Thursday, 19 July 2012

Unemployment and privatisation

The unemployment figures which came out yesterday weren't over-hyped, even by the government.  For an excellent analysis of what they mean, read Mark Easton on the BBC news site.  Long-term unemployment is rising inexorably, which shows that the Work Programme isn't doing what it was supposed to do.  But no one is really asking why.

The G4S fiasco has opened up a debate about the whole privatisation project.  We're still not entirely clear what went wrong, but it was a disaster waiting to happen.  It must be galling for A4e that the company is routinely linked with G4S as an example of the dangers of outsourcing.  But will the lessons be learned?  There's a very thoughtful piece in the New Statesman by Rick Muir, and another in the Guardian by Seamus Milne.  Here are my observations, for what they're worth.

One of my earliest concerns when I started examining A4e was how quickly one company could drive out the competition.  The bigger the contract, the more likely this is to happen.  And when everything is privatised, where do you go when things go wrong?  When the public sector no longer exists, you can't take a service back in-house.  Olympic security now depends on the army and the police.  But my pension is now run by Capita.  What happens if they screw up?  Serco runs an out-of-hours GP service in Cornwall which has become so poor that they've been ordered to improve it.  What happens if they can't?  Three companies - Serco, G4S and Capita - now run vast  numbers of services in this country.  You and I have no control over them.  It is no longer a case of deciding that private profit is a better motivator than public service.  The politicians decided that long ago.  It's no coincidence that many of the politicians have connections with these companies.  Perhaps it takes a huge mess like that which G4S has put us in to focus minds.

Your thoughts, please.


  1. The situation with G4s, A4e, Serco, Capita et al is pretty much an abdication of control, responsibility and accountability from various government departments such as the MoD, DWP and NHS over the past 30+ years. This has been happening under governments of BOTH main politcal parties.

    What's more, few people are not aware to the extent of the reach of these companies. They control so much, they have been likened to something of a 'shadow state' or 'private state'.

    The late Nicholas Ridley, a former Tory minister in Maggie Thatcher's govt, came up with a brilliant wheeze for local government organisation. Councillors would meet just once a year to award all the council contracts to private firms.

    Tony Blair, as part of his 'Third Way' policies allowed private firms to build hospitals and schools via PFI (Private Finance Initiative). Blair's rationale was "people don't care who builds a hospital, as long as it's built and run by the NHS'.

    There was this inherent belief with the Tories and New Labour that contracting out to private firms would always lead to a cheaper and more efficient service. Which sounds nice. However, the real test of contraction out is when things don't go to plan and screw up such as:

    W2W providers failing to hit even the pathetically low government WP targets.

    NHS trusts saddled with massive debts due to PFI.

    G4s failing to provide enough staff despite having months to get things sorted out.

    Being critical of contracting out services does not make one a communist or even anti-capitalist, as some would suggest. On the contrary, the G4s debacle should open a real debate on how public services are run in Britain. This goes way beyond the Olympics!

    Here's a little YouTube video on Serco:

    OCP indeed!

  2. When the Govt holds its internal post mortems into why the G4S Olympics security contract turned into an internationally embarrassing fiasco for the politicians, the political conclusion will be that the financial model for the Work Programme scheme is the example that should have been followed.

    If the WP scheme’s model had been followed then:-
    1. G4S would have been only one of several private sector contractors, between them sharing the responsibility for the 100 or so different Olympics venues, which venues are in several different regions of England;
    2. These several contractors would have received payment by results only;
    3. The “Market Share” dog-eat-dog provisions used in the WP scheme’s model would have forced the several contractors to compete with each other in order to stay in the game.

    I think that following the WP scheme model would have worked with the Olympics security contract, especially if the various WP scheme providers such as A4E had been encouraged to get involved with it. Many hundreds, if not thousands, of the Work Programme’s customers have had experience of doing security work.

    According to the BBC, part of the reason for the G4S fiasco was that Locog allegedly gave G4S the 'wrong' type of incentive.

    The wrong type of incentive is ineffective, as we are now all aware! CPUK’s debacle over the security guards for the Jubilee Pageant could have been avoided if CPUK had been given the 'right' types of incentives. Ditto G4S with the Olympics security contract.

  3. I have watched with interest,the grilling that these people have taken over the last few weeks(Barclays,G4S,BOE Ect) and I was expecting to see Dynamic people that would have a reasonable and concise explanation of what went wrong,I may of missed it, but these High Paid Executives do not seem to have a clue and constantly blamed middle and lower management, if this is the case why do they deserve these high salaries and bonuses?

  4. I normally do not support strikes,doctors and such,but the strike announced today by the workers at the airports I do applaud..Why? because they have the Gov't by the short hairs,which proves that farming out public services is not the answer...What the answer is? I have not a clue.

  5. Anna's charity has just gone bust,a W2W subbie and are not happy with A4E..Is this because they saw a cash cow? or are they just upset that the Gravy Train missed their stop(sic)


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