Reform or privatise?

Our guest blogger Monimbo assesses the Government’s chances of achieving ‘cuddly privatisation’.

One side effect of the coalition’s troubles in persuading people about their NHS reforms is that they also seem to be having second thoughts about wider ‘reform’ of public services.  Cameron signalled in February that he wanted all public services to be open in principle to outside competition.  But Francis Maude, in a leaked memo, has now said this would be ‘politically unpalatable’.  Instead, the government now apparently contemplates a sort of semi-privatisation, where services will be run by cuddlier voluntary bodies, mutuals and social enterprises, rather than the less-cuddly Serco or Capita.

This, to put it mildly, seems to show confused objectives.  The one virtue of the NHS proposals was that they were crystal clear in their goal of providing bigger opportunities to private health suppliers – perhaps too clear from the viewpoint of trying to convince the public to accept the reforms.  Cameron’s Telegraph article in February seemed to show a similar desire, surrounded of course by much talk about the big society and freeing services from the ‘grip’ of state control (if someone needs to have a grip on public services, shouldn’t it be the state?).

Now two things have happened. One is that the public service reform white paper has been postponed. The other is that, according to the leaked memo, in the white paper the government won’t take ‘the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profit making by private sector firms’.

So now what seems to be on offer is half-privatisation, which is presumably judged to be more acceptable to the public. While this is possibly true, is it achievable?  Both in the NHS reforms and what is allegedly proposed for public services generally, the government seems to be unaware of or to be ignoring the EU procurement rules.  These come into play if a service is put out to tender, rather than being run in-house as a normal part of central or local government.  There is nothing discretionary about them: they have to be applied, unless (as in housing, for example, with ALMOs) the service is to be run by a company still owned by the public authority.  There are exemptions for small contracts, but it’s not permitted to split what otherwise would be a big contract into multiple small ones to get round the rules.  The rules are set out inUK law which itself is based on European law.

The effects on housing are, as yet, even less clear as we wait to see whether new rules will be imposed on local authorities and, within them, on council housing services. Given that the government has imposed a tight timetable for council housing finance reform, any further imposition on councils would be unwelcome, to say the least.  Ironically, housing associations (presumably unaffected by the latest proposals) have themselves complained about the bureaucracy associated with EU procurement rules.

Either the government is being disingenuous about its real plans for public services, or it thinks it can achieve something that in practice looks impossible: cuddly privatisation. It seems to think that this will both drive down costs and make services more user-friendly, and as usual it has a handful of examples (the one in the memo is apparently a mutual called the Sandwell Community Caring Trust) that seem to be prove its point. But of course they don’t: all they prove is that a particular solution works in one place, not that the same approach can be used for services as diverse as supplying driving licences or collecting taxes (two of the examples given in the leaked memo).

Once again we seem to be on the brink of public service ‘reform’ whose end result is likely to be full privatisation.

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