Public Management and Administration - Owen E.hughes

economic ideology. The ideological fervour faded somewhat, even before the
Conservative government lost office. The Labour Party’s return to power in
1997 did not bring an end to the use of privatization as a policy tool, and
neither was there any serious suggestion to go back to nationalization.
Privatization, in its various forms, was viewed pragmatically, as a set of devices
that offered possible solutions to some public management problems.
If there has been an ideological debate over privatization, it has certainly
been won by those favouring privatization, judging by the policy outcome.
However, it is not so much that the debate was won but that the counter debate
was either not made or made weakly. In any case, pragmatic rather than ideological
arguments seem to have held sway. Even in Britain, where the ideological
debate was supposed to be most fervent, the most cogent reason for the
continuing privatization programme was the pragmatic one of raising revenue
rather than changing the shape of society.
Looking again at the different kinds of public enterprise, it is clear that
economic benefits would only be certain to arise from selling enterprises in
competitive environments. For the other kinds, notably utilities, the economic
benefits would be greatest by encouraging competition through deregulation
with change in ownership being less important. Vickers and Yarrow (1988, p. 3)
argue that ‘the degree of product market competition and the effectiveness of
regulatory policy have rather larger effects on performance than ownership per
se’. Even there, though, the benefits may not be large. There would seem to be
little advantage in privatizing loss-making areas such as railways, although
there may be some attraction in simply getting rid of these kinds of enterprises.
The debate has now been won by those in favour of privatization. This has
happened even though the economic arguments for privatization are less than
overwhelming; there is no incontrovertible evidence supporting the superior
efficiency of private sector provision (although there is a similar lack of evidence
of any public sector superiority); and the ideological arguments are
unconvincing. The arguments and evidence for privatization were not strong.
But, in the final analysis, there was no serious and sustainable argument from
those in favour of retaining public enterprises, other than the rather weak ones
of history and the role once seen in them as advancing the cause of socialism.
Public enterprises had lost supporters and support. There now seems to be
fairly general agreement that running public enterprises is no longer part of the
core business of government.
Control and accountability
Public Enterprise 107
Once any organization is in government hands, there must be questions about
its accountability. In theory (see Chapter 13), all parts of government are
accountable to the political leadership and finally to the people. The question of
accountability was once the major concern in public administration studies of
public enterprises and statutory authorities, with any concern about ownership