In the steel industry, for example, the workspace was reduced from 130000 people to 50000 by 1990s and the production of 1 ton of steel by 1990 took only 3,7 man hours instead of 12 man hours in 1980. The government believed that privatisation would increase efficiency and economic freedom would encourage private initiative. A lot of big publicly owned production and service companies such as British Telecommunications, British Gas, British Airways, Rolls Royce and even British regional Water Authorities were sold into private hands. Britain began to turn into a country of shareholders. Between 1979 and 1992 the proportion of the population owning shares increased from 7 % to 24%.
The Conservative government reduced the income tax from 33% to 25% as an incentive in production. This did not lead to any loss of revenue, since at the lower rates fewer people tried to avoid tax. At the same time the government doubled the VAT on goods and services to 15%. Today it is 17%.
Small business began to increase rapidly. In 1984 for example there was a total of 1.4 million small business though including “the black economy” the figure was nearer to million. Proportionately, however, there were 50% more of them in West Germany and the United States and about twice more in France and Japan.
Many small businesses fail to survive mainly as a result of poor management and also because compared with other European Community Britain offers the least encouraging conditions. But small businesses are important because they can grow into big ones and because they provide over half of the new jobs. It is particularly important because unemployment in Great Britain rose to nearly 2.5 million people and a lot of jobs are part-time.
Energy is a major component of the economy, which depended mainly on coal production until 1975, began to rely on oil and gas discoveries in the north sea. Coal still remains the single most important source of energy, in spite of its relative decline as an industry, so oil and coal each account for about one third of total energy consumption in Britain. Over a number of years British policy makers promoted the idea of energy coming of different sources. One of them was nuclear energy as a clean and safe solution to energy needs. In fact Britain constructed the world’s first large scale nuclear plant in 1956. However, there were a lot of public worries after the US disaster at Three Miles Island and the Soviet disaster in Chernobyl. Also nuclear research and safe technology is proved to be very expensive - by 1990 the real commercial cost of nuclear plant was twice as high that of a coal power station. Renewable energy sources such as wind or solar energy, are planned to provide 1% of the national energy requirements in the year 2000.
Research and development (R&D) in Britain are Mainly directed towards immediate practical problems. In fact British companies spend less on R&D than any European competitors. At the end of the 1980’s, for example 71% of German companies were spending more than 5% of their annual revenue on R & D compared with only 28% of British companies. As a result Britain has been automating more slowly than her rivals. In fact it may be the consequence of Margaret Thatcher’s views on public spending which includes medical service, social spending, education and R&D. “The Iron lady” argued that “if our objective is to have a prosperous and expanding economy, we must recognise that high public spending kills growth of industry”, as money is taken from the productive sector (industry) to be transferred to unproductive part of it. As a result in the 80’s only 6% of Britain’s labour had a university degree against 18% in America, 13% in Japan and 10% in Germany. Technical education has always been compared with Britain’s major competitors. According to government study “ mechanical engineering is low and production engineers are regarded as the Cinderella of the profession”.