Public character

So Jon Cruddas is in hot water with the media, again. This time it is his supposedly anti-business stance with respect to public services. Through partial quotation of a forthcoming pamphlet, the Daily Telegraph suggested yesterday that Cruddas wants to see the end of all private sector involvement in public services. But in the meat of the article he turned out to be giving a fairly orthodox account of the Miliband Labour worldview. The actual quote from the pamphlet was:

‘No more outsourcing of relational services to those parts of the private sector that are driven purely by corporate profit rather than a social purpose.  It is quite staggering that some £10 billion of public contracts – of taxpayers’ money – are allocated to some 20 private companies. Rather, we need to forge cooperative ties with ethical enterprise – such as cooperatives, mutuals, and social businesses.’

The Telegraph’s write-up overlooked the key word ‘relational’. The term is rightly derided as a piece of terrible wonk-speak, but in this case it was central to Cruddas’ argument. The shadow minister was saying that services which involve high-trust, two-way partnerships between citizens and public service workers should be conducted by organisations with a social or public purpose. In other words there is a huge difference between outsourcing an IT contract and a relationship. He was also suggesting there are different sorts of independent provider and that many organisations with strong social values lie outside the public sector. Being against Serco does not mean being against pluralism and innovation from non-state providers, as Cruddas’s own politics attest.

Both these points are central arguments in my recent report Going Public. Using more circumspect language than Jon, I put it like this:

Policy makers should be particularly cautious about marketisation where (1) close personal relationships and joint endeavour with the citizen is involved; (2) complex collaboration across service boundaries is needed; or (3) a major system-wide transfer of risk and control is envisaged. In these instances in-house provision or a less marketised relationship, perhaps with non-profit providers, is likely to be less problematic.

Last month, exactly the same thinking was in evidence when Andy Burnham launched Labour’s ten year health strategy. That document promised to ‘replace the competition framework with an NHS Preferred Provider framework’ and ‘draw a clear distinction between not-for-profit and for-profit providers by giving the voluntary sector organisations the benefit of longer and more stable arrangements’.

In the right wing media perhaps this is all anti-business, if it means an end to large companies taking over core public services in their entirety. But there will still be lots of private sector involvement further down the supply chain, hopefully with more opportunities for small businesses.

It is worth standing back and reflecting on the point we have reached: if the Work Programme and the Lansley health reforms are now considered the new normal, with any departure an anti-business assault, then neoliberal economics really has captured our debate. After all, we’re not talking about an encroachment on free markets, but the democratic choice of an elected government as to whether to ‘make or buy’, when spending its money. The sort of decision big business makes all the time.

Going Public stresses that business has an important contribution to make to public services – but securing the public interest requires institutions with strong public character. The report concludes by calling on the next government to ‘consider legislating to exclude for-profit organisations from the frontline delivery of more public services, for example major NHS services – or at least create a ‘presumption’ in favour of delivery by public interest institutions. In these restricted sectors independent providers would need to be non-profit and also meet a public character test.’

Cruddas, Burnham and Miliband seem to be responding.

Going Public, by Andrew Harrop with Robert Tinker was published in November 2014