Customers can expect more

The third BT share sale left Sid, the City and the Government happy.

Private investors have made paper profits of about pounds 115 on 600 shares, which might be less than in previous privatisations but is still substantial, for the level of risk.

SG Warburg, the merchant bank that organised the sale, can take pride in the fact that the BT share price held up during the offer. Its tactics were criticised as too tough but they proved effective.

Large investors, even those who did not get all the shares they applied for, were also happy as most of them reckon that share prices generally will go higher now that BT3 is out of the way. There is one less thing to worry about.

Meanwhile, the Government could breathe a sigh of relief, knowing it had realised much-needed funds at lower costs than in previous BT sales.

It is now left with few more candidates for stock market privatisation, other than its remaining shares in PowerGen and National Power. This makes the completion of BT3 a good time to assess the long-term results of the 12-year-old privatisation programme.

The first, and most painful, consequence of privatisation has been felt by the workforces. While shareholders on the whole have enjoyed rising share prices and big dividends, employees have been suffering overdue rationalisation.

The BT workforce, for example, peaked at 253,000 in 1981, three years before it was floated on the stock market. Rationalisation continued slowly until 1990, when it speeded up with a vengeance. More than 30,000 jobs were lost last year.

The company has shed nearly a third of its employees - or 76,000 people - since it was first privatised and a further 15,000 jobs are due to disappear in the next two years.

One of the aims of privatisation was to replace bureaucratic sloth with entrepreneurial efficiency. But the timing of cuts at BT suggests this switch may have more to do with regulatory controls on prices than with flotation itself. At any rate it has been very delayed.

Many recently privatised companies have yet to tackle the size of their workforces.

Take electricity. Some of the regional companies - including Seeboard and Northern - employ as many people now as they did when they joined the stock market in 1990. Others have made substantial reductions, for example Manweb, down from 5,500 to 4,600.

A straw poll of water companies, privatised a year earlier, suggests that many have yet to cut their workforces at all. Indeed, some have taken on extra manpower. For example, Anglian has increased its staff by 450 to 5,550 and at Welsh Water the number of employees has risen from 3,755 to 4,696.

Some of the increases may reflect diversification into new businesses but it may also be possible that rising water prices - designed to cover the costs of vast capital spending programmes - have allowed these companies to maintain their cost bases at pre-privatisation levels. Ofwat take note.

Other privatised companies to have made cuts include British Gas (down from 90,000 in 1986 to 76,000 last year), the electricity generators (PowerGen's workforce has fallen by 900 to 7,800 and National Power by 1,900 to 13,300) and British Steel (down by 2,400 to 51,600 at the last count). However others, including British Airways, BAA and Amersham, have taken on more employees.

The job losses may sound dramatic. But compare them with what is going on in British industry as a whole. Nearly every large company has had to make cuts in recent years - GEC recently disclosed it had reduced its staff by 9,600 last year.

Against this background it looks as if the privatised companies - with the exception of BT - have yet to grasp the nettle of extra efficiency. Expect more job losses, especially if the regulators tighten the screw.

While former employees have paid a high price, customers on the whole have benefited from privatisation, not just in lower prices - British Gas says they have fallen by 20 per cent in real terms since privatisation - but also in better service. Seeboard, for example, says it reduced the number of appointments it failed to keep - which left customers stuck at home waiting for an engineer - by 70 per cent last year. But much more needs to be done if the benefits to customers of lower costs are to equal those to shareholders and the City.

(Graph omitted)

The Banksy image in Folkestone before it was vandalised
Life and Style

Sales of the tablet are set to fall again, say analysts

Brian Harvey turned up at Downing Street today demanding to speak to the Prime Minister

Met Police confirm there was a 'minor disturbance' and no-one was arrested

Arts and Entertainment
George Lucas poses with a group of Star Wars-inspired Disney characters at Disney's Hollywood Studios in 2010

George Lucas criticises the major Hollywood film studios

Chris Grayling, Justice Secretary: 'There are pressures which we are facing but there is not a crisis'

Does Chris Grayling realise what a vague concept he is dealing with?

Life and Style
A street vendor in Mexico City sells Dorilocos, which are topped with carrot, jimaca, cucumber, peanuts, pork rinds, spices and hot sauce
food + drink

Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets

Blackpool is expected to become one of the first places to introduce the Government’s controversial new Public Space Protection Orders (PSPOs)

Concerns raised phenomenon is threatening resort's image as a family destination

Life and Style

I Am Bread could actually be a challenging and nuanced title

Nigel Farage has backed DJ Mike Read's new Ukip song
ebooksAn unforgettable anthology of contemporary reportage
The number of children in relative income poverty is currently 2.3 million in the UK

A Brazilian wandering spider
natureIt's worth knowing for next time one appears in your bananas
Life and Style
Time and Oak have developed a product that allows drinkers to customise the flavour and improve the quality of cheaper whiskey
food + drink


Peter Biaksangzuala died from his injuries in hospital on Sunday

Life and Style
The final 12 acts will be facing Simon Cowell, Cheryl Fernandez-Versini, Mel B and Louis Walsh tonight

The X Factor's judges colourful outfit was mocked by Simon Cowell

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Operational Risk Manager - Asset Management

£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...

Project Coordinator - 12 month contract

£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...

Day In a Page

Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album
Hugh Bonneville & Peter James: 'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'

How We Met: Hugh Bonneville & Peter James

'Peter loves his classic cars; I've always pootled along fine with a Mini Metro. I think I lack his panache'
Bill Granger recipes: Our chef's heavenly crab dishes don't need hours of preparation

Bill Granger's heavenly crab recipes

Scared off by the strain of shelling a crab? Let a fishmonger do the hard work so you can focus on getting the flavours right
Radamel Falcao: How faith and love drive the Colombian to glory

Radamel Falcao: How faith and love drive the Colombian to glory

After a remarkable conversion from reckless defender to prolific striker, Monaco's ace says he wants to make his loan deal at Old Trafford permanent
Terry Venables: Premier League managers must not be allowed to dictate who plays and who does not play for England

Terry Venables column

Premier League managers must not be allowed to dictate who plays and who does not play for England
The Inside Word: Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past

Michael Calvin's Inside Word

Brendan Rodgers looks to the future while Roy Hodgson is ghost of seasons past