By John Harris (July 10 2008)
What exactly is the point of John Hutton? Every week seems to bring news of Labour's dread political predicament: the loss of support not just in the supposedly affluent marginals, but also at the heart of Labour's core constituency, as demonstrated by government shivers about the looming Glasgow East byelection.
For the business secretary, however, this is evidently no time to be moving away from the old Blairite behavioural tic of defining yourself against your own side. Having already counselled his party against any move on the mega-paid new olympians who are making Gordon Brown's call for pay restraint all the more difficult ("Rather than questioning whether high salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country," he said back in March), today found him enthusiastically launching a report from his department's public services industry review, a funny old document that amounts to a brazen call for New Labour's privatisation drive to be accelerated.
Despite protests from such union leaders as Mark Serwotka, the old "ideological battle" over the relentless extension of the private sector is, Hutton claims, long over. In the report, the multitude of "service companies" who have sprung up to make the most of 30-ish years of outsourcing are grouped into a "public services industry" that now accounts for 6% of GDP, and is in the midst of what Hutton sees as an admirable export drive, advising foreign governments about how to break up and sell off their public services, and then reaping the benefits. In the UK, says the report, handing these firms all manner of contracts has led to cost savings of between 10% and 30%. It acknowledges that evidence on what outsourcing does to the actual quality of services is "weaker and more limited" than the financial stuff, but that doesn't get in the way of the essential point: that "Government authorities need to reinforce and demonstrate their long-term commitment to open up public service markets" – whatever "public service markets" actually are.
On the ground, of course, it does not take much effort to discover how those miraculous savings come about, and what such cost-slashing causes. One thinks, for example, of the burgeoning private prison industry, in which average pay rates are a third lower than in the public sector, and staff turnover runs 10 times as high. In my home turf of Cheshire, there was a flurry of outrage a few years back about the grim reality of one of privatisation's most mind-boggling aspects: its extension into police custody, and the replacement of scores of local holding cells with outsourced "custody suites", often several miles from where people might be arrested.
You might also cite the experience of hospital caterers like the woman I once met at private finance initiative hospital in Carlisle, told by her new private sector employers that preparing food in the traditional way was now prohibitively expensive, and it was time for the staff to get with the "cook-chill" method: that reassuring cheap culinary technique whereby hospital patients are now served up a grim version of airplane food.
Under duress, the government has occasionally - and belatedly - tried to smooth over the worst effects of its privatising zeal, which has often only served to point up the near-lunacy of what's been done: in 2005, for example, the Department of Health finally made moves to ensure that outsourced hospital staff would be employed on the same wages as their NHS counterparts, which involved local health trusts paying subsidies of £75m a year to the private companies who had taken over so-called "ancillary" services. Even with that wheeze, however, the essential problems remained. The best example, as demonstrated by loud noises from the Royal College of Nursing, is that of hospital cleaning, and a story that comes up time and again: that when you outsource, you fragment the workforce, standards tend to drop, and the wards get dirty and diseased.
Against an unbeatable combination of New Labour zeal and corporate lobbying, unfortunately, all that counts for precious little, and we continue our passage into a grim future - in which schools, hospitals and jobcentres are adorned with the flash logos of the aforementioned service companies (Serco, Capita, Sodexho, Interserve), accountability counts for very little at all, and the public service ethos is superseded by a dried-up combination of output-specified contracts and the profit motive.
Thinking about all this, my mind goes back to a trip I made in 2006 to the Adam Smith Institute (ASI), the free-market think tank where the ongoing privatisation drive of the last 30 years partly originated ("We propose things which people regard as being on the edge of lunacy", its president, Madsen Pirie, once boasted. "The next thing you know, they're on the edge of policy."). While I was there, I spent a couple of hours talking to Dr Eamonn Butler, ASI's co-founder and director, who exhibited the unflappable confidence of a man who reckoned that history was on his side.
"For many years," he told me, "people have said to us, 'Well, where does it all end? Would you privatise the army, or the police?' And I say this. Mrs Thatcher did the easy ones first. It took her a long time to get on to health and education, which were difficult. There's no such thing as an easy, simple privatisation. Every one has been a very complicated political process. And if you look at things like the police, Post Office, health, education, welfare services, all of those things – in theory, all of them could be outsourced. But how should it actually be delivered?"
His conclusion crisply proved what John Hutton will never tell us: that all this has less to do with anything "evidenced based", than the most hare-brained kind of dogma. "All you can do is try," he said, "and see what happens."
Pulished in guardian.co.uk here