Political factors Flashcards
What is privatisation?
The act of passing ownership of a business from the public to private sector, by selling shares.
What are the disadvantages of privatisation?
- Will have to rely on public profit, won’t get government money
- Business sold too cheap - therefore government makes less
- The decisions are made for profit, not public good
What are the advantages of privatisation?
- Selling the business generates a one-off injection of funds for the government
- Due to public reliance, they need to be more efficient
Why are Regulators important?
- Through privatisation the government lost direct control of essential industries
- Without regulation, the private companies owning these industries could raise their prices , knowing the public has little choice but to pay.
- The CMA , Ofwat (water), Ofgem and Ofcom has power to intervene: cap prices, and look out for consumer interests.
What is Deregulation?
Deregulation meant removal of lots of regulations that surrounded employment and operating practices in certain areas, eg. local bus transportation.
This led to bus companies competing for services on the most popular routes.
What did Deregulation occur?
The 1980s/90s ideology held that the freer the market, the more efficiently it was likely to operate. State intervention ought to be as limited as possible.It was this belief that led to the wave of privatisations, and deregulation of many other industries
How do governments intervene on the supply-side of the labour market?
policies that increase the number of people in the workforce (quantitative)
increase the skill-level and therefore productivity of the workforce (qualitative) through education policy
making it easier for employers to take on short-term and part-time workers (eg. zero hours contracts)
curbing trade union power and influence, thereby reducing the number of strikes and limiting wage increases
national minimum/living wage legislation which seeks to reduce exploitation of workers.
What are the 3 different levels of rules and regulations that determines a business’ operation?
LOCAL: Council tax and business rates, local regeneration schemes, etc.
NATIONAL: Government policies, regulation, non-devolved taxation, etc.
INTERNATIONAL: World Trade Organisation rules, European Union regulations, etc.
What are the difference in policy’s for conservatives?
less tax and regulations, smaller public sector
What are the difference in policy’s for labours?
more worker protection, more money for public services, more tax
What politics outside the UK have an affect?
Wars, international disputes, elections and other countries’ management of their economies affect the UK through exchange rates and availability/price of inputs
What rules come with being part of the EU?
- legally binding Regulations
- Directives must be applied as law, but how is up to the UK government
- Recommendations and opinions which are non-binding but can influence UK political decisions/law-making.
As a member of the EU and the European Single Market, UK businesses have a potential market of 460 million people, but significant competition from other European firms.
Changes due to the single market?
- Freedom of movement for all EU citizens
- Free movement of capital
- Harmonisation of rules and regulations applied to products and services
- Removal of some of the checks on crossing frontiers between member countries
- Harmonisation of tax rules for individuals and businesses
- Removal of internal tariffs and a common external tariff
What have these changes led to?
Increase in competition
Increased the need to be efficient
Increased specialisation
Greater economies of scale
When was the Euro introduced?
Introduced in January 1999 and used by 19 EU members on January 2002
