It's Political Stupid!

The march of outsourcing or privatisation of public services appears to have few boundaries, with whole new sectors being announced at regular intervals. Many felt that the announcement by Michael Gove that Doncaster Borough Council was to be stripped of its children's services for at least five years was in effect a trial run for the whole sector. This Guardian article appears to confirm the suspicion and interestingly names Serco as a likely contender for the work:- 

The government is planning to allow outsourcing firms to bid for contracts to manage social services for vulnerable children in England – while dropping laws allowing the removal of companies that fail to do the job properly.

A number of firms have expressed an interest in proposals that would allow them to bid for contracts managing foster care and providing other services for children in care.

A Department for Education spokesperson said that even though some legal requirements would be removed under government plans, inspections and a national minimum standard for providers would be covered by councils' existing obligations. The DfE said it was "nonsense to suggest that private-sector and voluntary organisations cannot provide good-quality services for children" and that the suggested change in policy was first explored under the last government.

This article in Public Finance by John Tizard casts serious doubt on whether the private sector does indeed do things better as politicians of all colours would have us believe:-

Over the last few decades under successive governments, there has been a political and ‘new public management’ view that the use of competition and outsourcing of public services is intrinsically a ‘good thing’ that will result in savings, better performance than the public sector can produce, and often a greater choice for the service user.  Actually, the evidence to date has been very mixed and I suggest that in future, and without firm evidence, such assumptions are best avoided. 

Public services are not the same as consumer services, especially when they are funded wholly or in part through public expenditure and/or have a wider public interest than simply serving an individual user. Unfortunately we are guilty of having introduced the language and some management approaches of the retail sector into public services and not always appropriately.

The Best Value Social Value Act places a specific duty on the public sector to secure wider social, economic and environmental outcomes when procuring public services.  Unfortunately however, and all too often, the emphasis has typically been on lowest cost and attempts to transfer risks to the provider (often spuriously) rather than securing public value. Again, perhaps inevitably, there is a strong sense of price driven procurement  being adopted in this period of austerity simply (or primarily) as a means of reducing public expenditure.

In this Guardian article, whilst acknowledging that the whole political love-in with outsourcing, or more accurately privatisation, remains intact, the lack of accountability is set to become a big issue:-

In politics, ideological conviction remains intact. Tory commitment to 'the market' is untouched and shrinking the state and outsourcing the state go hand in hand. Labour, so keen on contracting when in power, is still on board. Contractors retain their friends in high places, including NHS England. Their lobbying power is formidable.

And yet they may still be facing a moment of vulnerability, even danger – at least in balance sheet terms. If £1 in £3 of public service spending now goes through contractors, you see ratios of up to 75% in contractors' dependence on the state (not just UK central government of course). Tony Travers of the London School of Economics calls them 'para-statal', not so different from arm's length bodies or quangos.

When the Treasury publishes its 'Whole of Government Accounts' you won't see Serco's debts and turnover though, in theory, its revenues from government ought to be detectable. Should it, as an entity, feature in any account of the state – and 'account' could mean what it pays its chief executive, its governance and its costs. Why should NHS foundation trusts have to conduct their business in public, when Virgin remains so opaque?

It's a question that gets asked more insistently, not least by the House of Commons Public Accounts Committee. Shouldn't its pursuit of the 'public pound' carry it deep inside Capita?

Then there's the ever present issue of contractors just fiddling things:- 

The Institute for Government (IfG) pursues a parallel track in its report on outsourcing, its principal concern whether what gets confidently described as markets are in fact being rigged into cartels and even monopolies. The National Audit Office's recent study of the 'market' for delivering high-speed broadband to rural areas in the UK is emblematic: local authorities arranging the service find their choice of provider is BT, BT or BT. The IfG provides welcome detail on competitive conditions in employment services and social care.

But the report's authors end up wondering who ensures contractors behaved fairly or competitively. The regulators of competition in private markets in the Office for Fair Trading and Competition Commission (their own performance variable shading into indifferent) have never really interested themselves in the huge expansion of public service contracting. Whitehall departments have, typically, neither the skill nor the inclination to 'manage markets' and – certainly in front of the PAC – often end up as shills for their contracting companies.

Oddly, this report – like that of DeAnne Julius for Labour - leaves open the big question. It's one that has never been answered as outsourcing has grown in recent times (though its progress has been a lot more up and down than the American-inflected market enthusiasts of the Thatcher era would ever have imagined).

It's this. On a genuine like for like basis, do private companies provide a better service – defined qualitatively or by price? Perhaps no such general formula is possible, perhaps too much depends on the detail of commissioning or the specifics of the sector (social care will always be very different from bin emptying). But the absence of the algorithm makes the entire debate somewhat flaky – and prey to the ideologues."

Exactly, this whole probation privatisation omnishambles is political ideology full stop.

To round this up, I'd like to quote in full an impressive anonymous comment from a reader the other day, which I think pretty much sums things up:-

Private companies per se are not the enemy, but it is increasing difficult to see them as the friend of employees. There was a laissez faire time when private companies ruthlessly exploited their workers, indifferent to their employees need for a safe workplace and a decent standard of living. Later, for various reasons, the behaviour of employers improved and there was a social contract between worker and employer in place, so there was a better sharing of the wealth created. And of course the state postwar became a large scale employer. All in all standards of living rose, there was increased job security and following a career spent in the public services, or with the major employers in the private sector, there was a prospect of a decent pension for many, albeit not gold- plated. However, with neoliberalism the social contract has been torn up and for ideological reasons, the private sector must now be the preferred provider of all services. 

I think it is quite logical to see the private sector as the enemy of many employees and you could equally say the same about public employers, because unless you are near or at the top of the tree, all we have seen in recent history is a gradual erosion in wages and conditions of employment, with some of the worst features of Victorian times making a comeback, such as zero hours contracts, lack of protection if you fall ill and enveloping fear of unemployment and poverty. None of this has been caused by the banking crisis and the ensuing austerity, though it has provided good political cover for what is an ideological shift rightwards – shared by ALL the political parties. There is no counterbalance because the trade unions are weak and relatively ineffective.

So yes, the private sector continues to generate wealth, but it's a wealth that goes to the modern-day robber barons. We are going backwards in terms of prosperity for the many. These forces are now working their way through the probation service. I don't know how the delivery of such services will look in, say, five years, but one thing I think is certain is that those delivering the services will be economically poorer than their predecessors – except of course those who occupy the elite positions, because they must be rewarded for their ruthlessness and indifference to those they marshal and dominate, using fear as the primary incentive in fractured and atomised workplaces.