How Thatcher saw popular capitalism turned into reality

Gavin Oldham
MARGARET Thatcher’s role in opening up personal share ownership in the UK is unquestionable. By privatising nationalised industries, often by offering shares directly to the public, and by sweeping away the City cartels, which restricted access and competition prior to 1986, she paved the way to a more democratic form of capitalism. She enabled people to own part of the businesses they worked in and whose products they bought. And this had broader benefits – it brought a better understanding of what makes enterprises tick, and so fundamentally changed society.

By the 1980s, a small elite of around 3m people owned shares privately – about 7 per cent of the population. The number boomed with the privatisation of state-owned utilities, and by the end of the 1980s, a quarter of the population were direct share owners. When BT was sold in 1984, two-fifths of the shares sold went to the public. Around 2.1m people invested. British Gas’s privatisation was even more successful. About 4m people applied for its shares, of which 1.5m received an allocation.

But there was more to it than selling off shares. Two convictions underpinned Thatcher’s reforms. First was a passionate belief in the potential of each individual, whatever their circumstances. Second was a determination to break down entrenched privilege, whether in the London Stock Exchange’s old boys’ clubs or in the trade unions.

It is companies like mine that owe their existence to these convictions. In 1976, I joined an old family firm of stockjobbers in the City, Wedd Durlacher Mordant. There was no way to make share ownership a reality for the wider public: the market was riddled with high dealing commissions, a sense of mystique, and a near total bar on advertising. Investing was a high net worth activity.

Stockjobbing was, however, a good place to understand high volume share administration. It was there that the pool nominee structure originated, which has proven so important in building relationships with retail investors, in reducing operational costs, and paving the way for internet-based automation. But widespread share ownership could not take off without doing away with the old City privileges.

When Barclays announced its takeover of Wedd Durlacher, I jumped at the opportunity to turn my concepts into reality. Barclays eventually established Barclayshare (which became Barclays Stockbrokers) and the rest is history. I subsequently set up The Share Centre: its first trade was dealt on 25 April 1991. Privatisation and the 1986 Big Bang were key contributors to the development of both these businesses.

If people have a sense of ownership, they accept responsibility. In fact, directly-owned investments also improve social mobility as they provide something tangible to be passed onto your children. They link real people to the working heart of the economy, breaking down the “us and them” mentality. And that’s not to mention the benefit of more widely distributing dividends and capital gains.

Gavin Oldham is chief executive of The Share Centre.