When it comes to service provision I’m an unregenerate advocate of public service provision. None of the gimmicks, from PFI to outsourcing used by Labour or invented by a Tory government determined to roll back the state, work as well. All or any of them might reduce public spending and public sector borrowing but this is a conjuring trick. They cost more, waste resources and succeed only by cutting costs, corners, and workforces and by accountancy and tax fiddles. They all put profits and big bonuses for top management before people or service.
Nor are they accountable for their wasteful ways, though they are certainly more cutting and clever than either public servants or ministers at getting legalistic deals which suit them rather than the public. Indeed, by using them so much we’ve bred a new bastard: capitalism, more adept at leaching on the state, than fighting the global competitive battle by innovating or taking risks. These are all pushed on to the state.
The examples are legion. The railways cost far more in subsidies than British Rail’s unified service ever did. Network Rail has had to be effectively renationalised. The costs of separate companies who don’t really compete to make their huge profits from their monopoly of rolling stock is legendary but well concealed. Gordon Brown’s London Underground PPP ended up costing far more with the disastrous collapse of Metronet.
Employment services were taken from the Department of Work and Pensions and given to gimcrack companies lacking adequate audit and control structures so frauds and fiddles were inevitable in local offices, though those at the top would rather not know so long as the money poured in and even the new Work Programme of payment by results leaves scope for fiddling the results. The PFI deals for schools were wildly expensive, and those for hospitals produced too many bed cuts, too many over-elaborate and expensive schemes, and too many service charges. Their profits were then boosted by channelling the money through tax havens like Mapley and by selling contracts and debts on.
I dread to think what will happen when private contractors run schools, hospitals and other NHS services, because these profiteers will run rings round public servants when it comes to avoiding the risks which are supposed to be the strength of the public sector, and negotiating deals which guarantee easy profits and throughputs.
Such conjuring tricks neither save money nor improve service. If we are going to expand public provision, as we will certainly need to do after the Tory drought and disinvestment, and spend big on early years and housing then we must be honest, put the focus on better service and educate the public. Public sector debt isn’t the bogeyman precursor of national bankruptcy the Tories pretend. It can and must be boosted if we are to boost demand and get growth. We must put the case for concern, service, integrity and compassion, all of which are better provided by the public sector and public service.
In childcare provision the great success has been the Sure Starts and Children’s Centres, not the private nursery provision which has been expensive and inefficient. In housing the market is clearly not working and this government`s efforts to boost the private rented sector leads only to rising rents, exploitation, instability and an ever rising benefit bill, despite the vicious attempts to cut it which come into force next year. The pressing need is not more gimmicks and unaffordable ‘affordable’ housing but a massive build of public housing, both social and council, for rent to provide for the two fifths of the nation who will never be able to afford to buy and whose housing situation is becoming desperate. This can easily be financed by local housing bonds or by contracts financed by a National Investment Bank or Quantitative Easing.
Labour shouldn’t be so diffident about public spending. Britain’s economy has shrunk and as of now is still shrinking so debt is heavier to bear, but the only way to combat this is a big stimulus financed by public borrowing. The growth that generates will then allow the economy to bear more public spending. We must channel all this to social purposes, highlight the needs, the problems and the misery that over-reliance on the market have brought to arouse public concern, then rely on the understanding among the public, if not among the think tanks and clever classes (who have been reinventing government for three decades without making it better), that public spending is not only better and fairer but currently too low. Honesty is the best policy and always more likely to be found in the public sector than the private.