Page 1: Introduction
From 1945 to 1950, a Labour Government altered the structure of British industry by nationalising many major UK undertakings, including coal mines, steelworks, railway companies, airlines, and gas and electricity supply companies. Some nationalised industries were granted a monopoly, including the National Coal Board, the British Railways Board and the Central Electricity Generating Board. For each industry the government decided policy and set targets. The Boards carried out day to day operations.
These state monopolies reduced consumer choice. For example, only one producer supplied gas, and only one producer supplied electricity. Power lay with government ministers. A nationalised industry could not diversify its business. It could not close down any activity without government permission. For capital investment funds, it had to apply to the Treasury.
A change of political party in power led to a change in policy. In May 1979, the newly-elected Conservative government began a programme of privatisation and de-regulation that took 15 years. Gradually over time, state-owned industries were sold and became private sector companies. Many UK citizens became shareholders for the first time.
This case study explores the advantages and disadvantages of de-regulation in the energy sector.