Electricity Privatisation and Generation in the UK
Privatisation is an economic reform that has brushed off the economy over the last two years. Since the era of the Thatcher government in the United Kingdom, who initiated privatisation, it became a global event. UK government’s one of the most complex privatisation is the sale of the electricity industry in England and Wales as the lack of previous investment in electricity network had resulted incompetent electricity supply in that regions (Surrey 2013). Therefore, the objective of electricity privatisation and generation is to boost the foreign direct investment and promote market liberalisation. Privatisation reduces commercial and technical losses as new investment enters into the market. Along with this, as the industry has moved away from monopoly to duopolistic market structure, competition increased in electricity generation and its supply (Alonso and Andrews 2016). As more investors entered into the market, this led to an increase in managerial and technological innovation and drastic reduction in cost and prices; import also increases which is an important source of competition for electricity suppliers and generators (Torriti 2014). The net gain from electricity privatisation is higher than that of the pro-privatisation situation. This gain usually came from the excessive nuclear expansion programs, the building of new nuclear power stations and a shift from costly British coal to cheaper natural gas. However, some of the gains have been consumed by paying higher payments to the French electricity for its cheaper import facility (Surrey 2013). Moreover, electricity privatisation had resulted a huge environmental benefit because older cold fired plant has been replaced by cleaner gas generation and thermal efficiencies had also risen correspondingly that reduced emission. Despite all the benefits gained from the privatisation, there are some areas of improvement in the process of privatisation. Firstly, as major income has been transferred to France because of import payment, more attention need to be paid to prevent such things. Secondly, introducing competition in generation might have reduced excess entry and thus lowered prices and increased social welfare (Torriti 2014). For example in case of British Gas, privatisation has offered various positive impacts. Due to privatisation there has been various improvement made for the consumers. Better electricity generation after privatisation has helped many water authorities to offer better pressure of water to the consumer. British Gas received the fastest rate of privatisation in the past years (The Guardian 2018). Moreover, with privatisation the prices of gas have fallen by 23 percent, benefitting the consumers. However, to some extent the profit of the company suffered due to privatisation due to falling prises.
Railroads Privatisation in the UK
Impact of railroads privatisation on UK economy:
The main objective of UK railroads privatisation is not only to earn more profits and public subsidy but also to create financial arrangements and their political consequences. As per the survey conducted by Adam Smith Institute, rail privatisation introduced more competition in the UK market leading to a huge increase in passenger numbers, rail fare and public subsidy (Wellings 2014). Around 1.65 million passengers have increased annually, which is more than doubled than that of pre-privatisation era (Preston and Robins 2013). The lines that linked Waterloo with South-West London, Surray and New Hampshire had started experiencing an exceptional use of these roads. Volume of freight carried has also been increased around 80% after the rail privatisation (Wellings 2014). This led to a drastic increase in economic growth in UK during that time as compare to France, the Netherlands and Germany. In the post-privatisation era, all the rail networks and stations and branch lines were reopened as half of the UK populations are totally dependent on rail networks which were then government owned. However, this increase in train passengers mainly determined through three factors (Preston and Robins 2013). These are their long term GDP growth, changing commuting pattern as most of the people shifted to the urban area for better employment opportunities and increasing their standard of living. Therefore, this rise in passenger journey is not due to privatisation. Moreover, as per the government report, more than 90% of new investment in railways comes from the UK government and several other governments funding (Reynolds 2013). Therefore, innovation and new investment is also not a reason of privatisation. On the other hand, critics claimed that rail privatisation has resulted cheaper services for daily passengers. However, a report from 1995-2015 revealed that rail fare has been increased by 117% post privatisation (Pollock 2016). From the above discussion, it can be argued that rail road privatisation resulted a complete failure in the UK economy.
The argument about the privatisation of NHS has been intense. The private sector role for the development of NHS needs a serious consideration. In this context, three individuals Fraser Coppin, Jessica Hubbard and Clive Peedell have been argued for and against the NHS privatisation.
