UK application stuff

Question 1

examples of failed privatisation in the uk

Answer 1

1. Rail privatisation - Network rail
   - rail network privatised in 1993 , with rail track managing infrastructure
   - rail track criticised for poor maintenance and cost cutting, leading to safety failures like the Hatfield rail crash in 2000
2. Water privatisation in 1978
   Thames water has faced criticism for :
   - underinvestment in infrastructure, leading to leaks and sewage dumping
   - high debt levels and excessive executive bonuses
   - customer price u creases without corresponding service improvements
3. Energy privatisation in 1970s
   - aimed to boost competition and lower prices
   BUT
   - lack of competition as big companies dominated the market like british gas
   - high energy prices, where customers faced rising energy costs, especially after 21-22 energy crisis

Question 2

examples of successful privatisation in uk

Answer 2

1. British airways
   - before privatised, it was described as “bloody awful airways” due to inefficiency and poor service
   - after privatisation, there was improved customer service, reduced costs, and became one of the worlds leading airlines
   - increased competition led to better efficiency and expansion
2. BT
   - privatised in 1984
   - led to huge investment in telecommunications
   - encouraged competition from companies like Virgin media and Sky, leading to better services and lower prices for consumers
   - although bt remains a dominant player in the market
3. Rolls royce:
   - privatisation allowed for massive investment in R&D
   - created thousands of skilled jobs and boosted uk manufacturing

Question 3

examples of successful deregulation attempts UK

Answer 3

1. financial services (“big bang”) deregulation
   - this was where Thatcher deregulated financial markets, removing restrictive practices in Londons stock exchange
   - this boosted Londons status as a global financial hub
   - allowed more competition and led to the rise of global banks
2. Airline deregulation 1978
   - UK liberalised the airline industry, allowing private airlines to compete with BA
   - this increased competition and led to the rise of budget airlines like easyjet and ryanair
   - lowered prices, making travel more accessible
   - airlines improved cost structures and services

Question 4

unsuccessful deregulation uk

Answer 4

1.Bus deregulation (1985)
- the transport Act 1985 removed state control over bus services
- led to reduced services in rural areas, as companies focused on more profitable routes in cities(London)
- higher fares, as without regulations, some companies raised prices significantly
- monopolies like StageCoach and Arriva dominated local markets

2. Energy deregulation
   - the UK deregulated gas and electricity markets to increase competition
   - led to rising energy prices due to market manipulation and lack of regulation
   - company failures, as many energy providers went bankrupt
   - companies focused on profits rather than upgrading infrastructure
3. Rail deregulation
   - led to higher fares compared to other European countries
   - frequent delays, overcrowding, inefficiencies
   - lack of competition as most touted became regional monopolies

Question 5

UK absences 2023/24 figures

Answer 5

2.1% of pupils were severely absent (missed 50% or more sessions) in autumn and spring 2023/24, an increase from 1.9% in the same terms in 2022/23. This equates to 158,000 pupils who were severely absent, increased from 139,000.

Question 6

nhs waiting list

Answer 6

7.46 million

Question 7

what percentage of income tax is paid by the top 10% of earners

Answer 7

The 10% of income taxpayers with the largest incomes contribute over 60% of income tax receipts.

Question 8

bank rate cut

Answer 8

4.5 to 4.25

Question 9

UK unemployment rate

Answer 9

4.4 %

Question 10

UK expected inflation

Answer 10

The UK inflation rate was 2.6 percent in March 2025, down from 2.8 percent in the previous month

Question 11

UK national debt

Answer 11

Public sector net debt amounted to 88.9 percent of gross domestic product in the United Kingdom during the 2023/24 financial year, rising to 97.8 percent when the Bank of England is included.

Question 12

UK electricity sources

Answer 12

40.8% came from fossil fuels.
56.2% from low-carbon sources, including 41.5% from renewables and 14.7% from nuclear

Question 13

tobacco taxes

Answer 13

Cigarettes- 16.5% of the retail price plus £6.69 on a packet of 20

Cigars- £4.17 on a 10g cigar

Hand rolling tobacco £14.30 on a 30g packet
Other smoking tobacco and chewing tobacco (for example pipe tobacco) £5.50 on a 30g packet

Question 14

tobacco elasticity

Answer 14

PED has been estimated to be about −0.4 to - 0.6

Question 15

how did regulatory capture lead to GFC

Answer 15

1. Regulatory Capture and Lax Oversight
   ➡️ Financial regulators were captured by the industries they were supposed to oversee, particularly in the US.
   ➡️ Key regulators, like the SEC (Securities and Exchange Commission), became overly influenced by major financial institutions and lobbyists.
   ➡️ This led to relaxed regulations and inadequate monitoring of risky practices like mortgage-backed securities and subprime lending.
2. Over-Reliance on Credit Rating Agencies (CRAs)
   ➡️ Rating agencies such as S&P (Standard & Poor’s) played a critical role in financial markets by assigning ratings to securities.
   ➡️ Many of these securities, particularly mortgage-backed securities (MBS), were rated AAA, the highest rating, implying they were extremely safe.
   ➡️ Due to the regulatory capture, agencies like S&P were incentivized to assign these high ratings to maintain business relationships with financial institutions, who paid for the ratings.
3. Incentives for Financial Institutions to Create Risky Products
   ➡️ Financial institutions, in turn, had incentives to create and sell high-risk MBS because they could easily get AAA ratings from agencies like S&P.
   ➡️ The inflated ratings allowed these products to be sold as “safe investments,” attracting buyers, including pension funds and international investors.
4. Misleading Information and Systemic Risk
   ➡️ Investors, relying on the AAA ratings, were misled into buying these high-risk securities, believing they were low-risk.
   ➡️ This widespread mispricing of risk contributed to the systemic risk in the global financial system.
   ➡️ As more and more MBS were created and sold, the financial system became increasingly overexposed to bad loans, particularly in the housing market.
5. The Collapse and Aftermath
   ➡️ Once the housing market began to decline, the underlying assets of MBS started to default, causing the value of these securities to plummet.
   ➡️ Financial institutions, heavily exposed to these risky assets, suffered massive losses, which led to the collapse of major firms like Lehman Brothers.
   ➡️ The global credit freeze and recession were the results of these failures, exacerbated by the initial regulatory capture and misleading ratings.