How private is public?

By Stephen Gummer

The last week’s wholly justified anger at Conservatives such as Dan Hannan, who regularly insult hundreds of thousands of Britain’s public sector workers by attacking institutions such as the NHS, has brought into perspective for many just how vital the public sector is. However the whole affair has left me wondering how many of those thousands of people who wrote into Twitter know just how much the private sector has already infiltrated our core public sector institutions.

In the health sector, the example of Norwich and Norfolk Hospital shows how the Private Sector used to exploit the building of hospitals through refinancing to make outrageous profits. This hospital was built by private companies on a huge contract from the government. Money was borrowed privately, meaning a higher interest rate was paid for the job than necessary; as the government can get preferential borrowing rates as compared to the private sector. When the building stage was completed the private company then refinanced the deal, whereby it borrowed from a different provider to pay off its original loan, this time at a lower rate of interest as the risk of the project was then lower as the building work was completed. The money left over became profit, which at the time went overwhelmingly to the private service provider Octagon.

While it may be bad news that private firms are profiting outrageously from public sector provision, private companies are also endangering the quality of public sector service provision. Many of the cleaning contracts in our hospitals are contracted out to private firms, who have an incentive to do only a perfunctory job. They must meet minimum standards to get paid but after this there is little incentive to do anything further. This is doubtless a contributing factor to the MRSA epidemic that ran rampant through British hospitals in the UK.

However PFI hospitals are not the only area where private influences are compromising essential public services. In the penal sector privatisation is rampant. Private companies run the four Secure Training Centres (STCs), which house around 300 young offenders. The rate at which restraint is used on children in STCs is absolutely staggering, from November 2005 to October 2006 total number of restraint incidents was 3,036 restraints, of which 1,245 were on girls. These children are often incredibly vulnerable and treated terribly by a private company who knows it is more cost effective to simply restrain children rather than provide them with the adequate care they need.

Two young people have died in STCs since they came into existence including Gareth Myatt, the boy who died under restraint in Rainsbrook STC.

The circumstances of Gareth’s death are mystifying. Staff at the secure training centre reportedly operated in a “macho culture” where officers had nicknames such as “crusher”, “clubber” and “mauler”, an inquest found. The circumstances of the 17 year-olds death are the epitome of poor care in action and once again it is society’s most vulnerable that are left to suffer the neglect of privatisation.

According to PFI expert, Stephen Nathan, ‘two private prisons, Blakenhurst and Buckley Hall, were taken back into the public sector between 2000 and 2001, after competitive bids. In 2002 Ashfield [another private prison] had a period of public sector management after it was found to be unsafe for prisoners and staff alike.’

The Government has recently announced that Serco has won a contract to run two new prison contracts both Belmarsh and Maghull. I don’t think anyone other than Serco themselves should be comforted by this news.

This week’s show of strength for the public sector in the health service has been vital but it has left me wondering just how much operational control the public sector has left over our public sector operations. The sad truth is that profit has been proven time and time again to be a poor motivator when it comes to providing public sector care. It will not safeguard vulnerable people in hospitals who need optimal care and it will not solve the problem of Britain’s growing prison population. Private companies are incentivised to make money, they don’t get paid per patient they cure nor do they get paid per how many offenders they reintegrate back into society.

I agree with the consensus that has expressed itself strongly this week. Britain deserves better than private, we deserve a public sector and we all believe that this is the fairest and best way to provide essential aspects of a civilised society. However the biggest threat to our public services is not found in the Tory Party Manifesto and it’s certainly not happening on Dan Hanan’s blog, if anything these debates are distracting us from the real threat. The biggest threats arrive subtly and PFI and private contractualisation of public services is already well under way. If only more people knew about it maybe Twitter might be made to crash once more.