Privatisation? Is This Really The Best Way?

Dave (can I call you Dave?) we’ve heard a lot about privatisation recently.  Ever since the ConDems came into power in fact, it seems like official ConDem Policy is to privatise everything in sight before the next General Election in 2015.  Or did you think we wouldn’t make the connection?

We have heard lots of rhetoric and spin  about how good privatisation will be for the country. Well I thought that it was about time someone told the country a few facts about the other side of privatisation.

Let me begin by stating, for the record, that I am not opposed to efficiency savings.  What we do need to do, is to realise that beyond a certain point no more savings/cuts are possible without losing efficiency, bite the bullet and move on. If Council Tax, Income Tax or National Insurance contributions have to increase slightly to pay for this, maybe, just maybe, the Great British Public are willing to pay that to maintain their public services.  Have you asked them Dave?

Privatisation is by no means guaranteed as a universal panacea, neither is it a solely UK phenomenon.  If you Google privatisation (can you Google Dave?  Or do you have someone do it for you?) you will find numerous references to it across the whole world.  The same Google results will also demonstrate that it is globally unpopular and that there are numerous examples of privatisation failing globally.

I’ll begin with Southwest One, a collaboration in south west England between IBM Somerset and Taunton Deane councils and Avon and Somerset police.  According the leader of the council this is failing on several fronts. Ken Maddock, has said that Southwest One is failing to deliver, that its accounts show “staggering losses” of £31.5m and “failures to hit modest savings targets”.  Southwest One was set up in 2007 as a joint venture between IBM, Somerset county council, Taunton Deane borough council and Avon and Somerset police to modernise the public sector bodies’ business processes.  Maddock told a council meeting: “It is failing to deliver promised savings; failing to cope with a changing financial landscape; failing to be flexible enough to adapt in challenging times and provide the best possible value for money.”

The Southwest One “continuing failure” was not about staff, Maddock said, but “about the contract, the complications, the failed technology, the missed opportunities, the lack of promised savings”.  The joint venture received a £10m loan from IBM, its most recent accounts show.

A Somerset County Council Review in 2010 recommended a renegotiation of the contract.  The most recent update on this story is from only last week that “IBM is in an “escalating” dispute with Somerset County Council (SCC) over the Southwest One venture” and appears to be heading towards the Courts.

UNISON has blamed “a toxic combination of funding cuts and privatisation” for driving down standards in homecare, leaving elderly people without the help and support they need.

Heather Wakefield, UNISON Head of Local Government said: ”Home care services should provide elderly people with the help and support they need to carry on living with dignity in their own homes.” This is the preferred option for many people and cheaper than residential care.

“The Coalition government has inflicted drastic cuts on local authorities with the result that elderly people are suffering”.

“Cash strapped councils are selling off 15 minute care slots to the lowest bidder. Is it any wonder that care workers tell us they don’t have the time they need to care for elderly people properly?”

Which? executive director Richard Lloyd says: ‘The Government can no longer claim to be shocked as report after report highlights the pitiful state of care for older people.

In March 2012 the Guardian published an article entitled Rail privatisation has failed – and the NHS is hurtling down the same track.  With the NHS “reforms” in full swing, the failures of rail privatisation provide important lessons. Britain has the most expensive train fares in the world. On the back of the McNulty review, the government is now set to push them even higher!

How does a service intended to benefit millions find itself impoverishing them, and why is our political class determined to let it continue?…………………Rail privatisation has failed in the most unequivocal terms. The public can see it, the unions can see it and the taxpayers can see it. The only people who can’t are the firms profiting from the mess and their supporters in parliament. Our national health service is now hurtling down the same broken track.

Just across the Channel we have this European Union uses eurocrisis as alibi to push privatisation of water services.  At the end of this article is a paragraph entitled “Privatisation of public services is a bad idea”  containing the following

“Research by the World Bank and the IMF has found that there are no significant differences in terms of the efficiency of public or private utilities. It has been public investment that built the water and sewerage companies which in turn have delivered public health benefits. Compared to publicly operated companies, privatised water companies charge more for their services.

