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22 August 2018

Leader: The Tories’ blind commitment to austerity and privatisation has been ruinous

The failures have long been evident. But in 2018, with the renationalisation of Birmingham Prison and the East Coast Main Line, they have become undisguisable.

By New Statesman

In March 2011, HMP Birmingham became the first publicly run British prison to be privatised. The then justice secretary, Ken Clarke, boasted that the contract awarded to G4S would deliver “innovation, efficiency and better value for money” without “compromising standards”. Seven years later, such lofty ambitions appear risible. On 20 August, the Ministry of Justice took emergency control of the prison after an inspection charted its dismal state. Peter Clarke, the chief inspector, described endemic violence, chronic drug use and corridors strewn with cockroaches, blood and vomit.

The prison system – which has endured cuts of more than 30 per cent since 2010 – is struggling to sustain a near-record population of 82,949 in England and Wales. As well as a crisis in the justice system, HMP Birmingham’s disrepair exemplifies the wider enfeeblement of the public realm.

The failures of the Conservatives’ combination of austerity and privatisation – as charted in the New Statesman’s Crumbling Britain series – have long been evident. But in 2018 they have become undisguisable.

At repeated intervals, the state – long reviled by free marketeers – has intervened to compensate for private failure. In January, the 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 second time since rail privatisation, the East Coast Main Line was renationalised by the government after its private operators Virgin and Stagecoach defaulted on payments (costing the state an estimated £2bn in lost revenue).

And this month, Conservative-run Northamptonshire County Council – once a Tory flagship – announced that it would provide only a legal minimum service (described by one observer as “a people-not-dying level”) after declaring effective bankruptcy in February. As many as 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 and Liberal Democrats entered office as the coalition in 2010.

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Yet the surprise is that anybody should be surprised. From the onset of austerity, we and others have warned that the project would inflict irrevocable harm without achieving its stated aim of eliminating the deficit. The government’s dogmatic commitment to privatisation – which has, oddly, led to foreign state firms taking ownership of British rail franchises – has long put ideology before evidence. That G4S, the company that failed to provide enough security for the 2012 London Olympics, has continued to reap tax-funded largesse is symptomatic of ministers’ recklessness.

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National governments have a duty to manage the public finances responsibly. Yet too often, austerity and privatisation have failed even on their own terms. For Britain, the fifth-largest economy in the world, with its own currency and low borrowing costs, this ruinous course has always been a choice rather than a necessity. Without a lasting change in direction, the only certainty is that there will be more disasters.

This article appears in the 22 Aug 2018 issue of the New Statesman, Will Labour split?