Don Brind on the politics of the post-Carrilion world
When Jon Trickett was leader of the Leeds City Council in the early 90s he had a regular Friday date with finance department officials. He got them to bring along every bill the council had paid that week. He then pulled out at random a number of bills to prompt a discussion on whether the ratepayers had got value for money from suppliers.
“I hate waste” declares Trickett and his hands-on approach to public procurement was designed to inculcate a tight-fisted culture of amongst councillors and officials. He says they indentified lots of savings that were reinvested in council services.
He took that mindset to Westminster when he was elected at the Hemsworth by-election in 1996. And it informs his thinking now as the member of Team Corbyn tackling what he describes as the “rigged system” of outsourcing and privatisation.
He is leading the charge over the collapse of Carillion and the troubles at Capita but Trickett has been on the case for the best part of five years. Under Ed Miliband’s leadership he drew up radical plans to ensure that social as well as financial criteria were used in public procurement. The near £200 billion a year of national and local government spending on private contractors would be used to drive policies like the Living Wage, apprenticeships, equal pay and to fight tax fraud.
In the Commons the junior Cabinet Officer minister Oliver Dowden trotted out the standard defence for privatisation and outsourcing. These companies “have a specialty in delivering such services, so they can deliver them more efficiently. That means there are savings for the taxpayer.”
Not so, says Professor Colin Crouch of Warwick Business School. He argues firms win contracts in fields where they have no track record or professional knowledge because “their core business” is “knowing how to win government contracts: how to bid and how to develop contacts with officials and politicians.”
It is, of course, true that the private sector was widely used to deliver services by the last Labour government and Tories have a favourite quote from Gordon Brown that “It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model.”
The implication is that Labour is divided and that Trickett is speaking for only the Left of the party. The contributions in the Commons by John Spellar, Luciana Berger and Rachael Reeves,– none of them Corbynistas — put the lie to that.
Spellar said there there are “two separate but linked problems: the business model and the performance of these companies? Like Carillion, Capita seems to be part of the over-concentrated, over-leveraged, dividend-and-bonus-exploiting culture that relies on the state to bail out failure. Capita incompetence is only too clear from its lamentable performance on the recruitment contract for the armed services.”
Berger said Capita’s £1 billion contract for the delivery of NHS England’s primary care support services was beset with serious problems including “patient safety, GP workload and an effect on GP finance …The service falls far short of what is acceptable”.
Reeves, the chair of the Business, Energy and Industrial Strategy committee said there were striking similarities between Capita and Carillion – “both have debts of more than £1 billion and pensions deficits in the hundreds of millions; both paid out dividends of more than £1 billion in the past five years; both rely on the public purse for half of their contracts; both were audited by KPMG; and both grew through acquisition and not through organic growth.
“Jobs, pensions, small businesses and vital public services now depend on these outsourcing companies, but it is time we rethought the whole strategy for public service provision. How many more warning signs do the Government need?”
Although Trickett has been working in this area for several years Labour’s policies are still work in progress. The party holds an important conference in Glasgow this week on Alternative models of ownership . A background paper for the conference says “The predominance of private property ownership has led to a lack of long-term investment and declining rates of productivity, undermined democracy, left regions of the country economically forgotten, and contributed to increasing levels inequality and financial insecurity. Alternative forms of ownership can fundamentally address these problems.”
Although old-style nationalisation will be part of the menu, as I have argued here previously it will be a relatively small part of Labour’s economic programme.
Under a Corbyn government the state will continue to be a purchase of goods and services on a massive scale. As the veteran Labour MP Barry Sheerman “there is nothing wrong with a public-private partnership: what is important is getting the contract and the relationship right. What went wrong in many PFIs was rotten contracts that still bedevil local hospitals and local schools.”
That’s the task facing John Trickett. I think he’s the right man for the job.