No private panaceas - Labour needs to spell out its commitment to public control of public services
Thursday September 6, 2001 - Guardian article
The Labour party cannot allow its conference later this month to become a bickering match about the role of the private sector in providing public services. That would fail to reflect the complexity of modernising Britain's public services and sidestep the problem of how to bring about a sharp improvement in their quality and effectiveness.
As part of Labour's own modernisation, the party moved from an obsession with means to a proper focus on ends. That was necessary, but in defining what the left is about, we must continue to assert our belief in the central importance of public institutions controlling public services. To rely solely on a yardstick of "what works", is to deny any moral underpinning to the public realm and to open ourselves to the agenda of the right, whose vision of "what works" is very different from ours. The left must be guided by its belief in the values of collectivism and community - whereas the right's values derive from a belief in individualism unimpeded by state intervention.
So any ideas of wholesale privatisation of schools and hospitals are inimical to Labour's core value system. That is why the education white paper is not about privatisation. It is simply about freeing up schools in the public sector to take advantage of the best ideas, wherever they exist, to raise standards in the comprehensive system.
Indeed, to see privatisation and private sector practices as the answer to the problems of public services is to fail to understand the essential differences between the public and private realm. The public realm often has to deliver services that are essentially unprofitable, such as accident and emergency services. In these cases, efficiency and effectiveness cannot be measured by profitability and different measures relevant to the public domain are necessary.
Some public services operate as monopolies without the competitive pressures of private sector markets. So private sector techniques are neither adequate nor appropriate to ensure quality and provide value. The Tories failed to understand this when they created the privatised monopolies in the railways.
Most importantly, the public sector is financed by taxpayers' money and legitimised by the popular vote. This demands a different level of accountability from the private sector, where major shareholders are the people to whom companies are accountable. A private sector chief executive does not need to account to the public through an array of trust boards, local councillors, parliamentary select committees or government departments. Sensitivity to these differences is essential to command public support.
There is a role for the private sector, but it is limited. There are private sector techniques that the public sector can adopt to improve services and private sector organizations that can provide some public sector services effectively.
There are also times when private sector investment can add value. The private finance initiative should not be overused, but I never heard the left crying foul when Labour local authorities used techniques similar to PFI to maintain public investment in the late 1980s. Sustaining housing investment in Islington during the 1980s was only possible because of a £200m loan from the private sector, outside capital controls inflicted on local government by the then Tory government. We did that with full backing from the left.
There are brilliant services and workers in both public and private sectors - and there are lousy ones. Think of the teacher who transformed your life, but remember queuing at the post office to collect your pension or tax your car. Think of the comfort you felt in a private health club, but remember your irritation at the endless mistakes and excessive charges levied by your bank. Old Labour ideologues should stop dressing up defence of vested interest as vital principle; New Labour managerialists should stop pretending that financial services bosses know all the answers about good customer services.
The reality is that public sector reform is tough; the answers neither obvious nor clear. It's easier to focus on the old arguments of public versus private. But it won't help to achieve the transformation needed to restore confidence or the consensus to secure the investment necessary to promote equality.
To do that, the government needs to secure the support of public sector workers for change. We must listen to those who work in the services - their work practices may be part of the problem, but they themselves are necessarily part of the solution. Slagging off public service staff is counterproductive when we want to recruit and retain more of them. It may be easy to blame the workers for many of the problems in public services, but it's a cop out. We need to accept our responsibilities for the policies and the funding of services. We have to tread the tightrope of mixing pressure and support to bring about change.
Second, the user must be at the centre of the planning and delivery of services. That sounds obvious, but it does involve changing traditional working practices and challenging professional attitudes. The doctor and the library should be as available as the supermarket to meet the needs of the modern family.
It is also essential to get better at measuring performance. The art is still in its infancy, so it's not surprising that the measures are sometimes wrong. We need constantly to review and, if necessary, change our approach. That's difficult for politicians, who find it tough to admit they got things wrong, so we too need to transform our culture.
It is more difficult to measure quality outcomes, than it is to count numbers. We can count operations done, crimes solved and qualifications achieved. But does the number of operations improve the health of the nation or would cutting smoking be more effective? Does increasing the number of people enjoying a university education of itself ensure better opportunities for working-class children?
Next, we must genuinely decentralise. In our desire to overcome postcode lotteries, we must not revert to old Stalinist centralist solutions. The state cannot secure good outcomes through central diktat. Whether they are hospitals, schools or police services, it is only when services are really owned and delivered locally that they will reflect the needs of users rather than funders.
Finally, we must start delivering a really integrated approach to public services. Most people, from police officers through health professionals to teachers, still defend their own professional or institutional boundaries. Getting people with different expertise to work together and leave behind their vested interest to pursue the best outcome remains a huge agenda for change. And we need to transform departmental and ministerial empires much more radically.
This is an important moment for the labour movement. Time is running out. No one should take the next general election for granted. It remains the case that governments lose elections. We have a once-in-a-lifetime opportunity to transform people's experience of and belief in our public services. Now is the time to reassert our willingness to get on with the job.
Margaret Hodge is higher education minister.
