This chapter introduces the theoretical assumptions which underpin privatisation and discusses their influence over initial policy formulation. It explains why the network industries were sold as “virtual monopolies” throughout the 1980s, and considers the nature and scope of utility regulation and assesses the extent to which the state maintained a continuing role in the companies’ affairs. The chapter reviews the key issues which arose from the privatisation of the utilities throughout the 1980s and suggests that they prompted a notable reorientation of policy in the 1990s which resulted in market liberalisation being accorded a new priority in the privatisation of British Rail. Social regulation has been imposed upon the utilities both through conditions in their licences and action by their respective regulators. British Telecom, British Gas and the water industry are all required to satisfy certain safety requirements, in particular regarding the well-being of their workers, and fulfil environmental responsibilities where appropriate.