Matthew Jeffery is one of Britain’s most experienced global talent and recruitment leaders, with more than 25 years advising boards and C-suite executives on workforce strategy, skills, and productivity.
Privatisation was one of the great achievements of modern Conservatism. But we allowed others to claim it had failed. The truth is simple. The policy succeeded. The system around it did not. After the achievements of the 1980s, too many Conservatives lost their reforming zeal. We became custodians of the status quo when we should have remained the party of change. Labour seized the moment, rewrote the history and turned a Conservative success into a political weakness. Politics loathes a vacuum. If one side stops defending an idea, the other side gets to redefine it.
As Andy Burnham begins his “summer of treats”, designed to soften the ground for an early election, the denigration of privatisation is firmly in his sights. Labour has spent years arguing that privatisation failed and Burnham has become one of its most vocal advocates for reversing it. His record in Greater Manchester points in the same direction. He brought buses back under public control, argued for greater state involvement in transport and energy and has repeatedly suggested that essential services are better run by government than by competitive enterprise. His argument is straightforward: he believes the state can run major services better than markets. Conservatives should have the confidence to challenge that argument directly.
Privatisation was never about creating perfect companies. It was about recognising a simple truth: governments are poor at running businesses, while competitive markets reward innovation, efficiency and success. The state’s role is to create the conditions for enterprise, not compete with it. Thatcher understood that. Her successors forgot it.
When she arrived in Downing Street, the state owned airlines, telecommunications, gas, electricity, airports and vast parts of British industry. Much of it was failing. British Airways was widely mocked as “Bloody Awful”, a national joke that captured the decay of state-run industry. British Telecom took months to install a phone line. Ministers found themselves trying to run commercial businesses despite having neither the expertise nor the incentives to do so.
Privatisation changed that. British Airways became one of the world’s leading airlines. British Telecom modernised Britain’s communications network. British Gas transformed one of Europe’s largest utility businesses, improving efficiency and attracting billions in private investment. Investment poured into ports, airports and electricity in a way impossible under Treasury control. These successes remain one of the most significant programmes of economic reform undertaken by any post-war British government.
Perhaps Thatcher’s most enduring achievement was creating a nation of owners. More than ten million people became shareholders. Families who had never owned financial assets suddenly had a direct stake in Britain’s economy. Popular Capitalism spread wealth, responsibility and opportunity far beyond the City. Privatisation succeeded because it trusted people more than the state. That should have been the beginning of a new chapter. Too many Conservatives treated it as the end of the story.
When Conservatives forgot how to be conservative
This is the point at which Conservatives need honesty. After the success of the privatisation programme, we stopped asking whether markets were still competitive, whether regulation still encouraged investment and whether public monopolies still deserved to exist. We defended the status quo because it was familiar. That was never Thatcher’s instinct.
The truth is that, for a time, we also lost sight of what being Conservative meant. The last decade confronted Britain with extraordinary challenges. Brexit demanded major constitutional change. The pandemic required unprecedented intervention to protect businesses, jobs and livelihoods. Russia’s invasion of Ukraine triggered an energy shock that affected every advanced economy. Faced with those crises, government inevitably became larger, borrowing increased sharply and public spending rose dramatically. Much of that intervention was justified. The mistake we Conservatives made was allowing exceptional government to become normal government.
One Conservative principle matters more than almost any other. Government matters enormously but it cannot do everything well. Its first responsibility is to do exceptionally well the things that only government can do: defend the country, secure the borders, uphold the rule of law, protect property rights, provide sound public finances and create the confidence that allows businesses to invest for the long term. Prosperity is built in factories, laboratories, workshops and start-ups, not Whitehall departments. Government’s job is to make those places easier to succeed, not compete with them.
We did not return quickly enough to those instincts. The state remained larger than it needed to be. Taxes stayed higher than Conservatives would ordinarily have accepted. Spending continued to grow. Too often we became more comfortable managing an expanded state than asking where it should retreat. Whitehall increasingly behaved like a software company, venture capitalist and industrial strategist, despite having no natural advantage in any of those roles.
