Privatising Public Sector Assets

Abstract

There are two reasons for choosing one of the privatisation initiatives as a case study. First, if one is to regard the optimum allocation of resources as a serious objective, then, as well as adding to assets, the public sector must continually review the case for asset disposal or redeployment. That is, the question ‘Can these resources produce greater net benefits if they are employed elsewhere?’ must be posed from time to time. Second, our general understanding of the efficiency benefits of public sector asset disposal will be amplified by evaluating a particular example of such a disposal in a cost-benefit framework. The case for privatisation of public assets has been surveyed elsewhere (for example, Curwen, 1986) and we will review government philosophy on such asset disposals, as it evolved in the 1980s, later in the chapter. For the moment we may note that asset disposal benefits are generally thought to be partly internal and partly external to the organisation.