The private sector is not evil, so let’s embrace it

By Luke Bozier / @LukeBozier

Can you believe there are some people in the Labour Party (and on the more fuzzy, non-partisan ‘left’) who still believe that the private sector is intrinsically evil and out to get us? No me neither, but it’s true – and they are shrill in response to David Cameron’s announcement that he wants to open up most of the public sector’s work for tender by private companies. I’m one of the few in the Labour Party who actually welcomes this move, and I hope it smashes the state monopoly which drives standards down and reduces accountability to the public.

Let’s get something clear firstly: the NHS is not going to be privatised. The government is not implementing a Swiss or American style private healthcare system paid for by private insurance. The government is not privatising the entire school system so that parents will have to pay expensive fees to send their children school. The transaction for the citizen (you & me) with a public service will be exactly the same; that is that we pay our taxes and we get free access to healthcare, education etc. at the point of use. The difference will be behind the scenes, where private companies will be commissioned by the state on our behalf to provide certain services for us.

I fail to see how this is a bad thing. I cannot understand the near-religious language that people on the left are using to defend the NHS. The NHS is a fantastic institution, the idea that the country will provide healthcare for every citizen regardless of his or her means is a noble one. That principle is not going away – the healthcare will still be free at the point of use and paid for out of general taxation. And anyway it’s deluded to think that the NHS is an area completely free of the private sector; the private sector builds the hospitals and surgeries, invents and creates the drugs, and manufactures the beds, bandages, scalpels, life-saving equipment and everything else the NHS uses on our behalf.

Our National Health Service does not provide the same quality of healthcare that countries like Canada, France and the Netherlands enjoy. We simply do not spend enough money as a country to get the absolute best level of healthcare – the percentage of GDP spent on healthcare is one of the lowest compared to similar size economics (see this chart). Standards in the NHS need to be higher and one way of raising the level of investment is by bringing private companies into the system. I’d like to see us spending 14%+ of GDP on healthcare – then the NHS really would be the envy of the world – but until now we’ve only ever been able to spend around 9% of GDP for various reasons, and this government certainly isn’t going to be raising that out of the public purse any time soon.

Education is another area of public life which the private sector might be able to contribute something to. In London at least, there just aren’t enough schools and there are many schools in this city and up and down the country which aren’t providing a good enough education for our children. We look on with envy at private schools because of the high standards of education they provide but get on our high horses at the thought of bringing the private sector into public education in order to try to raise standards for all. What matters most is the quality of the education our children are receiving, not who is providing it. As long as education is still available for free out of taxation, and the standards of provision are going up, what is the harm in letting private companies do some of the work?

What happens when you dismantle state monopolies is good: private companies, yes in the selfish hope of earning a profit (and in the process creating jobs) compete with each other to provide the best service. That competition leads to innovation, and pushes standards of service up. This has to be done within a regulatory framework to guarantee minimum levels of quality in service provision, but market forces unleash human creativity, drive up services and drive costs down. Don’t we all want public services that are the best in the world, but also economical and affordable? I sure do and don’t care if those services are being provided by a limited company or an NHS primary trust or local council.

The other force that comes into existence when competition is introduced is accountability. If you think that simply because the Secretaries of State for Health & Education are elected officials, that that brings accountability into our public services, you are sorely mistaken. Large public services like health and education have many vested interests who like to protect their own status quos. It is infamously difficult to reform the NHS, as New Labour found out since 1997. If on the other hand, you have a real choice between two competing doctors’ surgeries who are concerned with their financial performance, and one of those surgeries is markedly better than the other, you will vote with your wallet. That market accountability is what drives services up and gives us customers a bigger say in how services are provided than we currently have over the behemoth monopoly the NHS is.

The private sector is all around us, we live in a capitalist world, and that capitalism unleashes human creativity and has done more than any other political system in history to lift people out of poverty. There is an irrational fear that bringing the private sector into public services is going to create some sort of wild west, where companies gamble with our lives and futures on a daily basis. This is absolute nonsense. The private sector already contributes massively to the good of public health – all of the drugs we use come from private companies who have been forced to innovate in response to market forces. That innovation leads to amazing technology being invented which helps beat cancer and prolong our lives.

If we’re happy to trust our needs for medicine, contraception, aviation, home-building, food production, cars and motorbikes, defence and other areas which involve some element of life and/or death, what makes it so hard to think that a doctor employed by a private company could give you that injection or carry out that surgical procedure, or that a teacher employed be a private company could teach your child every day. So long as the public contract is there – that from our taxes we get good quality and free healthcare, education, local government etc., what is the problem exactly?

I look forward to seeing what happens if these reforms go through. Tony Blair should have been as bold as this when trying to reform public services between 1997-2007. If there’s any point of being in politics it’s to push forward the reformist march, to improve the country as much as you can in the process, and to bring Britain firmly into the 21st century. We are proud of our public services, but they could be and should be a lot better considering they affect us so deeply. The state should continue to provide us with education and healthcare, but the state should be the public commissioner not necessarily the public provider of those services. The private sector is not evil, and those market forces could vastly improve our services without the taxpayer spending any extra money, as they have done for decades in other important areas of our lives.

Luke Bozier also blogs here.