The same instinct appeared in our approach to markets. Rail shows the problem clearly. Passengers complained about poor services and we defended the franchise model instead of asking why it was underperforming. Families wanted cleaner rivers and we sounded as though we were defending water companies rather than demanding higher standards. When concerns were raised about executive pay or excessive debt, we defended existing arrangements instead of asking whether they still encouraged long-term investment. We became the party of incumbents when we should have remained the party of markets. That is how the myth that privatisation had failed took hold.
Why privatisation is seen as a failure – and how Conservatives fix it
Privatisation is often described as a failure. It is not. What failed was the stewardship that should have followed it. Conservatives changed ownership but gradually stopped renewing the institutions that allowed markets to earn public trust.
The first privatisation revolution answered one question brilliantly: who should own Britain’s industries. It never claimed ownership alone would guarantee better outcomes forever. Markets need rules. Competition needs oversight. Regulation must evolve as technology, capital and consumer expectations change. Ownership was the beginning of reform, not the end of it.
That is where Conservatives lost their reforming instinct. We stopped asking whether markets were still working as they should. We stopped questioning regulators, challenging public monopolies and modernising institutions that had outlived their purpose. Instead, we defended the status quo simply because Conservatives had created it.
The consequences became obvious. Rail services disappointed passengers. Water companies became associated with pollution, debt and weak governance. Regulators drifted. Public monopolies inside the state escaped the scrutiny Conservatives once applied to nationalised industries. Public confidence declined, not because enterprise had failed but because stewardship had.
Labour also dismantled one of the safeguards built into the original privatisation programme. Golden shares were designed to protect strategically important companies while competition matured. By removing them prematurely, Labour opened the door to overseas takeovers in sectors that were never meant to become global auction houses. A policy designed to create stronger British businesses became associated with selling Britain’s assets abroad. Privatisation was blamed for a problem created by the abandonment of its original safeguards.
Markets do not look after themselves. They need governments capable enough to defend competition, disciplined enough not to replace it and modern enough to keep institutions fit for a changing economy. That is the foundation of Stewardship Capitalism. It is the Conservative belief that markets create wealth but institutions determine whether that wealth remains productive, competitive and trusted.
Stewardship Capitalism draws a distinction British politics often ignores. Productive capital builds businesses, finances innovation and strengthens long term capability. Extractive capital relies on leverage, financial engineering and short term returns that weaken resilience. Markets reward success but institutions shape which forms of success they reward. Good stewardship ensures productive capital wins.
Stewardship also requires a capable state. Government should protect property rights, preserve competition and strengthen national resilience. It should not try to become Britain’s largest software company or industrial developer. Prosperity is created in factories, laboratories and start-ups, not in Whitehall departments.
Strategic importance should be judged by the consequences of failure, not by ownership. A supermarket can fail without threatening national resilience. A national electricity grid, water network, telecommunications backbone or AI infrastructure cannot. These sectors should remain overwhelmingly in private hands, supported by institutions that reward long term investment, resilience and responsible stewardship.
Privatisation was never a one-off event. It was the beginning of a permanent duty to renew markets, strengthen institutions and defend competition. The Second Privatisation Revolution is about finishing that job.
The Second Privatisation Revolution – And the Institutions Conservatives Must Open
That is also why the Second Privatisation Revolution is different. The question is no longer what government should sell. It is what government should never build in the first place. Artificial intelligence, quantum computing, biotechnology, advanced manufacturing, defence technology, commercial space and fusion energy will shape Britain’s future prosperity. Our task is to ensure those industries are built through private enterprise from day one, supported by institutions that reward innovation, productive investment and responsible stewardship.
Britain should become the easiest country in the democratic world in which to start, finance and grow companies in those sectors. Planning must become faster, regulation more predictable and investment much easier. Pension capital should back British innovation rather than finance growth overseas. Entrepreneurs should spend their time building businesses, not navigating bureaucracy.
Britain should begin with Sovereign Innovation Zones: places with fast planning, reliable energy, competitive taxes and regulators whose instinct is to enable progress rather than delay it. Government still has a vital role. It should provide infrastructure, uphold the rule of law, support scientific research and protect competition. Building new industries, however, belongs to entrepreneurs, engineers, scientists and investors.