What is more, the private sector companies active in Europe’s water services have a history of corruption and cartels. For workers, privatisation has led to outsourcing, lower pay and worse labour conditions. While a strong argument against privatisation is that all being equal, the private sector is more expensive because it needs to top up prices with a profit margin, I think most people instinctively feel that public services should not be run for the benefit of the very few.”

Further afield we get this;

FAISALABAD: Privatisation of public-sector organisation in the country has served only vested interests at the cost of public welfare, Economist Khawaja Sarmad said on Tuesday. [this item dated 25/7/2012]

He was delivering a lecture on Privatisation; Myths and Realities at the University of Agriculture Faisalabad.

He said privatisation of profit-making enterprises had been detrimental to the country’s economy.

In September we had a UNISON Press release claiming that a Confederation of British Industry (CBI) report, claiming that billions could be saved by privatising public services, is ‘fundamentally flawed’.   The CBI report is based on an assumption that savings of 11% can be made through outsourcing or privatisation – a figure that has been ‘plucked out of the air’ by the CBI. This assumption is then extrapolated and applied to more than £200bn of public spending.

The 11% savings calculation does not take into account the often huge knock-on costs associated with privatisation including procurement, tendering and contract management. It also omits to mention the huge cost to the taxpayer and local people when the private sector fails, or that some public bodies have brought public services back in-house after contracts have failed.

We also have an example from Dr Eoin Clarke’s blog, The Green Benches of an NHS Privatisation scheme failing.  “On the 1 August, Circle Health celebrated the 6 month anniversary of its take over of the first NHS Hospital with a sequenced blitz of good news stories. The BBC swallowed them up, unquestioningly, and reurgitated Circle press releases like they were Papal decrees. The Daily Telegraph did likewise. For a flavour of what they reported, you can see (here, here, and here). They pieces can be best summed up as follows “We are performing so amazing at Hinchingbrooke that we deserve to be given more NHS hospitals.”

Today, less than 3 months on, that argument is dead. Circle Health have failed to deliver at Hinchingbrooke Hospital”

The most recent example of a privatisation project failing spectacularly and tragically is the Winterbourne View Care Home scandal.  The families of the victims of the Winterbourne View care home scandal have demanded the Government ensures that nothing like the abuse exposed by BBC’s Panorama programme can happen again.

They said they hoped that ministers would “seize this unique opportunity with both hands” to make changes.

PCS Union have issued an item entitled The Truth About Privatisation.  Amongst other things it outlines ConDem plans to privatise things I haven’t even heard of!

“Along with massive cuts in public spending that will hit jobs, pay and pensions, the coalition government – like the previous one – is committed to further privatisation of our public services.

Under the 2009 operational efficiency programme, some of the areas either proposed for privatisation, or prepared for eventual privatisation through increased marketisation, are the Royal Mint, the Land Registry, the Met Office, Ordnance Survey, the Defence Vetting Agency and the UK Hydrographic Office.”

In March this year the Guardian published

A short history of privatisation in the UK: 1979-2012

From the first experiments with British Aerospace through British Telecom, water and electricity to the NHS and Royal Mail

This is quite an interesting article and includes a few things that I had frankly forgotten, but under the tag of Thatcherism Mark II is says this

“The Tories took office without a mandate, but with no lack of confidence. Their agenda, which had emerged since 2008, was to represent the crisis of global capitalism as a crisis of public sector spending. Having already privatised the Tote and announced the sell-off of Northern Rock, with other nationalised banks to follow, they have indicated that Royal Mail will be sold off, along with probation services, roads, large sectors of education and the NHS. Even sections of the police, traditionally an ally of the right, will be privatised. Outsourcing will be extended into every possible area.”

These are but a few examples of failure and warnings.

Around the world you will find instances such as these

The public failure of privatisation

‘Manila water system shows failure of privatisation’

Katrina exposes the catastrophic failure of privatisation

Failure of water privatisation in Tanzania

European Contract and Privatisation Failures

And These are just a few examples that I believe highlight this issue.Please feel free to look for your own examples and add them to the comments section. If anyone is still unclear of my position I feel that it is clear that privatisation is, at best, a risky option, and at worst reckless or potentially criminal.

When the entire world are suffering similar problems why aren’t you listening Dave?


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