CYPN: may 2014 Why competition can be good for public services. And why the private sector isn't all bad.
The Guardian’s dramatic lead story last Saturday that child protection services
might be privatised has caused extreme consternation and although Edward
Timpson has made it plain that the proposed new powers are not about large
scale privatisation, that has provided only limited assurance to those who are
aghast at the possibility that there could be any role for the private sector.
I first heard of the controversy when the Guardian’s Patrick Butler phoned me on
Friday morning. I knew nothing about it. I’d been at Michael Gove’s weekly round
up on children’s issues just forty-eight hours earlier and if there really were a
master plan to privatise child protection, I’m pretty sure it would have been
mentioned. It wasn’t of course because such a plan doesn’t exist.
But some of the furore following the Guardian story, particularly some of the
more sanctimonious dismissal of the morality of the private sector – that’s
twenty million of the UK workforce by the way – prompted me to write this
defence, not of privatisation, but of competition and indirectly, of those who
work in the private sector.
I’m opposed to simple privatisation. Taking something from the public sector
and determining that public servants must no longer run it is not the best way of
ensuring value for money. But while I’m opposed to crude privatisation I’m an
unapologetic fan of competition, not least because I believe that competition
allows the public sector the opportunity to demonstrate that it cannot be beaten
in terms of value for money.
I was the Director General of the Prison Service who opened a number of new
prisons, designed, built and run by the private sector. I was also the Director
General who first exposed current prisons to competition. Consequently I’m
often accused of having been the architect of rampant privatisation. Just a couple
of months ago, the ex General Secretary of the Prison Officers Association –
clearly not a friend of mine - was talking about me when he wrote of “the
underbelly of prison privatisation” and the “creatures” responsible for it.”
The reality is somewhat different. I introduced competition because I wanted
better prisons and in particular, I wanted prisoners to be treated with decency.
And if the private sector had proven themselves, at that time, to be better at
providing decency than the public sector I would have had no compunction in
giving them the work. But competition prompted in the public sector imaginative
and cost effective proposals for running prisons and with a much greater
emphasis on decency and rehabilitation. In the event, I moved not a single prison
from the public to the private sector, although I took two from the private sector
and effectively nationalised them, much to the disappointment of the then
Prisons Minister Paul Boateng and to the dismay of Anne Widdecombe the
Shadow Home Secretary. Quite simply, competition allowed the public sector to
demonstrate that, on those occasions, it could offer anything the private sector
could offer and at a better price.
It’s not always that way. Competitions for two public sector prisons last year
resulted in one staying in the public sector and one, Birmingham, transferring to
the private sector. But the benefit of competition in each case has been to the
public purse and from my own observations of Birmingham, the improved
treatment of prisoners.
I can almost hear the shrieks of dismissal, that prisons and the safeguarding of
children are two very different things. And that is so, although prisons house
some of the most impoverished, wretched and vulnerable adults and children in
the country. The point I’m making is that the private sector, despite the
requirement to make profits, is not inevitably without scruple. I’ve spent all my
life in the public or the voluntary sector. But I’ve never agreed with those who
claim a moral superiority over private sector organisations and those who work
for them. I don’t think that the garage, which services my car, the supermarket
where we buy our groceries, or my family solicitor, are driven solely by profit.
And I certainly don’t think the newly qualified GP, who last year spotted that I
might have cancer, was driven remotely by profit although he, like the others,
works in the private sector.
Do I think that child protection is remotely ready for competition now? No I
don’t. But that’s primarily because of concerns about the competence of both the
private and the voluntary sector and the currently inadequate nature of
commissioning. And if it were ever to happen we would first have to think
carefully about which tasks, for presentational and other reasons, would always
have to remain within the public sector. But there is, to my mind, no reason why
a properly managed private sector organisation, by itself or, more likely, in
partnership with a public or voluntary sector provider, could not compete to
play a role in child protection. That won’t be easy for them. They start with a
disadvantage in winning work, precisely because they have to make a return to
shareholders. But if they can do that while still offering better value for money,
then that says a lot about the efficiency and effectiveness of the public and
voluntary sector alternatives.
Some private sector companies act shamefully. Some are exploitative. But there
is nothing intrinsically wrong with making a profit. Without the £74 billion in
Company Taxes last year, the current programme of public spending cuts would
be much more severe. And without decent company profits many of those who
have worked hard all their lives, including many in the public or voluntary
sector, will have a less comfortable retirement to look forward to. The Local
Government Pension Scheme alone has 60% of its funds, some £90billion,
invested in shares. If company profits and shareholder dividends decline many of
us will suffer. In short, the private sector isn’t all bad.
Sir Martin Narey advises Michael Gove on children’s social care and chairs the
Adoption Leadership Board. In the past he has advised G4S on the care of children
and their education in custody.