The next test of Conservative conviction is not whether we defend the privatisations of the past. It is whether we still have the confidence to ask difficult questions about the institutions the state continues to own. If competition raises standards in telecommunications, energy and aviation, why should we assume it suddenly stops working the moment the conversation reaches Whitehall? A reforming Conservative Party should never be afraid to ask whether government is still the best organisation to run a service. Across the state, entire services could be opened to competitive management without touching the core functions of government. The most visible examples are already familiar:
And these are only the most visible examples. Beyond them, many other services could be opened to competitive management while government retains its essential responsibilities:
These institutions should be judged by the same standard Conservatives apply everywhere else. Do they still deliver the best outcome, or has competition overtaken them?
The same principle applies inside Whitehall itself. Government has quietly become one of Britain’s largest technology organisations. Departments commission vast software programmes, build digital platforms and manage enormous databases. That is rarely where the state adds the greatest value. Government should buy the best technology available, not try to become the technology company.
The question is not whether government matters. It is whether government still needs to run these services itself. Conservatives should have the confidence to ask that question everywhere. If competition delivers better outcomes, we should not be afraid of the answer.
The Return of the Ownership Society
The greatest legacy of the Thatcher years was the creation of a nation of owners. Millions became shareholders. Ownership stopped being something reserved for the wealthy. Ordinary families acquired a direct stake in Britain’s economy. Popular Capitalism did not simply privatise industries. It democratised wealth.
That revolution is unfinished. Britain now needs to become a nation of investors as well as savers. Pension funds control hundreds of billions of pounds, yet too much of that money finances growth overseas while British companies struggle to attract long-term investment.
National Infrastructure ISAs could allow families to invest directly in Britain’s future, from advanced manufacturing and clean energy to artificial intelligence and strategic technologies. Pension reforms should encourage more investment in British growth companies. Employees should have greater opportunities to own meaningful stakes in the businesses they help build.
Future privatisations should also serve that same purpose. Where government still owns commercial assets that no longer need to sit inside the state, Conservatives should once again use public share offers to widen ownership across the country, not simply maximise receipts for the Treasury. The objective should be to create millions more owners, not merely different owners.
People are far more likely to believe in markets when they have a stake in them. People believe in enterprise when they share in its success. The Ownership Society was never just about selling assets. It was about giving ordinary people a direct stake in Britain’s future. That ambition is just as relevant today as it was in the 1980s.
The Next Conservative Revolution
Labour is still fighting yesterday’s battles. Reform UK talks about free enterprise but reaches for state intervention whenever frustration grows. One looks instinctively to nationalisation. The other increasingly looks to government direction. Neither asks the more important question: how do we build stronger, more competitive markets in the first place?
Conservatives should make a different argument. Britain should become the easiest country in the democratic world to start a business, raise capital, hire talented people and turn good ideas into successful companies. That means removing barriers, rewarding ambition and trusting enterprise more than central planning.
That is why Kemi Badenoch matters. She has shown a willingness to question ideas many Conservatives now treat as untouchable. Thatcher never believed Conservatism meant preserving the status quo. She believed it meant challenging assumptions that no longer served Britain’s interests. In the 1980s she asked whether government should own Britain’s industries. The defining Conservative question today is different: should government be trying to build Britain’s future industries at all?
The strongest case for privatisation has never been purely economic. It rests on a simple belief that free people make better decisions than governments. Ownership gives people a stake in success. Competition rewards improvement. Enterprise creates the wealth on which every successful nation depends.
Its critics often blame privatisation for problems it was never designed to solve. Weak regulation, complacent institutions and governments that stopped opening markets damaged public confidence far more than private ownership ever did. Privatisation did not fail. Conservatives failed to keep reforming it.
The next Conservative revolution will not be won by defending yesterday’s settlement. It will be won by becoming the party of reform once again. The first privatisation revolution changed who owned Britain’s industries. The second is about ensuring Britain becomes the best place in the democratic world to build the industries of the future. That will demand the same confidence Margaret Thatcher showed in the 1980s: the confidence to challenge old assumptions, trust free people and keep reforming long after others believe the job is done.