Mark Wallace and Frances O’Grady go head-to-head in this month's duelby Mark Wallace, Frances O’Grady / February 22, 2018 / Leave a comment
Yes (Mark Wallace)
Look at the world around us, in all its amazing creativity and variety. The winning combination of specialisation and competition, which is the foundation of the modern economy, has made available more and better things in every sphere of life, and provided more people than ever before with the opportunity to access them. Instead of asking why would we let the private sector get involved in public services, the real question is why on earth wouldn’t we want to harness such a successful system for such an important job?
Of course the private sector helps our public services to run better. We know this inherently when we think about, say, the NHS finding supplies of pens.
It would be insane and disastrous for hospital trusts or the Department of Health to develop and manufacture their own Biros. It would waste a fortune trying and failing to replicate work that others already do perfectly well. Instead, we all accept that they outsource the job to the private sector, and various specialist companies compete to provide the most attractive service, motivated by profit.
The end result is good for all involved—the supplier earns a living, while the NHS receives what it needs at a decent price, and can get on with focusing on its real job.
We all accept this private delivery as sensible—I doubt you or anyone else would want the NHS pen supply nationalised and brought in-house.
So why pretend that the same principle does not apply to other aspects of helping public services get the job done? What people want, and what they pay for, is services that deliver, as well as possible and at a reasonable and sustainable cost.
The private sector helps them do that, and without its contribution we would all lose out.
No (Frances O’Grady)
Private enterprise can do incredible things. Taking risks, investing in new products and services, and stimulating innovation are at the heart of what many businesses do. But when it comes to public services, all too often the private sector is failing to deliver. Why is that?
Pens aren’t people. And public services are not the same as consumer goods. Services like the NHS belong to all of us by right. As a result, they come with a different set of expectations: universal standards, equality of access, co-operation, accountability and the collective good, which goes further than the bottom line.
But the outsourcing market has become concentrated in the hands of a small group of generic providers. Rewards for shareholders are the ultimate concern.
It is this relentless pursuit of new sources of revenue and profit that leads to short term imperatives—under-bidding, over-borrowing, bearing down on the pay and conditions of the workforce—that puts our public services at risk.
And while we can clearly see the rewards going to executives and shareholders, it is less clear what the benefits are for the rest of us.
Generic service providers squeeze out specialism—can it really be said that a firm like Carillion “specialises” in tasks as diverse as railroad repair and school lunches?
Outsourcing contracts have to be specific. So specific that they stifle innovation and flexibility—even getting a broken window fixed in a PFI-managed building can take months.
Accountability is undermined by commercial confidentiality. Market competition adds layers of bureaucracy, cost and complexity that puts up barriers to the kind of collaborative reform we need to see, the NHS and social care being a very good case in point. And risk? It’s borne by workers, service users, and eventually the taxpayer who foots the bill when things go wrong.
Take a look at where our public services have been most exposed to outsourcing. Would anyone look at adult social care or our privatised railways and say this is the model to follow?
I’m glad we agree that free enterprise is a remarkably effective system. But you’ve yet to present any good reason why those who use public services should be denied its benefits.
The services that you choose as cautionary examples are not those “most exposed” to the private sector. Why ignore cases like the telephone system—supposedly an essential part of the public sector at the start of the 1980s, but now transformed for the better by being completely delivered by the private sector? A nationalised monopoly in telecoms made people wait an age just to get a phone installed, while flourishing private competition has brought us the interconnected world we enjoy today. That’s a huge success story, which no one wants reversed. It seems a peculiar oversight to disregard it.
My example of pens established the principle that howling down private sector involvement is easy in rhetoric but nonsensical in practice. The tools that public services use every day are created by the private sector. The bricks of every hospital are privately made, and every builder who lays them is a private contractor. We trust the private sector with the very fabric of our services, and always have done. The idea that it’s even possible, never mind desirable, to cleanse public services of the private sector is a fantasy.
You’re right to caution that some contracts are a bad deal, and privileged firms are too often indulged rather than punished for failure. But what you’re describing is a failure in commissioning and oversight. If the public sector is too inefficient to manage a contract, and too disorganised to discipline an under-performing contractor, it seems unwise to conclude that the very same struggling Whitehall managers would do a perfectly good job of directly running every aspect of an £800bn state.
This dogmatic attachment to an impossibly pure public sector would produce more “layers of bureaucracy, cost and complexity,” not less. Why not embrace true “collaborative reform” by accepting the private sector’s help in getting the job done?
