Chris Evans

13th October 2021


The slow-motion collapse of the free market experiment?

Competition will lead to lower prices for customers. Private enterprises will deliver efficient services where state monopolies once wasted more and more taxpayer’s money. Popular capitalism is nothing less than a crusade to enfranchise the many in the economic life of the nation.

That has been the keen riposte of capitalist politicians of all parties that have championed the privatisation of the UK’s key assets since the Thatcher administration sold shares in British Telecom back in 1984. The TV advertisements and the brochures sold a vision of a private capital utopia delivering efficient services, self-sustainability and return on investment for the exchequer.

Despite scepticism and opposition among the lower classes at the time, the appetite for these assets was enormous. At its IPO, BT was oversubscribed and gained 30% in value within the first 24 hours. Similar flotations of privatised utilities followed a similar path as one by one the nation's assets were sold off by an emboldened government.

Fast forward almost four decades and the fanfare and exuberance of the ’80s has been replaced by a creeping sense that the privatisation experiment has failed. A growing number of private companies operating in former state industries are surviving only on taxpayer support.

Market analysts Plimsoll have examined some of the UK’s former state-run markets to highlight the current conditions and the reality of post-privatisation:


British Rail was so famously inefficient, it had a cameo mention in the Hollywood blockbuster Die Hard 2. In 1993, British Rail was entirely privatised and split into two parts. The infrastructure was spun off into a private company called Railtrack and floated in 1996. The rolling stock would be franchised out to private companies.

This “vertical separation” proved to be a disaster. Within 3 years, 38 lives had been lost and more than 600 people injured in major crashes on British railways. After a third major crash in 2000 panic set in at the company as most of the centralised repair skills had been sold off to private contractors and concern grew about how many more tragedies were lurking in the network. Financial pressures mounted and share prices collapsed, forcing the government to retake control, and Railtrack fell into administration.

The franchise system fared a little better. Virgin Trains lost its franchise for the West Coast line. Northern Rail was taken into state ownership. The Frist Group agreed to early termination of key route franchises. The situation has deteriorated to such a degree that the government has now cancelled the franchise programme.

Plimsoll’s latest analysis of the Rail Transport sector shows a market that, pre-pandemic, was growing at a healthy rate with companies averaging almost 9% annual growth with profit margins of over 6%. Despite these favourable headline figures, 132 companies in the sector were given a Caution or Danger rating by Plimsoll, indicating financial vulnerability.

With fares forecast to rise by as much as 5% in 2022, passengers could be forgiven for asking where are the cheap fares and better service that was promised back in the ’90s?


Post pandemic demand has seen gas prices rocket by 250% since the start of the year and government sources are left warning that a hard winter could lie ahead. As a net importer, the lack of investment in secure and reliable energy sources, particular after leaving the EU‘s Internal Energy Market, has left a key strategic asset vulnerable to global volatility. Another industry, privatised in the ’80s and ’90s, is now reliant on government support and the taxpayer picking up the tab.

The energy price cap, implemented in January 2019, means that suppliers cannot pass on enough of the wholesale price increases to consumers. This is putting enormous pressure on both small and large suppliers. After dissent over the largest increase in personal tax since World War 2 and the £20 cut to Universal Credit, the government appears loathed to let the market set a natural price.

The “Big 6” that first emerged from privatisation look set to subsume many of the smaller independent providers. Less competition and a return to oligopoly are likely to lead to entrenched higher prices.

Politicians, CEOs, and marketing departments are already framing the problem as one of unexpected rising wholesale prices which are, indeed, unprecedented. However the financial fragility of these smaller companies is a symptom of a dysfunctional market. According to the latest Plimsoll Analysis, Bulb Energy Ltd, the latest embattled supplier, has never posted a profit since it began trading in 2013. In fact, in 2019 it lost £129m and a further loss of £63m in 2020. Cumulatively over the past 3 years, the company has lost more than £200m.

The same Plimsoll Analysis has also found that two-thirds of the UK’s energy companies have been rated as Danger and almost half are loss-making. Furthermore, with average margins at a wafer-thin 0.4%, the market has become increasingly difficult to operate in BEFORE this years surge in wholesale prices.

Consumers have seen energy bills steadily increase over the past 20 years and now face a real price shock. Is there a palatable answer as to what benefit the general population or private companies gained from the privatisation of the UK energy market?


When the British Steel Corporation was privatised as the publicly listed company British Steel Plc in 1988, then chancellor Ken Clarke claimed the company was ready to go out into the world as the latest privatised British success story.

By the end of the 80’s the number of people employed in the steel sector had dwindled from 142,000 to 52,000, although efficiency gains saw British Steel post a profit of £733m in 1989. However, within 4 years production of steel in Scotland had ended and the Ravenscraig plant closed. The decline had already set in.

Over the next 30 years, a carousel of mergers, resales and emergency bailouts saw British Steel dwindle to just 5000 people employed and on the brink of financial collapse, unable to compete amid a glut of supply. Its saviour came in the form of the Chinese industrial company Jingye Group. The rescued company that emerged from that latest rescue deal saved just 3000 jobs at Teesside and Scunthorpe, leaving a mere shell of the company sold off in 1988.

With Brexit and the government’s insistence that EU protections should not be renewed, the UK market is being flooded by cheap imports. With 37,000 jobs reliant on the market in predominantly “red wall” seats, could steel be set for even more political focus?

Plimsoll’s latest assessment of the Steel industry shows a market struggling to make a profit despite strong demand. Almost a quarter of the companies involved in the steel market are rated as Danger in the latest Plimsoll Analysis. Can the industry really survive the “free market” reality espoused all those years ago or could steelmaking be confined to history, replaced solely by imports?

The UK’s almost four-decade privatisation experiment appears to have failed with almost all state assets that were sold off in the ’80s increasingly back reliant on state aid or outright renationalised. Few success stories have sustained beyond the initial IPO gold rush and a brief honeymoon period. Is it time for the country to accept that the advertised benefits of privatised industries might not be all they seem?

The list of UK companies and industries that have failed, are a shell of themselves or are entirely owned by foreign entities, paints a picture a world away from what was sold at the time. From our water to our airports and everything in between, many state assets that were privatised have failed to deliver value to the consumer.

Plimsoll provides industry analysis on almost 1600 different UK industries. Whether it’s an industry that sprung out of a privatised national market or a more traditional private enterprise, we can provide the analysis you need to measure financial stability and spot companies heading for trouble.

For more information on Plimsoll and the industries we analyse, simply visit