The Government’s economic strategy is centred on keeping the rate of inflation down, within a range of 1 to 4 per cent. As part of this strategy, public spending and borrowing are tightly controlled. At the same time government policy seeks to improve the working of markets and promote enterprise and efficiency.
A substantial amount of activity has been transferred from the public to the private sector through privatisation and contracting out. Since 1979, 46 major businesses have been privatised, including British Gas, British Telecom and British Steel. Legislation is being introduced for the privatisation of British Coal and to enable the private sector to operate rail services. The remaining major nationalised industries are British Coal, British Rail, the Post Office and London Transport. These are expected to act as commercial enterprises and achieve a required rate of return on new investment.
Direct controls on pay, prices, foreign exchange, dividend payments and commercial credit have been abolished. The Government has acted to improve work incentives by reducing corporate and personal income tax rates, and by increasing share ownership among employees. Industrial relations have been put on a more secure legal footing and training opportunities have been expanded.
