge Rate yourself against the success criteria Before the lesson
on a scale of 0-3
AO3: Analyse economic issues 0. Not familiar
1. Basically (e.g. I have an idea)
A04: Make reasoned judgements 2. Moderately (e.g. I can discuss it)
Success criteria: 3. Extensively (e.g. I can teach it to a peer)
- Am I able to apply my understanding in explaining privatisation ?

- Am I able to analyse the impact of privatisation ?
- Am I able to evaluate the case for privatisation ?
Up to this point we have learnt sufficiently about the mixed
economy. An important component of the topic is “privatization”.
This lesson will be 100% self-led and you will need to:
1. Comprehensively explain what is meant by the concept
“privatisation” with the use of an example and find a real life
case for privatization. [SC1]
2. Analyse the impact of privatization on: a) Consumers. b)
Workers .c) Businesses. d) governments. (Use research)
[SC2]
3. Evaluate the case for privatisation. [SC3]
Challenge: Research on the nature of a) Nationalisation b) Pros and cons of

nationalization c) Value judgement on whether privatization is best or nationalization
for energy sector in an economy.
Success criteria:
SC1: Apply my understanding in explaining privatisation
SC2: Analyse the impact of privatisation
SC3: Evaluate the case for privatisation
Comprehensively explain what is meant by the concept “privatisation” with the use of an example and find a
real life case for privatization.
Privatisation means the transfer of assets from the public (government) sector to the private sector. In 1983 in
the UK, more state-owned businesses were privatised, including major utilities such as British Telecom (1984)
and British Aerospace (1986), and organisation such as Rolls-Royce and British Airways (both 1987).
Success criteria:
Analayse the impact of privatization on: a) Consumers. b) Workers .c) Businesses. d) governments. (Use
research)
On businesses
Reduces trade union power
Privatisation is also seen as a way of reducing trade union power, widening share ownership and increasing
investment, as privatised businesses become free to raise finance through the stock market.
Private monopolies
Privatisation creates private monopolies, such as the water companies and rail companies. These need
regulating to prevent abuse of monopoly power
On government
Government will raise revenue from the sale
Selling state-owned assets to the private sector raised significant sums for the UK government in the 1980s.
However, this is a one-off benefit.
Government loses out on potential dividends.
Many of the privatised companies in the UK are quite profitable. This means the government misses out on
their dividends, instead going to wealthy shareholders so it also means we lose out on future dividends from
the profits of public companies.
Success criteria:
On consumers
Efficient allocation of resources
Privatisation creates healthy competition in the economy and enables consumers to receive better products
and services than they would if the public sector were the provider. This is because the public sector through a
command system rarely or never uses the price mechanism.
Public interest
In the case of health care, it is feared privatising health care would mean a greater priority is given to profit
rather than patient care. Therefore the interest would shift from providing health but rather to gaining profits
in the process than rendering an important service to the public.
On workers
Employment opportunities
Given that privatisation links more on supply-side policies, this increases the employment opportunities and
competitive salaries in the labour market.
Disposable factor input
A private firm is interested in making a profit, and so it is more likely to cut costs, this puts labour at risk of
retrenchment in a time of recession or economic depression since private firms will normally first
reduce/adjust the human factor input in time of economic depression.
Success criteria:
Evaluate the case for privatisation.

It depends on the industry in question. An industry like telecoms is a typical industry where the incentive of
profit can help increase efficiency. However, if you apply it to industries like health care or public transport
the profit motive is less important.
It depends on the quality of regulation. Do regulators make the privatised firms meet certain standards of
service and keep prices low?
Is the market contestable and competitive? Creating a private monopoly may harm consumer interests, but if
the market is highly competitive, there is greater scope for efficiency savings.
Can you create incentives in a nationalised firm? For example, performance related pay could replace the
profit incentive.
Success criteria:
Rate yourself against the success criteria After the lesson on

a scale of 1-3
1. Basically (e.g. I have an idea)
2. Moderately (e.g. I can discuss it)
3. Extensively (e.g. I can teach it to a peer)
Success criteria:
Success criteria:
SC1: I am now able to Apply my understanding in explaining privatisation
SC2: I am now able to Analyse the impact of privatisation
SC3: I am now able to Evaluate the case for privatisation
Success criteria:
SC1: I am now able to Apply my understanding in explaining privatisation
SC2: I am now able to Analyse the impact of privatisation
SC3: I am now able to Evaluate the case for privatisation

Privatisation Review Lesson

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Privatisation Review Lesson

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Title: Privatisation

Lesson objective: To investigate the case for privatisation

Assessed skills: The ability to monitor, evaluate and self-correct

AO1: Communicate knowledge

- Am I able to apply my understanding in explaining privatisation ?

Challenge: Research on the nature of a) Nationalisation b) Pros and cons of

Evaluate the case for privatisation.

Rate yourself against the success criteria After the lesson on

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