After the G4S debacle, it's time to re-think the role of the private sector

We should be much clearer about where outsourcing is not in the national interest.

The failure of G4S to deliver sufficient security staff to cover Olympic venues has reignited the debate about the role of the private sector in delivering public services.  Coming soon after the controversy surrounding A4E, this latest scandal should lead us to ask big questions about how these contracts are designed and monitored, but also about the wider role of the private sector in delivering public services.

There have traditionally been three positions on this.  First, there are those who say "private good, public bad": the public sector is slow and inefficient because it is not exposed to competition, whereas private companies are inherently better at getting value for money.  Second, there are those who say "public good, private bad": the private sector will always put profits first, whereas those who work in the public sector will always put the public first.  Third, there are those who say "what matters is what works": let’s put ideology to one side, it doesn’t matter who provides the service, the contract should go to those who deliver the best outcomes at the lowest cost.

I occupy a fourth position, one that retains an important dose of pragmatism, but which is attentive to the wider consequences of the privatisation of the public realm.  Clearly there is a case for contracting a private company to deliver a service where this can add capacity quickly, where a public provider has catastrophically failed or where a private provider can bring innovation and demonstrably improve outcomes as a result. 

However, those of us on the left should want to see boundaries put around the extent of private sector provision of public services. Social democrats believe in a strong public realm, constituted by institutions that embody the shared values of public service and promoting the common good. Those institutions send out important signals about the kind of society we are and help to inculcate values of public spiritedness and reciprocity.  Few of us want to live in a society where almost every relationship involves the extraction of profit.

So this should give us a wider concern not to allow the role of the private sector to go too far.  But more specifically there are services that are generally unsuitable for private sector delivery.  First, there are services where the outcomes we want are far too complex to be easily contracted for.  We don’t just want schools to deliver a target for the number of children getting 5 A*-C GCSEs, we also want them to help young people become good citizens and to broaden their imaginations. It is hard to contract for this.

Second, there are relational services which engage the public very intensively and where the introduction of the profit motive may undermine the trust upon which good quality relationships depend.   This is why the public are less concerned about back office functions being outsourced but are more concerned about the privatisation of relational front line services such as schools and hospitals. 

Third, there are services which are there to uphold the rule of law, such as the police and the judiciary, where it is particularly important that private interests are excluded and that there is direct public accountability.

Finally, there are services that are particularly important for the inculcation of values.  This is one reason why we should oppose the introduction of profit-seeking "free schools": if we want young people to believe in the value of public service it sends entirely the wrong signal if the very schools we provide to educate them are run in part in for profit.

Now clearly there are some services that are currently delivered by the private sector that would count as complex and relational, including most care homes and many nurseries, for example.  However we shouldn’t let the current mix of provision lead us to take the view that almost anything is appropriately delivered by the private sector.  The way services are provided is due to a series of historical political decisions and compromises.  Adopting these principles does not mean unpicking all of that: we have to look at the current mix of provision and, while being attentive to the considerations I have set out, make pragmatic judgements about the future.

Where private providers are in principle appropriate, the G4S debacle should lead us to ask some hard questions about how contracts are designed and monitored.  Does a public sector that has pulled out of direct provision have the skills and expertise to design good contracts and properly monitor compliance?  Are there sufficient competitors in the market place to prevent ‘too big to fail’ providers posing significant risk?

There are many private providers delivering excellent services all around the country, often in collaboration with public and third sector organisations.  And there are many examples of public organisations failing to deliver and providing terrible customer service.  We should remain pragmatic about this – but we should be much smarter at commissioning, much tougher on compliance and much clearer about where outsourcing is not in the national interest.

Members of the armed forces are shown around the site of the London 2012 Olympics in east London. Photograph: Getty Images.

Rick Muir is associate director for public service reform at IPPR.

Photo: Getty Images
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What's going on in Northern Ireland?

Power-sharing and devolved rule are under threat. What's going on? Ciara Dunne explains. 

The UUP will formalise their decision to withdraw from the Northern Ireland executive on Saturday. The DUP then announced that it may consider voting to remove Sinn Fein from the executive effectively ending or at least suspending devolution. This is due to a statement by PSNI chief constable George Hamilton stating that former IRA member Kevin McGuigan may have been murdered by people connected to the Provisional IRA (PIRA). However Hamilton also stressed that there was no evidence to prove that the murder occurred due to PIRA orders and there are claims that it was a personal vendett.

