The Politics of Regulation, Privatised Utilities in Britain

Citation

Jones, A. (2001), "The Politics of Regulation, Privatised Utilities in Britain", International Journal of Public Sector Management, Vol. 14 No. 5, pp. 439-444. https://doi.org/10.1108/ijpsm.2001.14.5.439.2

This well crafted and highly readable book is a comprehensively researched historical review of the development of the frameworks for regulating the network utility industries following their privatisation by Conservative governments in the 1980s and 1990s. It is likely to appeal to a wide audience, not just those specifically linked to utilities. For the many participants in these particular events: industry practitioners, politicians, civil servants, regulators, interest groups, academics and observers, this review will be of particular interest as it will provide the perspective to allow their individual experiences to be put into broader context. The concise way in which the birth and evolution of the regulatory system for the privatised utilities is documented also gives students and researchers an excellent starting point and platform for much needed future study of this crucial sector of the economy.

The book is predominantly descriptive as opposed to analytical, “describing in turn the various aspects of an interlocking system” as the author puts it. Interspersed throughout the chapters are interesting mini‐case studies covering formative events and milestones in the evolution of the regulatory systems. Included are: the break‐up of British Gas, the demise of the coal industry following electricity privatisation, the water resources crisis in Yorkshire and the re‐opening of the electricity distribution price review by Stephen Littlechild in 1995.

The author aims to fill a perceived gap in the literature, which she describes as dominated by the writings of economists. This is achieved by painting the period as a process of political discovery. The urge to privatise the utilities was born out of frustration with the shortcomings of these vital services being run as state‐owned organisations. The RPI minus X model of regulation used to facilitate successive utility industry privatisations, although the brainchild of free market inspired economists, was underpinned by political aspirations. The ensuing periods of regulation are viewed as highly political with the regulators finding themselves in “constitutional no‐man’s land” attempting to “represent both government and consumers”.

New Labour, having abandoned re‐nationalisation as a prerequisite for election victory in 1997, turned from their open hostility towards the utilities whilst in opposition to pragmatic use of the inherited regulatory systems as instruments of social and environmental policy. This new role for regulation will ensure its longevity and has given birth to a new type of regulator as exemplified by Callum McCarthy, the energy regulator – a far cry from the original conception, which viewed regulation merely as a stop‐gap, to wither away as market competition took its place.

The chronicling of regulatory events ends with the Utilities Act, 2000 reforms for the energy sector and few pointers are offered as to the future. The author does however ask whether current political intervention in utility regulation means that the wheel has come full circle, referring back to ministerial interference in the years when the utility industries were publicly owned, only to quickly dismiss this notion as “probably too pessimistic”.

The Politics of Regulation is a valuable addition to the literature offering considerable power of reflection to its readers.