In the UK a quiet dispute rages just below the surface within the Labour party, and it reaches right up to the Cabinet. How much of the public service should be up to the private sector? It has become the totemic question that runs to the heart of which way Labour should go next.
At one extreme, everything should be open to the possibility of privatisation. They say that Labour’s best riposte to the Conservatives, who would shrink the state and cut services, is to turn the state into more of an enabling funder and less of a provider.
So Peter Mandelson, Secretary of State for Business, Innovation and Skills, has championed the selling off of one third of the Royal Mail, while James Purnell, ex-Secretary of State for Work and Pensions, outsourced the latest tranche of welfare to work projects. They see these moves as an ideological gesture, to tell the private sector that Labour is business-friendly, reform-minded and not in hock to the unions.
At the other extreme are those who regard any letting go of a state function as an anathema. Together with public sector unions, they will fight tooth and claw to see that the state provides all services itself through direct employment.
It’s not just the self-interest of the unions, but a deeply held ideology that the state delivers services better, whereas the private sector skims profits off the top that could have been spent on the services.
Needless to say, the two extremes infuriate one another, and each regards the other as the prime cause of Labour’s current travails. The Mandelson/Purnell wing wags a finger at these ‘Old Labourites’ as the death knell of modernity and electability. The Old Labour faction prods a finger back at them for destroying the purpose and meaning of what it is to be Labour, leaving voters unsure as to the difference between the parties. If, as expected, Labour loses the next election, this debate will break surface with ferocity.
But somewhere between these extremes stand those who are more pragmatic. The big questions that will be wrangled between Labour and Conservatives at the next general election are about what the state should provide, how big it should be, how much it should spend and how much tax should pay for it. After that comes the question of how to actually provide the best, most cost-effective services.
There is no doubt that putting some services out to tender has vastly improved certain standards over the years, broken the power of vested interests and brought in competition that has sharpened up results. Just look at how hospital consultants’ waiting lists plummeted when a few Independent Treatment Centres were set up nearby. Suddenly, long waiting lists for hip and cataract operations fell because patients had a choice. The wholescale mass privatisation of a service is rarely needed, but a little gingering up round the edges has an electrifying effect on sleepy outfits. Often, private provision makes sense where small units need to buy in some expertise or back-office work they can’t develop themselves.
Some things have always been private – GPs, for example, the most-loved part of the National Health Service. Some things should never be private – for example, our police or our army – because this is part of the contract between citizen and government. There is a pride in some national services that goes beyond market.
However, in many services a mix is healthy: if the NSPCC or Save the Children were to run some Children’s Centres, they could become beacons for innovation. On the other hand, private nurseries are a bad idea, as in all but the richest areas they make too little profit to offer as good an education as the state’s own best training nurseries. So the answer is flexibility and practicality; see what works best and keep ideology at bay as far as possible.