The UUP declaring that they will withdraw from Westminster is not particularly destructive. They only have one minister and their vote share has been steadily declining since they signed the Good Friday Agreement to the benefit of the DUP. By acting so dramatically, they run the risk of this seeming like the death rattle of a party trying to remain relevant in a world so different from its heyday rather than a principled stand to protect the fundamentals of the Good Friday Agreement.

Nesbitt voiced disgust that the IRA was still in existence. However the IRA is not one group and many of its splinter groups such as the Continuity IRA (CIRA) and Real IRA (RIRA) didn’t sign up to the Good Friday Agreement and have been active since it. They were not the only paramilitary groups that did not sign up, fragments of extremism have existed since the PIRA decommissioned and it seems likely that they incorporated those who had been PIRA members who were disillusioned by the agreement. Bertie Ahern, former Taoiseach and Good Friday Agreement negotiator, explained while the PIRA had to decommission as part of the agreement, for various reasons it was allowed to exist in a non-armed state. News of its existence shouldn’t come as a shock to the only major unionist party that engaged in Good Friday Agreement negotiations. If the PIRA were proved to be armed and active then this response would be understandable but that is not the case.

What this stand does however give the UUP is a unique selling point compared to their rivals the DUP and it can somewhat tackle the perception some have that the UUP betrayed the unionist community when it agreed to work with Sinn Féin in government.

The DUP has been less drastic. Although they have stated that they would consider pulling out of government, they have described it as temporary suspension of government rather than a total breakdown of trust. Jeffrey Donaldson, a DUP MP, said that if they are to continue to power share with Sinn Féin, they must ensure the PIRA issue dealt with ‘in terms that gives everyone the reassurance that this isn’t going to happen again’. This is a reasonable request and something Sinn Féin must do. They should be unwavering in their condemnation of any paramilitary organisations. However so far they haven’t done otherwise, several senior figures have denied that the PIRA have rearmed. Pearse Doherty, a prominent Sinn Féin TD, insisted that when it came to the IRA “the war is over, they’re not coming back”.

The best way to tackle paramilitaries is to tackle the reasons people joined them. This can be done not by threatening to withdraw from the government but standing together against sectarianism. Parties must ensure that there is a functioning government that works for the good of everyone and gives people a genuine stake in society. It is important that representatives of both communities condemn paramilitaries, in actions as well as words. All parties will soon have the opportunity to move away from old associations, as the old guard age and move aside and the younger members who are untainted by such associations, take charge of the party.

However, it is vital that parties take a considered stance in anything controversial for this to work. In this case, it is not yet certain whether the connections are historical or current. Garda Commissioner Noirin O'Sullivan has stated she has no reason to believe that the PIRA are active in the military sense. Bertie Ahern pointed out that it is possible that ‘these atrocities are being done [by those] who might have been on the inside but are now long since on the outside?’ Political posturing could have terrible consequences for the Good Friday Agreement, especially if results in a party with a large electoral mandate being removed from government when there is no proof it has broken the agreement.

If the UUP and the DUP are truly concerned, a more constructive reaction is to push for the reintroduction of the Independent Monitoring Commission (IMC). The IMC monitored paramilitary activity from 2004 to 2011 and its final report stated that ‘transition from conflict is a long slow process’. This latest incident shows this is true and it is likely that the IMC was disbanded too soon. Reconvening the IMC would offer a way to monitor paramilitary activity and to find patterns and evidence rather than allowing a single incident to destroy progress. If reconvened however it should address the issues that resulted in Sinn Féin’s criticism of the body. A more balanced panel, one agreed by all parties, would address this, the previous one was described as three spooks and a lord, but would still add value to the peace process.

If political parties pull out of the power sharing agreement over an incident that the police have not yet connecting to a sophisticated paramilitary organisation with political connections, they are handing extremism a victory while taking democratic choice away from the people of Northern Ireland. The majority of people in Northern Ireland have been clear, both in referendum and in their actions, they want peace and stability. If the parties of Northern Ireland don’t fight to protect this then they are betraying everyone who believed in the Good Friday Agreement and reconciliation.