From the TUC

Cameron’s great public services sell-off

21 Feb 2011, by in Politics, Public services

Writing in the Telegraph today, the Prime Minister signals more clearly than ever the Government’s determination to dismantle the public sector by opening up all our public services to private contractors and voluntary organisations. The prospect of the privatisation of health, education, libraries, parks, social care and much more will be set out in an ‘Open public services’ White Paper in the next two weeks – although of course it will be framed in the softer language of the Big Society.

The proposals remove any doubt about whether or not the Government’s reforms are driven by ideology. Despite evidence that privatisation does not deliver better services, the Government plans to push ahead with reforms that will mean private companies and other bodies can compete to deliver virtually all public services. Cameron’s article mentions exemptions for the judiciary and the security services but everything else appears to be up for grabs.

Of course, education and health are already seeing this approach to public service delivery being pushed through in the form of wide-ranging legislation. The Health and Social Care Bill allows ‘Any Willing Provider’ to deliver NHS services, removes the cap on how much income Foundation Trusts can make from private patients and devolves commissioning to consortia of GPs – some of whom are already passing 100% of this work onto private companies.

There are many reasons why the plans are misguided, dangerous and undemocratic. Here are five of them:

1. It doesn’t mean better results: The TUC responded to the call for evidence to inform the white paper, setting out evidence from a number of sectors about how privatisation often leads to poorer quality and higher costs. For instance, price competition in health in the early 1990s led to a fall in clinical quality, the outsourcing of hospital cleaning in the 1980s was linked to increased hospital infections, and evidence from the equivalent of free schools in the USA found that more than a third had results that were ‘significantly worse’ than their state-school counterparts. Since railway privatisation, the taxpayer subsidy to the industry has actually increased rather than decreased (see p.12 of this recent report for the DfT), at the same time as standards have declined and prices for passengers have risen.

2. It does mean a postcode lottery: Localism is an attractive word and as a policy it has potential benefits, enabling providers to better tailor services to the needs and demography of the local population. But coming at the same time as drastic cuts and the Government’s Open public services agenda, what it will mean in practice is vastly diverging levels of service provision and quality between different areas. Whilst wealthier individuals will be able to travel or pay to find the best services, those who don’t have the resources to do so will rely on overstretched local provision.

3. Bureaucracy will increase, not decrease: Although the Government’s stated aim is to reduce bureaucracy, in fact the plans are likely to lead to increased bureaucracy and spending on transaction costs and consultants. The process of tendering, awarding and overseeing reams of contracts will be incredibly resource intensive. Threats to national collective arrangements for bargaining over pay would lead to the replication of detailed and time-consuming negotiations in every school and local authority rather than a clear, equality-proofed national approach.

4. The changes are anti-democratic: Removing public services from democratic control establishes a contract-based culture which is likely to create plenty of work for lawyers but will weaken democratic oversight. Using a market approach to accountability rather than a democratic approach is likely to distort outcomes and leave the most vulnerable – who might not have the financial or other resources needed to exercise choice – without a voice. Local councillors, already stretched by the pressures of central government cuts, will struggle to adequately scrutinise and challenge the multiple providers in a fragmented system.

5. Public service workers’ living standards will bear the brunt: Forcing down pay, terms and conditions is the quickest way for private providers to maximise profits. Combined with inflation, a pay freeze for public sector workers and changes to pensions, this could add up to an unprecedented squeeze on living standards. TUPE provisions may well protect transferred staff, but the removal of the ‘Two-tier code’ means that there is little in the way of safeguards for new staff .

Ultimately what these changes will mean is private companies making profit from the services we all rely on. The magnitude of these changes and the threat they pose should not be underestimated.

12 Responses to Cameron’s great public services sell-off

  1. Tweets that mention Cameron’s great public services sell-off | ToUChstone blog: A public policy blog from the TUC — Topsy.com
    Feb 21st 2011, 3:57 pm

    […] This post was mentioned on Twitter by visionOntv, Frank roper, Ma, Richard Simcox, Mark Turner and others. Mark Turner said: RT @FalseEcon: 5 reasons why Cameron is wrong on public services by by @Alice_Hood @touchstoneblog http://bit.ly/efUxJy #falseeconomy […]

  2. Tim Worstall
    Feb 21st 2011, 4:43 pm

    Both fire and ambulance services in Denmark are majority supplied by a private company which is paid with tax money.

    Could you explain perhaps why such a system, which has operated there effectively for near a century, will not or could not work here?

    The French health care services are suppplied by a mix of for profit, not for profit private organisations, state owned and voluntary/cooperative ones. WHO regularly declares the French health care system the best in the world.

    Could you explain what is so different about Britain that such a system would not similarly work?

  3. Mark
    Feb 21st 2011, 11:38 pm

    Only in the last years of Labour did the NHS manage to get close to western european levels of funding. France has above average funding (with the French government constantly threatening big cuts because of unfordable healthcare).
    The introduction of a market in healthcare has massively increased transaction costs with some 10bn extra now spent on managing the market.

