However, in a major review of privatisation edited by David Parker, Professor of Business Economics and Strategy at Cranfield Business School and recently appointed by Tony Blair to write the official history of privatisation, a group of IEA economists argue that privatisation alone is not enough to ensure economic growth. The authors argue that:
· While privatisation is undoubtedly a good thing for the economy, privatisation alone is not a panacea for economic ills.
· Privatisation has been most effective when combined with deregulation and policies to promote competition.
· There have often been mixed motives for privatisation and this has undermined the achievement of economic objectives.
The relative performance of different privatised industries is consistent with the analysis. The performance of the water industry is well short of that of the electricity and gas industries. In the water industry the regulatory authorities control what should be commercial decisions and have done little to introduce the kind of competition that has been so beneficial in the energy markets. Much could be done to improve the performance of the water industry if the regulator used its power to promote competition in consumer supply and storage.
In railways, there has been a 40% increase in passenger volumes since privatisation with no evidence of a deterioration in safety, contrary to popular belief. However, whereas privatisation led to dramatically reduced costs in many industries, it coincided with a 300% increase in total operational