The argument for NHS privatisation by Fraser Coppin:
The fundamental principle of NHS is to get the basic healthcare based has on the need rather than the ability to pay. This idealism has been so inbred in the public that a slight reform in the healthcare system has been a political issue. NHS is one of the famous institutions in Britain. However, there are several problems associated with it (Powell and Miller 2016). As per the critics, there is a bitter rivalry between the NHS and rest of the world. As compare to the OECD, WHO and Commonwealth Fund, NHS ranks the third last of developed country. Even in the health outcome category, it ranks the last. A report conducted by Institute of Economic Affairs revealed that if UK’s cancer patients were treated in Germany instead of UK, then approximately 12,000 lives would be saved. Similarly, in the Netherlands, around 9000 lives and in Belgium around 14,000 lives would be saved; because in UK, hardly a hospital bed can be allotted for the patients (Reynolds 2013). Therefore, there is a huge shortfall in those cases. Overall, NHS has been failed drastically in every aspect. While encountering the issue, some defender will argue that certain things would be better if they were properly funded by the government. However, it is a fact that spending in the NHS by the government has been risen from EUR 68bn to EUR 143bn and it increases year after year. However, it is also a fact that it is not possible for a country to inject money on certain things which does not work. In fact, people are not quite interested to discuss its improvement. Therefore, the injection of unlimited cash is needed to be stopped somewhere. Get in this point, the question might arise that how privatisation would have a positive impact in this scenario. The best possible solution in this regard would be a private social insurance system. With this, every citizen irrespective of their income, has get the access of best quality healthcare, and when it comes to patient fallout, its result is a way better than the NHS in every aspect. Therefore, state owned public sector healthcare is badly needed a reform. So, it can be concluded that privatisation can work very well if it is possible to explore the possible alternatives and if it is possible to look after of what really matters: the patients instead of focusing ideological predicament.
The Argument for and Against the NHS Privatisation
Argument for privatisation of NHS- Thomas Cawston
NHS privatisation has received a lot of support for its ability of improving the care system with rising competitive environment. This will benefit patients by receiving better service (BBC News 2018). NHS has also asked other organization under them to give their views for supporting privatisation to get better equipment. Private companies along with were asked to submit bid for supplying best facilities and service to the patients (Reynolds 2013). Thus the private companies that win the bid will get to run NHS. This shows that privatisation in this process will have a beneficial effect on NHS.
Argument for privatisation of NHS- Dr. Jonathan Fielden
NHS has been receiving various increase in its cost and service requirement with the increasing demand from the patients. This is due to increase in aging customers and rising expectation from the health services (Telegraph 2018). It was becoming increasingly difficult for NHS to cope up with the costly healthcare services. In this scenario it has been rightly supported that privatisation has helped NHS to take up costly healthcare services and technology for the patients (Powell and Miller 2016). Thus, the view that private companies only aim to earn profit from NHS has proved to be a wrong claim.
The argument by Jessica Hubbard against the NHS privatization
The National Health Service is the cornerstone of British society. Its fundamental principle lies in providing basic healthcare to the Britons to the free of cost. Therefore, if NHS were in the hand of private sector, there will definitely be the absence of basic healthcare of those who cannot afford. Due to the privatisation, many parts of their hospital are being sold to the private parties (Campbell 2017). Moreover, competition will be more rapid and it further leads to job losses that in turn leads to bad healthcare services. On the other hand, private sector will demand more funding to run their business; however, most of the expenses are being wasted on marketing. In fact, 1 out of 10 pounds have been wasted in non-clinical expenses. This proves that there is a problem regarding the funding. Therefore, instead of privatising, government must fund nursing courses and other proper and relevant healthcare training that will enhance safety and more number of patients can be handled by them and this will lead to a limited hours of work and control the work pressure a well.
The argument against the NHS privatisation by Clive Peedell:
Over the last few years, UK government has taken several public service agenda regarding market competition, consumer choice and increasing number of private sector. In the context of NHS, all these were started since the Thatcher government; the injection of private sector in NHS led to trigger market competition and innovation, lower the cost of production (Sass 2015). However, market failure is a serious concern as price competition depressed the patient care. Another main problem is that private firms are profit maximisers rather than cost minimisers. Therefore, private firm stimulates profits by diminishing the NHS finances, reducing local healthcare services and patient choices. On the other hand, medical professions are undetermined because the relationship between the doctor and patients are underestimated. Therefore, proper healthcare services require a long-term strategic planning and it should not be left in the hands of private sectors (Jupe and Funnell 2017). NHS should be publicised and should be seen as a publicly funded healthcare service.
Argument against privatisation- Oliver Huitson
Privatisation for the health sector has received criticism largely from various grounds. This is because competition and privatised health provision has never shown any positive evidence (BBC News 2018). There has been large evidence that shows that healthcare privatisation and depending on the competitive market has largely proved to negatively impact the health care sector (Sass 2015). Similar things will happen after NHS privatization. This is because due to privatization, health care sector will totally target to increase income, cost cut and other profit maximizing solution which increases the evel of fraud in the in the system.
