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20 August 2018

2018: the year the failure of privatisation and austerity became undisguisable

The state takeover of Birmingham prison adds to a catalogue of private sector chaos: Carillion, East Coast, Northern Rail and bankrupt Northamptonshire council. 

By George Eaton

For nearly a decade, the Conservatives’ combination of austerity and privatisation has enfeebled Britain’s public realm. The failures of this approach have long been obvious (as the New Statesman’s Crumbling Britain series has charted) – but 2018 is the year they became undisguisable.

The Ministry of Justice has today taken emergency control of Birmingham prison the first publicly-run prison to be privatised  from contractor G4S, after an inspection found chronic levels of violence and drug-use among prisoners, and corridors littered with cockroaches, blood and vomit. After cuts of more than 30 per cent to the Ministry of Justice budget since 2010, the UK’s prison system has long struggled to manage, with a near-record population of 82,949 in England and Wales alone. 

The events in Birmingham fit an unmistakable pattern: private failure, public rescue. In January, construction behemoth Carillion which provided 11,500 hospital beds, 32,000 school meals and employed 20,000 UK workers collapsed at a cost of at least £148m to the taxpayer.

In May, for the third time since rail privatisation, the East Coast Mainline was renationalised by the government after its private operators Virgin and Stagecoach defaulted on payments (costing the state an estimated £2bn in lost revenue).

The state of Britain’s railways is now a source of national shame. For too many commuters, the mere act of travelling to work is now an arduous odyssey characterised by repeated delays, cancellations and overcrowding. Northern Rail, one of the worst offenders, eventually cut more than 9,000 services from its timetable after daily chaos. On Southern, as many as 267 passengers have crammed into carriages designed for 107 people. And yet far from commuters being compensated, rail fares already among the most expensive in Europe are due to rise by another 3.2 per cent in January (having increased by an average of 32 per cent since 2010).

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Meanwhile, Conservative-run Northamptonshire county council once a Tory flagship has been forced to declare effective bankruptcy and will now only provide a legal minimum of service (described by one observer as “a people-not-dying level”)  including potential cuts to child protection. Up to 15 councils, according to the National Audit Office, are also at risk of insolvency (real-terms funding for local authorities has been cut by 49 per cent since the Conservatives entered office in 2010).

In every corner of the state, the cost of austerity is marked. Rough sleeping, which fell by three-quarters under the last Labour government, has risen by 169 per cent since 2010. The NHS has been forced to cancel operations and even urgent surgery as it struggles to meet ever greater demand. Relative child poverty has increased for three consecutive years and now stands at 4.1 million, or 30 per cent of children. Nearly 1,000 Sure Start children’s centres and 478 libraries are estimated to have closed since 2010. Potholed roads and uncollected bins are evidence of the scale of austerity borne by councils.

But the surprise is that anybody should be surprised. From the onset of austerity in 2010, critics warned that it would inflict irrevocable harm without achieving the aim of eliminating the deficit. The government’s dogmatic commitment to privatisation foreign state firms have taken ownership of British rail franchises – has long put ideology before evidence.

For Britain, the sixth largest economy in the world, with its own currency and low borrowing costs, austerity has always been a choice, rather than a necessity. National governments have a duty to manage the public finances responsibly. But as economic evidence shows, the best long-term means of debt reduction is productive investment, not politically-driven cuts. Government borrowing, it is said, will “burden” younger generations. Yet austerity has enfeebled the collective institutions that they depend on and that their forebears strove to build.

In these circumstances, unsurprisingly, public appetite for alternatives is growing. A poll published last year by the Legatum Institute and Populus found the majority of Brits favour public ownership of the UK’s water (83 per cent), electricity (77 per cent), gas (77 per cent) and railways (76 per cent) – as proposed by Labour. Voters are weary of the substandard service and excessive prices that characterise many firms. Indeed let it not be forgotten the pretext for austerity was a financial crisis that originated in the private sector. Now, as then, the state long disparaged by economic liberals is being forced to intervene to save the market from itself.

Britain’s economic and social divisions are the root of its political polarisation. The Brexit vote was not merely an expression of antipathy towards the EU but a symptom of far greater discontent. Should the Conservatives continue to preside over a new era of private affluence and public squalor, the UK will become a yet more troubled and divided country.

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