Since the days of the Thatcher government, public sector workers have had to live with the repeatedly stated ‘fact’ that the private sector is supposed to be better, more efficient and cheaper at providing services than the public one. This was the stated logic behind decades of privatisation and outsourcing.

This belief has continued largely unchallenged by successive governments even though most people who use or work in these services know that this is simply not true. The pathetic performance of the rail companies is one very glaring example as travellers, since privatisation of the network, have seen fares shoot up, services decline and the endless engineering works  cause havoc, not least at weekends and public holidays. This has only been matched by the soaring profits being recorded by these firms.

However, official confirmation that the private sector is neither cheaper nor more effective than the public sector has come from an unlikely source. An analysis published in the Financial Times of October 19th is headed ‘Private sector not yet cheaper or better.’

Performance

Noting that a third of all public services are now provided by private firms, the FT has analysed the performance and costings of these firms and confirmed what most public sector workers already know, that any savings incurred were down to other factors rather than the abilities of the companies themselves. According to DeAnne Julius in a recent public services review, benefits come “from competition and the contractual process itself, rather than any innate efficiency advantage of the private sector.” In many cases these savings would have occurred whether the service provider was private or public.

The FT looked closely at the performances and costs of those private sector health providers who do work for the NHS and noted the following. In relation to the Independent Sector Treatment Centres (ISTCs) “…they were, according to government figures, paid on average 11 per cent more than the NHS price to recognise their start-up costs. This was a bargain in comparison to private hospitals, which had secured between 30 per cent and 50 per cent above the tariff price in return for providing NHS operations.’ The FT also notes the well-known fact that the private sector tends to go for the cheaper operations rather than those involving long term less profitable healthcare.

The FT then goes on to look at firms working in the jobs market, noting that the Pathways to Work project, run privately, ‘performed worse than Jobcentre Plus.’  For good measure, the performance of private prisons is described as ‘bouncing around’ compared to the rest of the prison service.

Cut, Cut, Cut

The reality is that the private sector has built their “savings” argument around one method – cutting staff numbers, cutting wages and cutting corners. They are not interested in providing a service to the public but getting the public to service them with increased profits. In some cases this had lead to disasters such as the PFI fiasco in the London Underground where the firms contracted to do the engineering and repair work have totally failed. This PFI partnership, pushed through (it should be noted) by the last Labour government under pressure from John Prescott, has ended up wasting millions of pounds of public money and left the underground network in a mess with constant weekend closures of lines and overrunning engineering works. 

As local authorities look to trim costs to make ends meet by further outsourcing  services, resulting in huge job losses, it should be made clear that council tax payers will be getting less for their money with private firms pocketing the difference at the expense of the workers and the people they are supposed to be helping. The so-called ‘EasyCouncil’ option being touted by certain Tory authorities is nothing more than an attempt to bring in minimum services for maximum cost.

This is a scam that has gone on long enough. All privatisations and outsoucings must be opposed and Labour should commit itself to calling for what it should have done when it was in office, the renationalisation of all the public utilities without compensation to the vultures who have made billions at our expense.