Privatisation and PFI make both cuts and reform harder
The calls for immediate public spending cuts are bad economics, motivated by a desire to shrink the state. When the recession is properly over and the time is right to reduce the deficit then the best way to do this is through the fruits of economic growth and through a progressive tax regime that asks those who did the best from from the bubble to make a fair contribution to putting right the damage done when it burst.
But this does not mean those who want to defend properly funded public services should shy away from efforts to make them more efficient, effective and responsive. It would be a big mistake to let the opponents of good public services have ownership of such concepts.
We should therefore welcome the Guardian’s debate, started today on the future of the public sector.
One report that caught my eye was David Brindle’s piece on the “Total Place” programme:
Billions of pounds could be saved if public services were rethought on the basis of themes rather than organisations, according to the findings of a scheme seeking low-pain ways to cut government spending.
Services could be improved in quality and better tailored to the needs of the individual as well as becoming more cost-effective, the Total Place programme is indicating in early feedback to ministers.
Total Place is being piloted in 13 areas of England. State agencies are working together to calculate how much public money is being spent in each area and to devise ways of using it more efficiently.
While I would be interested to hear from anyone involved in this on the ground – and I’m always suspicious of such grand claims – it’s an interesting idea. There surely can be nothing wrong with looking at public service delivery across agencies.
But this approach cannot easily go along with marketisation and privatisation. When bits of the public sector are parcelled up and contracted out they are largely set in aspic. Contracts determine what they will do in the future whatever insights are gained from a more rounded look at public service delivery.
The same goes for PFI contracts. They go into the future and have to be met. They are therefore immune from any cuts in the future, and, often literally, set in concrete. This means the rest of the public sector – particularly staff wages – are even more in the firing line.
Unions have always argued that privatisation and PFI is not the right way to expand public services. They certainly make both cuts and reform much harder.