大象传媒

Selling public services

• Robert Peston
• 9 Jul 08, 10:14 PM

A government document has been leaked to me which may come to be seen as the last gasp of Blairite New Labour.

It has the unappetising title of "Understanding the Public Services Industry: How big, how good, where next?" and it was commissioned by John Hutton, the Secretary of State for Business - who once-upon-a-time was a Blairite ultra and is now, apparently, an enthusiastic Brownite.

The paper, written by - the head of and a former member of the - claims that this administration's controversial outsourcing and contracting-out of public services has created a world-leading industry for the UK with great export opportunities.

Julius is brainy. So her argument shouldn't be dismissed lightly. But trade unions on the left and Tories on the right are both likely to argue that her paper is consultant-backed spin, or a clever public-relations campaign deficient in real economic meat.

So what exactly is "public services industry"? Well, it's those private and "third sector" enterprises that provide services to the government or to the public on behalf of government. So it includes hospital cleaners, and suppliers of IT to Her Majesty's Revenue and Customs, and trainers of military pilots and managers of private-sector prisons, inter alia.

It's true they all have one big thing in common, which is that they are in receipt of public money. Which means that if they have a shared, valuable, highly developed skill it is in persuading ministers, or local councillors or civil servants to hand them our precious tax wonga.

But arguably what differentiates the hospital cleaner from the software engineer working in HMRC is more significant than the fact that they are both in receipt of public money. Call me unimaginative, but a provider of IT services seems to me to be an IT company, not a "public service" company, even if those IT services are bought by the NHS.

So the attempt by both Julius and Hutton to claim that the public services industry represents a huge homogenous industry seems a trifle ambitious. Others might say it's pretentious and absurd.

But for the record, Julius claims that the contribution to our economy made by the public services industry is 拢45bn, way greater than food, beverages and tobacco (拢23bn), communication (拢28bn), electricity, gas and water supply (拢32bn) and "hotels and restaurants" (拢36bn).

However all that really means is that the government has been handing vast and growing amounts of our tax revenues to private-sector providers of many and varied services.

In fact, the most interesting statistic in the report, perhaps, is that growth in revenues for these recipients of our tax dosh was an impressive 6.8% per year in real terms from 1995/6 to 2003/4. Interestingly, as we elided from the Blair era to the Brown months, the rate of growth slowed very significantly - to 2.9% per annum since 2004.

Which perhaps indicates that the current prime minister isn't quite as enthusiastic about outsourcing, contestability and all that as his predecessor.

To give Julius and Hutton their due, there is a plausible patriotic case for cheerleading on behalf of this slightly nebulous industry - which is that other countries seem to be following the UK's lead in handing over increasing amounts of public service provision to commercial firms, such that there may be a substantial export opportunity for British service providers.

Hutton, in fact, seems to be reinventing himself as the Thatcher of our time: she exported privatisation to the rest of the world; he wants to convert the citizens of other countries to the notion that their public services should be provided by our private sector firms.

It's a worthy ambition. And there is a good case to be put that promoting competition for public service contracts and also between public-service providers reduces the cost of those services while sometimes improving the quality of those services (though there are also plenty of examples of the public purse being handsomely ripped off by private sector bunglers and incompetents, especially when it comes to IT).

But to be clear, it's the competition or bidding contest that tends to yield those benefits, rather than the identity of the provider as from the private, voluntary or public sector.

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