4694555-52387500 Awarding Body
Awarding Body: Arden University
Programme Name: Business Management
Module Name: Skill for Academic Study
Assessment Title: Privatisation
Student Number: STU57023
Tutor Name: Emmanuel Murasiranwa
Word Count: 1275
Please refer to the Word Count Policy on your Module Page for guidance
In this assignemnt I will be looking into privatisation and the possible impact it can have on the UK economy. I will also be using arguments from three individuals supporting each side of the NHS privatisation argument. Lastly I will be explaining my initial view of the NHS privatisation and then consider if my opinion has or not changed after the research I will be undertaking.
Privatisation is when there is a transfer of assets from the public sector which is basically a business that is owned by the government to a private sector. Whenever we take an action there is always advantages, disadvantages or both and it is not different when it comes to privatisation.Advantages of privatisation:
Improved efficiencyPrivate companies are often motivated by profit so they are basically forced to cut on costs and be more efficient.
Increased competitionWhen a business is privatised, a new firm will be entering an specific industry so there is an increase in competition and that increase will lead into improvements in efficiency which will benefit the the business and their customers.
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ShareholdersShareholders from private firms are likely to put pressure on the business for it to perform efficiently.
Disadvantages of privatisation:
Natural monopolyNatural monopoly happens when there is only one efficient business in a certain industry. As there is only one efficient business in the industry there will not be no competition against that firm. Firms can exploit the consumers with higher prices as they are the only who can provide them with an efficient service or product. It is better to have a public monopoly rather than a private one.
Public interestIn the health care, education and public transport industry, the profite motive should not be the first objective of the business as they are used to provide a public service to the citizens instead of making profit out of it. A great example can be in the health care industry, the priority should be given to the patient in care instead of be given to profit.
Problem of regulating private monopoliesWhen firms are privatised sometimes there is a creation of private monopolies and these need tregulation to prevent the abuse of monopoly power.
Royal Mail plc is a postal service and courier company in the United Kingdom, originally estabilished in 1516. In 2015 Royal Mail plc was fully privatised as the government sold the last 13% stake remaining, it was the end of nearly 500 years of state control. The business needed an acess to private capital in order to compete and grow as business. This privatisation was due because of the enumerous people who started shopping online. The importance of parcel deliveries became way more important than the delivery of letters and the business could grow if it was well invested so the government decided to fully privatise it. The government raised their revenue with this one of sale but at the same time we losing future dividends from the profits of public companies.
Royal Bank of Scotland is one the retail banking subsidiaries of The Royal Bank of Scotland Group plc, together with Natwest and Ulster Bank. RBS was founded in 1727 employing around 92,400 people. Approximatelly 5 years ago RBS had financial crisis as 80% of the bank is owned by taxpayers. The government can get some funds back by selling their stakes in RBS as they spent a lot of money bailing out Lloyds Banking Group etc. Investing on the RBS group helped them not to collapse. Having a major bank like RBS collapse would affect the UK economy as the loss of jobs at all RBS banks and those who are supported in the local community. The economy could be afftect also by the pshychological impact of the community seeing a bank failure.
Is the NHS being privatised? A question that is causing a lot of arguments in the UK. It is stated in the GOV website that the NHS is and will always be a universal service that is free at the point of need. The governement did some significant cuts into local governments services and policing to enable the NHS to have sufficient funds to provide care to their patients. Due to the increase of the population and the fact that we as human are living longer, also the advances in technology means that scientists are findind new treatments so the demand for health care and the fundind for it is rising day by day, Due to those facts, the health services are now treating more people than ever before. The key perfomance targets are not beeing meet within the last few years. The four-hour standard for treating patients in A&E has not been met sice July 2015, the 62 day standard for beginning cancer treatment following an urgent referral has not been met for three years and since February the referral-to-treatment target for elective care has not been met. There is no quality of care in some of the nhs services due to staff shortages and no hospital conditions.
The benefits of having a private NHS is that the consumers can be provided with more choices, also the private sector will cut costs and provide a more efficient service as they are profit motivated. Also, if less people use NHS the gobernment would of be able to reduce borrowing and also lower taxes. The problem of having a private NHS is that there might have an increase in equality as people with more money can afford to have better treatments than those who cannot afford it.
Professor Sir Stephen Hawking said “International comparison indicate that the most efficient way to provide good healthcare is for services to be publicly funded and publicly run” which I totally agree with but at the same time if there is no enough funds and the key perfomances targets are not being met, the government needs to take the best action to provide the patients with a better service.
My initial view towards privatising NHS was that they should not privatise the NHS but after finishing my research I started having a different point of view, my initial opinion does not change but I know see the all this privatisation thing from both sides as my final opinion is that they should not privatise the NHS as this is supposed to be a public service. My suggestion is that the government needs to find a new way of fundind the money that tha NHS is in need for. Privatising the NHS will not bring equality between the patients as some can afford to pay for their treatments and other are relying on the free public service as they have no other way to afford the costs of their treatments. It is not the change of management team that will sort the issues that NHS is facing.
ReferencesEconomics Help. 2018. Advantages and problems of privatisation | Economics Help. ONLINE Available at: https://www.economicshelp.org/blog/501/economics/advantages-of-privatisation/. Accessed 22 January 2018.
BBC News. 2018. Q&A: Royal Mail privatisation – BBC News. ONLINE Available at: http://www.bbc.co.uk/news/business-23253370. Accessed 19 January 2018.
Interactive Investor. 2018. RBS privatisation: Investment pros and cons | interactive investor. ONLINE Available at: http://www.iii.co.uk/articles/107275/rbs-privatisation-investment-pros-and-cons. Accessed 19 January 2018.
The Week UK. 2018. Pros and cons of privatising the NHS | The Week UK. ONLINE Available at: http://www.theweek.co.uk/nhs/63360/pros-and-cons-of-privatising-the-nhs. Accessed 20 January 2018.
The King’s Fund. 2018. Does the NHS need more money? | The King’s Fund. ONLINE Available at: https://www.kingsfund.org.uk/publications/articles/does-nhs-need-more-money. Accessed 20 January 2018.
Economics Help. 2018. Advantages for Privatisation of Public Services | Economics Help. ONLINE Available at: https://www.economicshelp.org/microessays/market-failure/privatisation-public-services/. Accessed 20 January 2018.