Privatisation is a term which is used to cover several distinct, and possibly alternative, means of changing the relationships between the government and the private sector. Among the most important of these are denationalisation (the sale of publicly owned assets), deregulation (the introduction of competition into statutory monopolies) and contracting out (the franchising to private firms of the production of state financed goods and services). This paper principally examines the sale of government industrial assets which has now become both the most striking and the most controversial element of the programme. However, its analysis has implications for other means of privatisation and indeed its conclusion is that these should have greater priority. The paradox of privatisation is that the view that it contributes to economic efficiency is derived from the belief that private sector managers are subject to incentives and disciplines different from, and more demanding than, those which apply to their public sector counterparts. If this were so, then it would be expected that the prospect of privatisation would be distinctly unwelcome to the management concerned. But without the consent, or acquiescence, of these same managers privatisation of any sort is a difficult and protracted business. As a result, measures of liberalisation, or deconcentration, associated with privatisation those which offer most in terms of potential gains in efficiency are also those on which major concessions have been made to win management support for the political process of privatisation. In section VI we describe how this has happened in industry after industry.