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 director of the Police Foundation

Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.