Monday, 4 August 2014

Privatisation: Labour as culpable as the Tories

I have a great respect both for the views and communication skills of the Cambridge economist Ha-Joon Chang.  However his claim in an article in last week's Guardian that "[p]rivatisation was halted under Labour"  is an over-simplification too far, and surely he must know it.  

True Labour  sold only 51% of Air Traffic Control, but that means they privatised over half of it.  They also continued Norman Lamont's policy of Private Financial Initiatives, PFIs, using them to finance the London Underground, hospitals and schools.  Most of these contracts now turn out to be greatly  in the favour of the private contractors and we the public are lumbered with disproportionately expensive  repayments over as many as 30 years.  Large sections of the work of the NHS were also "outsourced" to the private sector buy New Labour, and they even tried, but failed, to flog off the Royal Mail

The truth is that the neo-liberal nonsense that the private sector exudes efficiency and the public sector is inevitably an ineffective bumbling bureaucracy has been accepted by the  political consensus for the last thirty years,  and is virtually unchallenged in the media.  

Ha-Joon Chang is right to attempt to expose the myth, and his article is very well worth reading, but  he is wrong to claim that Labour is or was untainted by it.

For those who would like further and better particulars on this issue the Public Services International Research Unit, based in the University of Greenwich's Business School, has extensive evidence of the relative efficiencies, however defined, of the public and private sectors in a host of countries, not just the UK.  Their findings indicate that the private sector is not invariably more effective than the public sector. They do not show the reverse either: it is "six of one and half a dozen of the other."

So it is a matter of political choice.  I think most of us would agree that highly personal services such as our prisons, probation service and the assessment of our fitness to work, should be carried out by public bodies and not farmed out for private profit.  And it is, or should be, plainly obvious that there is no point in subjecting an industry to the alleged rigours of market forces if it cannot be allowed to go bankrupt.

The rule of thumb should be: the market where possible, the "state" where necessary.  The "state", however, should not necessarily mean nationalisation.  There are ample variations possible for regional and local, co-operative and "not for profit,"  public provision.


  1. I'd rather not see market where possible, state where necessary, because market where possible includes having the market where it does not work best. It's "possible" to have markets running our health systems, as they do in America. But only if we're prepared to pay twice the price. I would rather have market where market works better, state where state works better.

  2. You're quite right: this too is a "over-simplification too far." There's a more sophisticated discussion on (sorry, there doesn't seem to be a facility for providing links on comments). The nub of the argument seems to be that markets always need strict regulation but, given that, sometimes the state does things better (health, eduction) and sometimes the markets (cars, washing machines).

    Thanks for your comment and glad you're reading Don Cupitt. Are you a member of "Sea of Faith"?