ABSTRACT
INTRODUCTION British governments have subsidised private firms and industries. Examples have included British Leyland, Chrysler, Upper Clyde Shipbuilders and Rolls Royce together with the aircraft, agricultural, computer, cotton, machine tool and shipbuilding industries.1 Support for individual firms has increased since the early 1970s and the debate about ‘lame ducks’. These were private firms which were unable to remain in business as commercially-viable enterprises without state financial assistance. The Industry Acts of 1972 and 1975 provided a general policy framework enabling governments to support the private sector. In the public sector, nationalised industries, such as coal and rail, have also been subsidised. Subsidisation means that enterprises remain in business and whole industries can avoid or postpone contraction. In other words, subsidies to firms interfere with the operation of markets and the allocation of resources in the economy. Nor are subsidies the only form of state support for private firms and industries. Others include tariff protection, quotas on imports and non-competitive, preferential purchasing by central and local governments (see Chapters 6 and 11).
