- The Government or a state agency is doing the buying
- The Government is writing the contract under which the work is done
- The Government is regulating the company(ies) doing the work
- Regulation is heavy
- No choice for consumers
- No competition between providers
- The barriers to entry to new competitors are high.

What is frustrating is when there is a privatisation of the bad sort which goes wrong and gives privatisation as a whole a bad name. Rail privatisation, for example, was heavily regulated. The contracts to run railway lines were written by the Government. The Government chose which companies would get the contracts. And Railtrack was a monopoly.

Privatisation of telephone services, freight transport and car manufacture, in contrast, have been far more successful. In all these cases, the consumer has been the buyer and has had choice. Only in telephones was there heavy regulation and even that has been reduced.

For short, you might call privatisation of the better sort 'Triple C Privatisation' - because it has the elements of Consumer buying, Choice and Competition.

Why do the differences between good and bad privatisation matter?

Because if there is choice and competition, the providers have a powerful incentive to provide the best possible service (or product) at the lowest possible price. Consumers will choose providers on the basis of some trade-off between quality and price. No one will choose an expensive, low-quality product. They will go for the opposite. Tesco comes to mind.

Meanwhile the Government is a bad buyer. Look at how it buys computers. Look at how it does major projects (the Dome comes to mind). Look at how it buys cleaning services in hospitals - often without even consulting the anti-infection team.

Now that the Government is putting money into private 'treatment centres' and trying to set up neo-markets within the NHS, one should apply the good/bad tests. It seems, at present, that this privatisation is not 'Triple C' by any means. It is heavily Government controlled and regulated. With treatment centres, of course, the Government is to a large extent the real buyer.

Some of the use of the private sector in healthcare will almost certainly work better than what the NHS does. But it is worrying that the state is so much in the driving seat. It would really be a pity if the private sector was so badly deployed that it added yet more bad publicity to privatisation as a whole.