  4. Tim Worstall
    Feb 22nd 2011, 10:31 am

    And on the fire and ambulance point?

  5. Poppy
    Feb 22nd 2011, 12:05 pm

    @Tim Worstall

    Because here in the UK, the Tories wish to sell the public sector, and in particular the NHS, to their cronies in US healthcare corporations. They will no doubt get fat directorships as a result. The only thing wrong with this picture is that US healthcare is based entirely on the ability to pay, so if as a poor person who cannot afford medical insurance, I went to an A&E dept in the US, they would refuse to treat me unless I could produce evidence of health insurance or hard cash. I think you’ll agree that in an emergency, money is the last thing on your mind. That’s why it wouldn’t work, Tim. It’s wrong, morally wrong. People before profit.

  6. Tim Worstall
    Feb 22nd 2011, 12:52 pm

    “I went to an A&E dept in the US, they would refuse to treat me unless I could produce evidence of health insurance or hard cash.”

    That’s not actually true. Any A&E in the US will and indeed must, by law, treat anyone who turns up.

    I’m not sure where you’re getting your information from but it’s not this universe.

  7. Lisa
    Feb 22nd 2011, 3:21 pm

    @Tim.
    The NHS will have improved mortality rates for cancer and heart attacks and will exceed the French by 2012. Currently we fall short of the mark there but trends show (and these have been consistent over 30 years) our mortality rates in these areas will be better than the French soon. The french also pay more for their healthcare than we do. American’s who cannot pay for private medical insurance have to go to clinics that provide inferior service in terms of quality and care. There is a case in America where a women who actually did have private healthcare is dying from cancer. The healthcare insurance company would pay for her assisted death rather than pay for the expensive medicine that would prolong her life for another two years. It makes me sick.

  8. Fire sale to big business! « Market Morons
    Feb 23rd 2011, 9:21 am

    […] If you think Thatcher was bad, you aint seen nothing yet. Only the judges (70% of them come from public school backgrounds like Cameron) and the security services (they are there to spy and smear ordinary people) are to be exempt from the sell off! […]

  9. Rosita Stefanyszyn
    Feb 24th 2011, 7:20 pm

    Our British society is sleep-walking to a disaster driven by this Tory government hellbent on selling all our services.

    (The Tory affluent can afford to pay for themselves, for what the welfare services provide to others less able) and are making these cuts primarily to almost reduce their taxs bills to zilch. No “big sharing society”, or “we’re all in this together” there then!!

    The celebrities and the affluent certainly rose to the occation and joined the rest of us to save THE WOODS AND FORESTS making loud articulate protests, embarressing Cameron. Would have upset their precious lives – but then if you have private Medical cover and the securiety of money – thinking about, or even protesting, about the draconian cuts and privatisation of the National Health service, is just not the main priority in their lives. SOOOO SELFISH

    Lets be honest, anyone with half a brain can see through the Tory cuts and what misery and hardship to peoples lives, it will and is, causing – AND all made possible because of the support and pathetic weekness of Clegg and his power grabbing chums!

  10. Rachel
    Mar 17th 2011, 10:26 pm

    What do we do about it? I feel so angry, upset and frustrated when I think about the ideological driven privatisation agenda but feel impotent to effect any change, reduced to making comments such as this with a general feeling of despondency and certainty that no one will be able to inject a ray of hope. Sorry I guess I’m a little depressed by current events and direction.

  11. Rosita Stefanyszyn
    Mar 18th 2011, 9:55 am

    We ALL feel so depressed – BUT WE MUST KEEP ON THE CASE -together. Many more of my friends and acquaintances are at last waking up to what is going on and that IS good news.

    Now even the country is interfering or should I say – declaring to go to war in Libia – (but no ground troups – so that makes it alright then??!! Like a video game. Shock and awe all over again?)

    Cameron and his new war pal in France going off, in their new coalition for fighting together, and doing anything to try, I’m sure, to also improve their poll ratings (and increase arms sales), as well as the OIL connections and to support the bravery of the protesters. (This protest was different though because as soon as the protesters used weapons, Gadafi had the excuse to fight back for control?)
    There are these suspicions because there are many other dictators in the world who we are not “dealing with?”.

    Back to Privatisation.. ..
    We know there are core services that are better run by the people, ie their Government, and Health, Education, railways, Public transport, utilities, even post offices, are some of the obvious ones. We know that Gas and Electric and the Railways have not improved, as a service to the public, since privatisation, in-as-much as they are still heavily subsidised by us (taxes) and much money is lost and wasted paying for the top exectives, the shareholders and their bonuses. As are Private schools, who also recieve hugh tax relief!!

    Join the March on the 26th. It will be a joy just to be with like-minded-people!