Tories and the public sector ‘blowback’

By Carl Rowlands

We now know that David Cameron wants a state which consists of little more than security services and judiciary. Conservative ideas of ‘localism’ amount to little more than a superficial gloss on a massively centralised funding mechanism.

The Conservatives seem to envisage that this assault on what is left of the public sector and local autonomy will lead to greater efficiency. They seem to think that the closest parallel is that of the electricity and gas privatisations of the 1980s, with consumers and taxpayers perceiving a short-term gain from oligopoly competition and tax reductions, whilst private sector shareholders can potentially make a substantial profit. Hence, the Social Bank is to provide a source of profitable investment for those who trust in the ability of taxpayers’ money to yield the basis of steady and reliable returns.

However, the closest parallel may be that of the railway network, and the privatisations of the early 1990s. After all, as a subsidised service, any market conditions on the railways are totally artificial, with companies often leasing themselves their own trains. Basically, these companies are being paid to operate a service which will always be loss-making.

The public sector franchise system which is set to emerge, will no doubt provide more scope for the big operators who currently specialise in running public sector infrastructure. These already account for billions of pounds in public funding. It will create an environment ripe in opportunities for corruption and nepotism. In some ways it will reduce the possibilities for local people to help determine the focus of services, lost amongst the consultants and accountants who are set to frame the basis for the new contracts.

Yet the lessons of rail privatisation indicate that problems may go further than this. There may be dangerous shortcuts. Inspection regimes, already patchy, might be further trampled upon in the name of cutting red tape. Private operators of public services will try to cut the number of employees drastically, wherever they think it possible. They will re-organise endlessly. And they may also hit the same brick wall that the train company managers also experienced.

They could find that sacking qualified care workers and social workers increases the value of these workers, in the same way that train companies that sacked 10% of train drivers found that the remaining train drivers suddenly had massive bargaining power. In the years following 1993, train drivers were able to demand massive pay rises, union membership became more militant and bargaining took place from a position of strength. This money, although paid from the private train companies, actually came from the taxpayer.

If the Conservative plans go through, some of these services will be privatised in a straightforward way, and employees will rely on the unions to represent their interests. Any savings will be hard-fought. Re-organisations will be disputed and, where the staff is highly skilled, there will be times when managers are forced to retreat, to preserve the core ability to deliver a service.

However, other services will be pushed into the ‘third sector’ – and this is, in some ways, more difficult. Once again, high levels of union membership will help to protect the workers and reduce the chances of self-exploitation, as staff turnover gradually leads to an inexorable decline in the numbers of staff. There is likely to be a constant push to deliver more for less money.

In this way, the government hopes to undermine the unions’ power, in effect making public sector workers the architects of their own decline. I suspect this would be an intermediate phase, and the private sector will be given free pick of any struggling ‘third sector’ groups.

It remains to be seen whether the unions and the Labour Party can prevent these changes from occurring. If they go ahead, then it falls upon the NGOs, many of whom have been forced into Big Society initiatives, to blow the whistle on the failings of the process. It will fall to these unions, NGOs and the voluntary sector to try to develop solidarity between the council workers of different grades, whereby workers in Winchester can identify with those in Newcastle. All this, in an environment designed to turn worker against worker. Ultimately, council workers may need to revive the core concept of ultra-unionism, in the form of workers’ guilds, in order to frustrate those who plan to tear public services to shreds.