Working Paper 19-8

Political control of state-owned utilities in the UK

AUTHORS: Tim Tutton

ABSTRACT: Political control of utilities is problematic.  On the one hand, the industries have high political salience, meaning that politicians want a serious say in what they deliver.  On the other hand, day-to-day political intervention tends to have a high cost in terms of damage to operating efficiency.  The UK solution to this conflict has typically been for government to appoint an agent, with a high degree of independence from ministers, to deliver the government's objectives for the utility in question.  The agents have been the boards of the public corporations in the nationalised era and the economic regulators in the privatised era.  This paper looks at what lessons can be learned from both eras to answer the question of how might political control be better exercised than in the past, in the event that utilities are renationalised.  A core conclusion is the desirability of an independent agency (whether or not called a 'regulator') between the minister and the utility, with a transparent ministerial brief to that agency on how it should interpret its (inevitably high-level) statutory obligations.

CITATION: Tutton T 2019. Political control of state-owned utilities in the UK , Centre for Competition Policy Working Paper 19-8. 

Working Paper 19-8

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