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Privatisation overseas is a waste of government aid money

It’s time to crack down on the Tories’ ideological obsession with outsourcing abroad as well as at home.

Capita teeters on the brink. Carillion has collapsed. In the UK, tens of thousands of businesses and hundreds of thousands of workers are at risk. The bubble has burst: it is the beginning of the end of the outsourcing party for profiteers in the UK.

So now it’s time to crack down on the ideological obsession with privatisation overseas.

The direction under this Conservative government is clear. Ever greater proportions of the taxpayers’ aid budget are now spent and delivered through private contractors: up from 12 per cent of the Department for International Development’s bilateral spend in 2010/11 to 22 per cent in 2015/2016.

Despite the Tories’ tough talk last year of a crackdown on fat cats profiteering from the aid industry, it’s not clear if new rules will bring effective oversight without an increase in staffing or application across other government departments that now spend 26 per cent of the aid budget.

And in December, disgraced contractor Adam Smith International and the Foreign and Commonwealth Office became embroiled in further investigations by BBC Panorama and the Times on the running of an outsourced security project in Syria. 

Even more alarming is the government’s promotion overseas of Private Finance Initiatives (PFI) – or Public Private Partnerships (PPPs) as they are known outside the UK. The Financial Times reported in September that despite condemning PFI schemes in the UK (with Boris Johnson even comparing them to “looting”), various Tory ministers continued to promote the model overseas to the world’s poorest countries.

This government has focused on private sector models like never before. In Uganda, there has been a challenge to sub-standard, unlicensed and unsanitary learning conditions of so-called “low-cost” PPP private school chains, such as the Dfid-backed Bridge International Academies, which have also come under fire in Kenya.

In Lesotho, one World Bank-supported PPP for a single hospital and its filter clinics cost more than half the country’s health budget.

Little surprise then that in October last year, 152 trade unions and civil society organisations from 45 countries submitted a global manifesto sounding the alarm on this model, calling on the World Bank and International Monetary Fund to stop pushing PPPs to some of the poorest countries in the world.

Even United Nations Assistant Secretary General Jomo Kwame Sundaram recently pointed out negative experiences with PPPs across the globe, with few being cost-effective or delivering results in the public interest.

Labour has been clear that we will end the Tories’ “outsource-first” approach, which has degraded our public services and ripped off taxpayers to the tune of billions. Jeremy Corbyn has recently announced new rule changes to tighten the oversight of contractors and end this privatisation racket.

For two decades, we have been fed the unchallenged myth that the private sector is inherently better placed to provide our public services. The Carillion collapse shows this couldn’t be further from the truth. If we are serious about tackling poverty and inequality overseas, we need to end the hypocrisy and help people take back control of their public services. Not just here at home, but across the world.

Kate Osamor is Labour & Co-op MP for Edmonton, and shadow international development secretary.

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Labour’s renationalisation plans look nothing like the 1970s

The Corbynistas are examining models such as Robin Hood Energy in Nottingham, Oldham credit union and John Lewis. 

A community energy company in Nottingham, a credit union in Oldham and, yes, Britain's most popular purveyor of wine coolers. No, this is not another diatribe about about consumer rip-offs. Quite the opposite – this esoteric range of innovative companies represent just a few of those which have come to the attention of the Labour leadership as they plot how to turn the abstract of one of their most popular ideas into a living, neo-liberal-shattering reality.

I am talking about nationalisation – or, more broadly, public ownership, which was the subject of a special conference this month staged by a Labour Party which has pledged to take back control of energy, water, rail and mail.

The form of nationalisation being talked about today at the top of the Labour Party looks very different to the model of state-owned and state-run services that existed in the 1970s, and the accompanying memories of delayed trains, leaves on the line and British rail fruitcake that was as hard as stone.

In John McDonnell and Jeremy Corbyn’s conference on "alternative models of ownership", the three firms mentioned were Robin Hood Energy in Nottingham, Oldham credit union and, of course, John Lewis. Each represents a different model of public ownership – as, of course, does the straightforward takeover of the East Coast rail line by the Labour government when National Express handed back the franchise in 2009.

Robin Hood is the first not-for-profit energy company set up a by a local authority in 70 years. It was created by Nottingham city council and counts Corbyn himself among its customers. It embodies the "municipal socialism" which innovative local politicians are delivering in an age of austerity and its tariffs delivers annual bills of £1,000 or slightly less for a typical household.

Credit unions share many of the values of community companies, even though they operate in a different manner, and are owned entirely by their customers, who are all members. The credit union model has been championed by Labour MPs for decades. 

Since the financial crisis, credit unions have worked with local authorities, and their supporters see them as ethical alternatives to the scourge of payday loans. The Oldham credit union, highlighted by McDonnell in a speech to councillors in 2016, offers loans from £50 upwards, no set-up costs and typically charges interest of around £75 on a £250 loan repaid over 18 months.

Credit unions have been transformed from what was once seen as a "poor man's bank" to serious and tech-savvy lenders where profits are still returned to customers as dividends.

Then there is John Lewis. The "never-knowingly undersold" department store is owned by its 84,000 staff, or "partners". The Tories have long cooed over its pledge to be a "successful business powered by its people and principles" while Labour approves of its policy of doling out bonuses to ordinary staff, rather than just those at the top. Last year John Lewis awarded a partnership bonus of £89.4m to its staff, which trade website Employee Benefits judged as worth more than three weeks' pay per person (although still less than previous top-ups).

To those of us on the left, it is a painful irony that when John Lewis finally made an entry into politics himself – in the shape of former managing director Andy Street – it was to seize the Birmingham mayoralty ahead of Labour's Sion Simon last year. (John Lewis the company remains apolitical.)

Another model attracting interest is Transport for London, currently controlled by Labour mayor Sadiq Khan. TfL may be a unique structure, but nevertheless trains feature heavily in the thinking of shadow ministers, whether Corbynista or soft left. They know that rail represents their best chance of quick nationalisation with public support, and have begun to spell out how it could be delivered.

Yes, the rhetoric is blunt, promising to take back control of our lines, but the plan is far more gradual. Rather than risk the cost and litigation of passing a law to cancel existing franchises, Labour would ask the Department for Transport to simply bring routes back in-house as each of the private sector deals expires over the next decade.

If Corbyn were to be a single-term prime minister, then a public-owned rail system would be one of the legacies he craves.

His scathing verdict on the health of privatised industries is well known but this month he put the case for the opposite when he addressed the Conference on Alternative Models of Ownership. Profits extracted from public services have been used to "line the pockets of shareholders" he declared. Services are better run when they are controlled by customers and workers, he added. "It is those people not share price speculators who are the real experts."

It is telling, however, that Labour's radical election manifesto did not mention nationalisation once. The phrase "public ownership" is used 10 times though. Perhaps it is a sign that while the leadership may have dumped New Labour "spin", it is not averse to softening its rhetoric when necessary.

So don't look to the past when considering what nationalisation and taking back control of public services might mean if Corbyn made it to Downing Street. The economic models of the 1970s are no more likely to make a comeback then the culinary trends for Blue Nun and creme brûlée.

Instead, if you want to know what public ownership might look like, then cast your gaze to Nottingham, Oldham and dozens more community companies around our country.

Peter Edwards was press secretary to a shadow chancellor, editor of LabourList and a parliamentary candidate in 2015 and 2017.