Bill Totten's Weblog

Tuesday, March 06, 2007

The turbo-Thatcherites can't see the limits of privatisation

by Simon Jenkins

The Guardian (February 28 2007)

The Cumbria train crash and the plan to contract out probation both reflect a failure to grasp the value of democratic oversight

Those seeking a root cause of the Cumbria train crash should study today's third reading of the management of offenders bill 2007. It seeks to privatise the probation service. Both are infected by the same policies instituted by the Treasury under Gordon Brown and his predecessors.

Privatisation was the great liberator of the political economy in the 1980s and 1990s. It was a central construct of the transformation of Britain from lame duck to Euro-tiger. It was also a snare and a delusion. The inability to distinguish good privatisation from bad explains why a decade of public sector reform by Tony Blair's Labour party has failed to win public confidence.

In my youth I was a rail enthusiast and member of the board of British Rail. I was sure of the need to privatise the railway, to free managerial blockages and liberate its entrepreneurial spirit. But one thing was vital, to retain the vertical management crucial to operational discipline. If the railway were to be divided, it should be as in the old days, into integrated regional companies, with managers controlling assets, risks and balance sheets as one.

Between 1991 and 1993 this argument was lost. John Major, Norman Lamont and the transport secretary, John MacGregor, conceded the Treasury view that the route to greater rail efficiency led, via the City of London, to vertical fragmentation and internal subcontracting. The daily discipline needed to run a railway could be replicated by private incentives backed by contract law. The result was the Railways Act 1993.

The act was a blunder, a fiasco, a nonsense, intellectually grotesque, one of the worst passed by any postwar parliament. It was the classic work of stupid and arrogant men thinking that because they sat in London chatting to highly paid bankers and consultants they must know better than horny-handed sons of toil. A great European industry, at the time the most cost-effective rail network in Europe, was brought to its knees within five years. Whitehall did for the railway what it had done for the car industry. It kicked it in the crotch.

When Blair came to office in 1997 he cynically appointed John Prescott to sort things out, a man he must have known was not up to the task. It took New Labour six years to renationalise the infrastructure company, Railtrack, as Network Rail, ending one managerial weakness revealed by the Hatfield and Potters Bar crashes, the subcontracting of line maintenance. As shown in a recent Films of Record documentary, Potters Bar was the nadir of Treasury policy, with seven private contracts governing one stretch of track. Nobody took responsibility, least of all the head contractor, Jarvis.

Maintaining the permanent way requires total discipline. A century ago crossing keepers were licensed by magistrates as constables. Such discipline depends on stability, hierarchical loyalty and continuity of experience. Tamping ballast, checking points and tapping rails are arts as much as skills. Nothing is 100% safe, but how safe is a matter of personal judgment, not a legal contract. Early evidence from Cumbria suggests that the "subcontract" syndrome revealed at Potters Bar has not yet been cured. Old track gangs would have known every inch of the rail, every point and every bolt. I imagine the present gangs have been broken up many times over the past ten years, meandering from one contractor to another.

These contracts were supposed to bring down the price to the Treasury of rail travel in Britain. They have tripled it. On that score alone they have failed. Modern Railway magazine has estimated that it costs three times as much to lay and maintain a mile of high-speed track after privatisation as before. Certainly the railway is safer than ever, probably safer than normal risk assessment might require, but this too is a result of contractual "hypersafety" that has sent costs, fares and subsidies soaring. British trains are now the most expensive form of public transport.

My enthusiasm for privatisation remains undimmed, even within the public sector. It has transformed my rubbish collection and street cleaning. The private running of Westminster and Wandsworth councils has won Audit Commission approval. From government catering to council housing, from property management to some (very few) public finance projects, privatisation has broken logjams and delivered the goods. No problem.

But neither Labour nor the Tories seem to have any grasp on what is and is not suitable for accountability to a contract rather than democratic oversight. Because Treasury officials crave jobs in banks, they cannot believe that other officials might be moved by a desire for public service. They imagine that, unless chained to a target, a consultant and a contract, all public servants are off "on a sickie" or down at the pub. The subcontracting of hospital cleaning to de facto gangmasters who make their money by employing the cheapest labour on the block, takes out of house the central discipline of any hospital, its hygiene. It has sent Britain rocketing to the top of the European league of hospital-borne infections.

A similar result has come from Brown's (or his aide, Shriti Vadera's) bone-headed separation of night-time maintenance on the London tube from daytime operation. This means that tube companies actually make more money by delaying work - and millions of commuters - and then paying the contract fines. As for the idea that a probation officer might want to help his charges from a sense of public duty, this seems wholly alien to Brown and his aides pushing today's bill. They are true turbo-Thatcherites.

Experience shows that core public services are not necessarily more efficient under performance-linked private contracts. As with hospital private financiers, or Nord Anglia's flirtation with Hackney's schools or the shady "academy" operators, costs soar and continuous leadership, experience and community involvement long associated with public institutions cannot be legally enforced. Capita may run a smooth congestion charge, but do we want it running the Metropolitan police? We have lost sight of the difference between accountability to a contract and to democracy. I am sure someone will be pilloried for the Cumbria crash, and rightly so. But blame is shared with others who are never called to account, who walk into the sunset covered in fees, pensions and ermine.,,2022958,00.html

Bill Totten


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