This pens argument is clearly a red herring. The key point is that public services are different.
When it comes to phones or pens, we expect an array of products and prices. We expect that people will have different phones and pens. And in some cases, phone and pen companies will unfortunately go bust. That can’t happen in the public sector.
When it comes to vital public services, we expect universal standards, not ones based on ability to pay or where you live. We expect equal access for all, with real accountability. And we can’t, as a society, accept that those services will simply shut down one day.
Polls show that the public wants to see public services kept in-house. They don’t understand why private companies should take over naturally occurring monopolies.
And who can blame them? They live in a country littered with failing privatisations and badly thought-out outsourced contracts. Carillion is the obvious recent example, but buses, probation services, and railways have all suffered, to name but a few.
Switching provider isn’t an option in many parts of the public sector. If you face a dodgy Capita work assessment, you can’t simply change to another company. And for most of us, switching hospital or school isn’t an option either. So we need public service providers who get it right the first time. That means investing in a fairly-paid, secure and well-trained workforce.
It is not just a matter of more responsible contractors or better procurement, though both would help. The very nature of outsourcing and privatisation drives an endless pursuit for short-term profit. Commissioners push for cheaper contracts and contractors push for higher profits. Services and workers get squeezed in the middle.
And the inevitably inflexible contracts leave us with a bare-minimum jobsworth culture. It’s no wonder that increasing numbers of public sector organisations are now taking their contracts back in house. They cite greater flexibility, control and economies of scale as a result. As the experience of the East Coast Main Line shows, publicly-run public services can be a win for the users, workforce and the taxpayer alike.
I’m afraid you’ve missed the point on telecoms. Not long ago a previous generation of trade union leaders were using exactly the same circular logic to deliver a self-fulfilling argument that the telephone system was a natural monopoly, an inalienable public service that could never be fairly or successfully delivered by the private sector. History has proven them entirely wrong, so it would be wise to take such arguments with a pinch of salt.
Yes, “we expect an array of products or prices”—but that’s a recent expectation. If your predecessors in opposing change and innovation had got their way, we would still be waiting weeks for the BT monopoly to install the only model of phone on offer. The rest of the world would have dashed ahead while Britain languished under a dogmatic ban on progress.
I don’t pretend that every private company working on every public sector contract does a good job. It would be absurd to do so. If anything, I’d like more of them to be penalised for their failings, to align incentives more fully with good service.
But it’s cherry-picking to treat the worst examples as typical. Using that approach I could (unfairly) seek to rebut your entire argument by citing the deadly failures of the NHS at Mid-Staffs. The truth is that we human beings are flawed, and transpose our flaws into any institution or system that we create. What we need are ways of doing things that mitigate our errors, and help us to learn from our mistakes.
Free competition and private enterprise aren’t perfect, but they are by far the best mechanisms that we have yet discovered. It isn’t an ideology, a system, or a philosophy; it’s a tool.
We can be practical, and put it to use to help people. Or we can be dogmatic, and try to banish it from public services—an effort which would fail, but not before harming many, many people.
I agree there’s no room for dogma in this debate. But your arguments have remained abstract, the comfortable terrain of ideology. The lack of real-world success stories to support your case is telling.
Your only example was telecoms, where technology, rather than privatisations has been the driver of change. In any case, a two-week wait for broadband is maddeningly typical! The public believes the evidence of their own eyes. And that’s why support for taking public services and utilities back into public hands has grown so strong.
Carillion, Capita and Atos have become by-words for failure, profiteering and callous bureaucracy. Energy and water companies are considered rip-off merchants. And passengers feel that private rail companies are being rewarded for failure.
Local authorities have lost faith too. They are increasingly bringing services back in house, instead of being tied into expensive and wasteful contracts. It allows them greater control over their resources, greater flexibility to innovate, and greater opportunity to maximise benefits for the community.
It was the public sector that brought in smart ticketing like Oyster cards, against the stick-in-the-mud opposition of private train firms. And it’s the public sector that’s integrating local health and social care services, working around counter-productive competition requirements that get in the way.
The failings of private contractors are not just about good or bad companies. It’s the nature of the market. Borrowing costs for private finance are higher, pushing up prices. Fragmentation and competition prevent cooperation across public services. And inflexible contracts, with commercial confidentiality clauses, prevent public services being democratically accountable.
In wholly private enterprise, private money is put at risk and rewards are made. There are winners and losers and we can accept different outcomes. But our public services belong to the community. They are funded by us all, for us all—and there must be no losers.