November 6, 2019
Public spending for public good
The conviction with which Margaret Thatcher pursued her programme of privatisation was so compelling that it remains the received wisdom for many when it comes to running public services. Despite plenty of evidence to the contrary, there is an unbending faith that the free market will necessarily produce the most efficient, best value solution. But gradually, ever so slowly, new ideas are beginning to infiltrate the public sector’s decision-making in relation to how they spend the public pound and how that impacts on our local economies. If you want to learn more, come along to this.
Ten Reasons Why Privatisation is Bad for You
- Your services get worse
Public services involve caring for people. But private companies make a profit from public services by cutting corners or underinvesting. There is a conflict between making a profit and taking the time to care. For example, private care workers often can’t stop for a cup of tea with an older, vulnerable person they are caring for – because they’re only allowed 15 minutes for their visits.
- Privatisation costs you more
You pay more, both as a taxpayer and directly when they privatise public services. Have you noticed how your water bills, energy bills, train and bus fares keep on rising in real terms? And did you know that the US privatised health system costs double what we pay for ours? In a privatised service, profits must be paid to shareholders, not reinvested in better services. Interest rates are higher for private companies than they are for government. Plus, there are the extra costs of creating and regulating an artificial market.
- You can’t hold private companies accountable
If a private company runs a service, they are not democratically accountable to you. You don’t have a voice. Contracts to deliver public services are agreed between private companies and government behind closed doors. There is very little transparency, public accountability or scrutiny. The companies are not subject to Freedom of Information requests because of ‘commercial confidentiality’. When private companies fail to deliver, the public has no powers to intervene and government (local and national) doesn’t always have the time or expertise to force them to keep their promises.
- Privatisation creates a divided society
Public services are important to meet everyone’s basic needs, so we can all be part of the community. Schools and hospitals are not optional extras. We all need and rely on public services – they are universal. That means they need to be accessible and high quality for everyone. Privatisation often goes hand in hand with encouraging richer people to pay more and opt out of the services we all use. This leads to division, making it harder to provide excellent public services for everyone.
- You don’t get a democratic voice. When we go to the shops, we all make our own individual decisions about what we want. Public services are different – they give us a chance to come together to decide what kind of society we want to live in. For example, we might want clean, green energy for our future – but the private companies control the energy ‘market’ and often invest in dirty energy, without giving us a say.
- Public services are natural monopolies
Privatisation was introduced because of a belief in free markets and consumer choice. But public services are often what economists call ‘natural monopolies’. For example, when you take the train, you don’t really have a choice about which one to use. There’s no real competition. Facebook is another, relatively new ‘natural monopoly’. If all your friends are using it, it’s difficult for you not to. Private monopolies often become the worst of all worlds. You don’t have consumer power because you can’t go elsewhere. But you don’t have power as a citizen to make the service better through democratic accountability.
- Private companies cherry pick services
Private companies cherry pick the profitable bits of a service so they can make as much money as possible. For example, bus companies will only run services in busy areas, so rural communities lose out unless government steps in with a subsidy. It’s more efficient to run public services in public ownership so that profits can be reinvested across the whole network as needed. In probation services, private companies are paid to manage medium to low risk offenders, while the state continues to take responsibility for high risk offenders.
- Privatisation means fragmentation
When lots of private companies are involved in delivering a public service, this can create a complicated, fragmented system where it’s not always clear who’s doing what. For example, our railway. Private companies don’t necessarily have much incentive to work together and share information. This makes it difficult to provide an integrated service. Privatisation is fragmenting our NHS and the cost of the internal market is at least £4.5 billion a year.
- Privatisation means less flexibility
Councils and government departments are responsible for meeting the needs of the public – but privatisation means less flexibility for changing circumstances. If an outsourcing contract with a private company needs changing, government must pay more to make changes or improvements, add in extras or to opt out. And selling off public assets (like student loans) or public land (like school playing fields) means we the public have fewer options and resources for delivering the services we’ll need in the future.
- Privatisation is risky
Look what happened when Carillion failed. If private companies are running our public services and are too big to fail, the public has to pick up the pieces when things go wrong.