Rehabilitating The Public Sector

Simon Zagorski-Thomas

June 28, 2011

The coalition government in the UK keep repeating the mantra that we need to replace public sector jobs with private sector ones. This seems to ignore quite an important aspect of the issue: the question of what the people in these jobs actually do. The idea that we can remove public sector jobs without having any effect on the services provided is, of course, a nonsense that every opposition party and incoming government seeks to perpetuate. The quagmire that the government have slithered into over, for example, the NHS, the police, sentencing and the prison system, the universities and defence procurement illustrate this problem: efficiency savings are seldom a realistic option. What then about the option of privatisation?

The idea is that we get the same products or services but more cheaply because the private sector is more efficient than the public sector. Has that ever been the case? Did we get the same service when the railway system was privatised? Has our rail network improved in relation to, say, Deutsche Bahn and SNCF since it has been privatised? Do we get better value for money?

It seems that the first thing private companies seek to do when they take over public sector contracts is to change the nature of the product – to find out which aspects of the service don’t make money and get rid of them or replace them with something cheaper. We really need to be analysing the costs and benefits achieved in some of these sectors. Perhaps the only thing that changes is that any money that was being ‘wasted’ on lower paid staff through less efficient organisational structures is now reallocated to shareholders. Now you might argue that this is a good thing because shareholders are likely to reinvest such money (not necessarily in the UK of course, as off-shore investors like Peter Green illustrate). You might equally argue that low paid staff spend a larger proportion of their wages in the local economy and therefore stimulate demand. I don’t think there’s a purely economic argument here – it’s an ideological one and one which the Labour party has all but abandoned.

Is it worth paying extra for the improved infrastructure that a centrally run system provides in some instances? At the moment, the consensus seems to be that state run education is a good thing – so where is the serious research and debate about health, higher education, prisons, benefits, transport, police and security? I’ve recently seen some interesting arguments about the quality and value for money that the UK higher education system provides – Howard Hotson’s Don’t Look To The Ivy League in the London Review of Books – and Simon Szreter’s For The Many, Not The Few in the Times Higher Education. It’s sad that the Labour Party doesn’t have the self confidence to question the validity of free market capitalism and to seek to establish an ideology that rejects the notion that money is the only measure of worth. Even within the confines of capitalism we all make judgements about value that go beyond cheapness. When I buy a consumer durable I balance the features provided against the cost and realise that on the one hand, buying the cheapest will usually be a false economy and on the other, that I am sometimes paying extra for a brand name.

To bring this back to the public sector, surely the question shouldn’t be about what provides more value for money but about balancing the cost of the best system in relation to the most economic system and then making a value judgement about what we want as a society. Remember, private sector jobs are often much less valuable, not to mention essential, to society than public sector ones. We should be demanding that our government collects sufficient tax revenue to keep us in the style to which we’ve become accustomed. I want publicly funded and centrally planned schools, transport, energy provision, universities, libraries, police etc and I want my government to be working out how it can make the public sector run better rather than being obsessed with making it cheaper. Producing more fast food, television channels, plastic toys, computer games, garden centres, designer clothes, financial services and wittily emblazoned T Shirts in an enhanced private sector isn’t going to make our society a better place to live. That would stem from better schools, hospitals, transport, parks, housing, justice, equity, universities and democratic structures and the private sector is useless at providing them. The question of what type of economic activity we want shouldn’t be stuck in the economic ideology of public versus private, it should also be about valuable versus worthless, life enhancing versus stress inducing, thought provoking versus mind numbing, socially responsible and forward looking versus blinkered and selfish.