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Socialist Review Index (1993–1996) | Socialist Review 183 Contents
From Socialist Review, No. 183, February 1995.
Copyright © Socialist Review.
Copied with thanks from the Socialist Review Archive.
Marked up by Einde O’Callaghan for ETOL.
According to the CBI’s report A Nation of Shareholders, in 1963 individuals, as opposed to companies, owned over half of UK shares. By 1975 this had fallen to 37.5 percent and the latest CBI estimate shows the level at just 20 percent.
The trend under the Tories has been for greater concentration of share ownership in the hands of the big City institutions. Electricity privatisation meant millions of shares were sold by individuals within hours of trading opening. Individuals took large and quick profits (between 66p and 42p in the £) as City firms built up their stakes in the newly privatised companies. Eastern electricity, for example, had one fifth of its shares traded on the first day.
The privatisation of water and sewerage companies in December 1989 shows similar trends. Government figures show that within six months almost half the original 2.5 million investors had taken their profits and sold out. By June 1990 the number of shareholders was down 51 percent. Within four months of Severn Trent being privatised, 422 shareholders, almost certainly not individuals, comprised some 0.2 percent of total shareholders but owned nearly 66 percent of the company. South West Water shows a similar picture. Its 41,513 shareholders account for 95 percent of the total number of shareholders, but only own 19 percent of the shares. Large shareholders (owning over 100,000 shares) amount to 0.2 percent of shareholders but own 75 percent of the company.
Earlier privatisations have shown a similar fall off in shareholders. The privatised airport owner BAA and the defence contractor Rolls Royce have seen their share register fall by 66 percent. British Airways has seen its shareholders fall by 75 percent. In two other privatised companies, the final result has been a takeover. Britoil, sold off in 1982, is now owned by BP, and Jaguar, privatised in 1984, is owned by Ford.
So do we live in a stare owning democracy? Let’s leave the last word to two Tory supporters. Sir Peter Thompson, head of the privatised transport concern NFC and chair of the CBI Wider Share Ownership Task Force, admitted, ‘Like many others I thought that the 1980s was the decade when popular capitalism really took root in the UK. The reality is very different.’ And the Financial Times stated:
‘The reputation of the markets has suffered a mild but systematic fraud, practised on the taxpayer, whereby the give-away element in the flotation price has represented a straight transfer of wealth to those with the cash to buy shares.’
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