The battle against privatisation

Outsourcing of public services continues apace as austerity bites.

Last week, a group of public sector workers, supporters and others who've had enough of the neoliberal mantra that "public services improve if they're run by the private sector" protested outside a Capita conference called "New Models of Service Delivery - Opening Up Local Government Services to New Providers".

That was Capita - one of the country's biggest outsourcing firms, playing host (at more than £300 per head, behind closed doors) to senior council people who are in the process of deciding which private companies should win contracts to provide council services.

"There's no transparency - these big outsourcing plans are being discussed behind the backs of the residents and staff who are most affected," said Barnet Alliance For Public Services protestor Vicki Morris. "It's wrong for the companies who will profit from outsourcing to have privileged access to those making outsourcing decisions." Morris's group is fighting a Barnet council plan (called One Barnet) to mass-outsource council services. Capita is bidding for a £750m contract to provide services like finance and revenues and benefits as part of One Barnet.

There's every reason to suppose that Capita will get that contract. If there's a manual on snorkelling cash out of the public sector, Capita wrote it - every page. Last year, Capita's profits increased by 12 per cent to £364.2m, with dividends up by 19 per cent (you can read the rest here if you can stand it).

No matter that the questionable achievements of some of the outsourcing giants have frightened a few councils off. More ought to be terrified. Sefton council recently decided to terminate a £65m contract with Capita Symonds (a division of the Capita Group), because it failed (spectacularly) to deliver expected savings. Mouchel, another of the UK's biggest outsourcing companies, is in a tight spot. In October, chief executive Richard Cuthbert resigned when a £4.3m hole was found in the company's accounts. Mouchel reportedly has a net debt of £879m. The European Services Strategy Unit has an excellent document cataloguing some of Capita, Mouchel and BT's larger contracts and failures, as does almost every edition of Private Eye.

Still, the goldrush goes on. The public services industry is not just big business - it is and has been colossal business. Figures vary, but Unison reports estimated a worth of £79bn in 2008 with growth expected to put that figure near £100bn round about now. Wherever the total settles in so-called austerity, you can rest assured that the likes of Capita will fling themselves at it.

None of which is good news for those at the rough end of the trade. Public sector workers and service users know only too well what happens when services are outsourced. Staff salaries and leave allowances are slashed (often drastically in already-low-paid sectors like care), working hours extended (often to the detriment of a service) and unions sidelined as private companies look to destroy workers' terms and squeeze every pound out of contracts to pass to shareholders and senior managers.

Barnet Unison branch secretary John Burgess describes privatising in the austerity era as "outsourcing cuts" - councils offloading public services to companies which slash services and staff numbers, and diffuse political heat. Burgess would know. He and his members have already taken strike action in protest at Barnet council's radical, and unstable, mass-outsourcing plan (hard questions have been asked this year about the council's ability to manage big contracts with private sector companies).

Southampton council workers are gearing for a similar fight. That council wants to turn itself into a commissioning council - which means it would exist mostly to engage private companies to deliver services, rather than provide services directly itself.

Other councils are taking an incremental, rather than whole-hog, approach to outsourcing. Bristol council is chipping away at care homes and services. Nottinghamshire is doing the same. And, as Vicki Morris says, far too much of it is happening out of the public eye. Contracts fail and money is tight, but ideology prevails.

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By refusing to stand down, Jeremy Corbyn has betrayed the British working classes

The most successful Labour politicians of the last decades brought to politics not only a burning desire to improve the lot of the working classes but also an understanding of how free market economies work.

Jeremy Corbyn has defended his refusal to resign the leadership of the Labour Party on the grounds that to do so would be betraying all his supporters in the country at large. But by staying on as leader of the party and hence dooming it to heavy defeat in the next general election he would be betraying the interests of the working classes this country. More years of Tory rule means more years of austerity, further cuts in public services, and perpetuation of the gross inequality of incomes. The former Chief Secretary to the Treasury, Seema Malhotra, made the same point when she told Newsnight that “We have an unelectable leader, and if we lose elections then the price of our failure is paid by the working people of this country and their families who do not have a government to stand up for them.”

Of course, in different ways, many leading figures in the Labour movement, particularly in the trade unions, have betrayed the interests of the working classes for several decades. For example, in contrast with their union counterparts in the Scandinavian countries who pressurised governments to help move workers out of declining industries into expanding sectors of the economy, many British trade union leaders adopted the opposite policy. More generally, the trade unions have played a big part in the election of Labour party leaders, like Corbyn, who were unlikely to win a parliamentary election, thereby perpetuating the rule of Tory governments dedicated to promoting the interests of the richer sections of society.

And worse still, even in opposition Corbyn failed to protect the interests of the working classes. He did this by his abysmal failure to understand the significance of Tory economic policies. For example, when the Chancellor of the Exchequer had finished presenting the last budget, in which taxes were reduced for the rich at the expense of public services that benefit everybody, especially the poor, the best John McConnell could do – presumably in agreement with Corbyn – was to stand up and mock the Chancellor for having failed to fulfill his party’s old promise to balance the budget by this year! Obviously neither he nor Corbyn understood that had the government done so the effects on working class standards of living would have been even worse. Neither of them seems to have learnt that the object of fiscal policy is to balance the economy, not the budget.

Instead, they have gone along with Tory myth about the importance of not leaving future generations with the burden of debt. They have never asked “To whom would future generations owe this debt?” To their dead ancestors? To Martians? When Cameron and his accomplices banged on about how important it was to cut public expenditures because the average household in Britain owed about £3,000, they never pointed out that this meant that the average household in Britain was a creditor to the tune of about the same amount (after allowing for net overseas lending). Instead they went along with all this balanced budget nonsense. They did not understand that balancing the budget was just the excuse needed to justify the prime objective of the Tory Party, namely to reduce public expenditures in order to be able to reduce taxes on the rich. For Corbyn and his allies to go along with an overriding objective of balancing the budget is breathtaking economic illiteracy. And the working classes have paid the price.

One left-wing member of the panel on Question Time last week complained that the interests of the working classes were ignored by “the elite”. But it is members of the elite who have been most successful in promoting the interests of the working classes. The most successful pro-working class governments since the war have all been led mainly by politicians who would be castigated for being part of the elite, such as Clement Atlee, Harold Wilson, Tony Crosland, Barbara Castle, Richard Crossman, Roy Jenkins, Denis Healey, Tony Blair, and many others too numerous to list. They brought to politics not only a burning desire to improve the lot of the working classes (from which some of them, like me, had emerged) and reduce inequality in society but also an understanding of how free market economies work and how to deal with its deficiencies. This happens to be more effective than ignorant rhetoric that can only stroke the egos and satisfy the vanity of demagogues

People of stature like those I have singled out above seem to be much more rare in politics these days. But there is surely no need to go to other extreme and persist with leaders like Jeremy Corbyn, a certain election loser, however pure his motives and principled his ambitions.

Wilfred Beckerman is an Emeritus Fellow of Balliol College, Oxford, and was, for several years in the 1970s, the economics correspondent for the New Statesman