3.The basic concept of NHS privatization under the guise of proper patient care damages the concept of NHS. The scenario of public and private sector has been more complicated in recent years (El-Gingihy 2017). However, evidence suggests that private medical sector has been changing more rapidly over the last two decades. The percentage of population covered by private health insurance, and the number of private hospitals have been stimulating day-by-day. In 1997, around 3,367,000 patients were subscribed to the private health insurance which composed 11% of total population (Abel-Smith and Titmuss 2016). Moreover, 28% of hospital beds were in the hands of private sector in 1979, which was further increased to 56% in 1989. On the contrary, private medicines were grown during the last 20 years which is a definite alternative to the NHS. Therefore, from the initial point of view NHS is definitely beneficial for the UK economy.
It is quite difficult to estimate the impact of private sector involvement in the NHS. However, it is clear that after privatisation, those who have jumped to the private medical sector had gain the access of elective surgery, and these people tend to be well-off by the private insurance schemes. Moreover, the concept of equal access faced challenges due to the privatisation of NHS (Hughes 2014). However, Joan Higgins argues that both the advantaged and disadvantaged people are just imitated in the private sector and the advantaged people who gained from the NHS also started gaining from the private sector. The introduction of private sector helps to stimulate the choice of people who can afford. When it comes to the quality of healthcare, there is an absence of information in this regard. However, it is true that the process of private healthcare might be more comfortable yet it stimulates some over-testing and over-treatment (Smith et al. 2014). Also, doctors in the private sector can not earn incentives for maintaining medical records or clinical audits. Professional isolation, work culture of part time staff, deficient emergency coverage are some of the factors that lead to shift patients from private hospital to NHS. In early 1990’s, private sectors gained enormous growth through several policy initiatives (Pollock 2016). A paper published in the Journal of Public Health, the rate of treatment for NHS-funded elective surgery had fallen from 143.8 per 100,000 in 2006-07 to 137.8 per 100,000 (Pollock 2016). Research suggests that the UK people want to see NHS as a cherished institution. Therefore, it can be concluded that healthcare planning requires a long term strategy to meet all the need of healthcare activities. Therefore, NHS requires being publicly funded liable public healthcare services.
References:
Abel-Smith, B. and Titmuss, R.M., 2016. The cost of the national health service in England and Wales. Cambridge University Press.
Alonso, J.M. and Andrews, R., 2016. How privatization affects public service quality: An empirical analysis of prisons in England and Wales, 1998–2012. International Public Management Journal, 19(2), pp.235-263.
BBC News. 2018. Why not… privatise the NHS?. [online] Available at: https://www.bbc.com/news/uk-politics-22528719 [Accessed 23 Jan. 2018].
Campbell, D. 2017. How much is the government really privatising the NHS?. [online] the Guardian. Available at: https://www.theguardian.com/society/2016/aug/15/creeping-privatisation-nhs-official-data-owen-smith-outsourcing [Accessed 23 Nov. 2017].
El-Gingihy, Y. 2017. The NHS is on a one-way road to privatisation. [online] the Guardian. Available at: https://www.theguardian.com/healthcare-network/2015/oct/02/nhs-one-way-road-privatisation [Accessed 23 Nov. 2017].
Hughes, S., 2014. An eye to privatisation. Guardian (Sydney), (1664), p.8.
Jupe, R. and Funnell, W., 2017. ‘A highly successful model’? The rail franchising business in Britain. Business History, pp.1-33.
Pollock, A., 2016. NHS NO MORE?. Community Practitioner, 89(12), p.28.
Powell, M. and Miller, R., 2016. Seventy years of privatizing the British national health service?. Social Policy & Administration, 50(1), pp.99-118.
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Reynolds, L., 2013. The future of the NHS–irreversible privatisation? Interview by Jill Mountford. BMJ (Clinical research ed), 346, p.f1848.
Sass, S.A., 2015. Privatizing Railroad Retirement. WE Upjohn Institute.
Smith, A., Kern, F., Raven, R. and Verhees, B., 2014. Spaces for sustainable innovation: Solar photovoltaic electricity in the UK. Technological Forecasting and Social Change, 81, pp.115-130.
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Surrey, J., 2013. The British electricity experiment: privatization: the record, the issues, the lessons (Vol. 1). Routledge.
Telegraph.co.uk. 2018. The arguments for and against. [online] Available at: https://www.telegraph.co.uk/news/uknews/1541027/The-arguments-for-and-against.html [Accessed 23 Jan. 2018].
The Guardian. 2018. Privatisation: the good, the bad, and the ugly. [online] Available at: https://www.theguardian.com/politics/2013/apr/12/privatisation-good-bad-ugly [Accessed 23 Jan. 2018].
Torriti, J., 2014. Privatisation and cross-border electricity trade: From internal market to European Supergrid?. Energy, 77, pp.635-640.
Wellings, R., 2014. The Privatisation of the UK Railway Industry: An Experiment in Railway Structure. Economic Affairs, 34(2), pp.255-266.
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