Misguided, dangerous and undemocratic- government plans for public sector

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.