Wednesday, 29 February 2012

The Myth And Fraud Of The 'Small State'

The Tory message is ‘small state, Big Society’, a situation which they contrast to New Labour's ‘big state culture’ which pampered scroungers until they lost the will to work.
Indeed, this Conservative assault on the ‘big state’ has been going on since Thatcher, and it is a Tory tenet which people can (and most people do) easily understand.
It is a lie and a fraud.

The Tories, people believe, want to reduce the huge burden of over-bearing, intrusive ‘government’ in our everyday lives, and this will particularly involve:
• moving provision of services from the state to private ‘competition’
• smaller councils
• consequently-reduced state expenditure and lower taxes

Inasmuch as most people’s immediate contact with government boils down to taxes and laws – which are indeed intended to be limiting – it is a message which appeals to the voters.
But it is a lie, in every aspect.

Has all this privatisation reduced in any way the burden of services?
To an obvious degree, it has not.

Squandering the nationalised industries
The denationalisation of the nationalised industries under Thatcher (pawning the family silver, as MacMillan warned) was ‘sold’ to the public, ironically, as taking those industries out of state ownership and putting them into public ownership. It was part of Thatcher’s erroneous vision for a share-owning public who would own the companies who supplied their services.

Of course it was rubbish; the REAL reason the government denationalised was that it took fright at the cost to the taxpayer of the reinvestment needed (when the Tories had been elected on a tax-cutting manifesto).
And, as for ‘a share-owning public’, most people simply sold their shares, which fell – and have continued to fall – into the hands of pension funds, hedge funds and (increasingly) foreign buyers. Thus, rather than changing from state- to public-ownership, what has actually happened to the nationalised industries is that they have merely been transferred to private corporations from public ownership … from what was in effect a non-profit making company run by the government.

What we forgot, of course, was that those companies had been nationalised for a reason – because they were all industries which CANNOT be delivered by small firms.
And, therefore, we found that all those industries of necessity fell quickly into the hands of a few huge corporations… and thereby fell subject to informal (and occasionally formal) price-fixing cartels.

I have beefed about the denationalised industries before. We complained about their legendary inefficiency, but I don’t think we ever expected the private alternative to involve 25 minutes listening to musak whilst waiting to be connected to a man who calls himself John but doesn't really speak English.
However, the main consequence for us has simply been the sight of huge foreign corporations making billions-upon-billions of profit whilst nevertheless still raising our prices when we know for a damn fact that wholesale prices have fallen ... whilst our government is spectacularly powerless to do anything about it.
The nadir has been reached in the recent humiliating spectacle of our government having to bribe the informal-cartel of faux-reticent energy companies to invest in our power production … by allowing them to charge double or treble for the energy when they sell it on to us, the consumer.

‘Small state’? Denationalisation did indeed reduce the orbit of the state – but all it did in doing so was to hand us over to the profiteer. We still have to PAY for those services (they were a loss to the public but not a reduction on our pocket); it’s just that we have to pay so much more now.

Sterilising our Councils
The other process, which started under Thatcher but continued enthusiastically under New Labour, has been the asset-stripping of our Councils.

In the 1970s, local government DELIVERED your services but, by a series of strategies – compulsory competitive tendering, private finance initiative, local financial management etc. – these services have been systematically taken from the control of the local Council and given to private companies.
In some areas (e.g. education, social housing), there was a thought that these companies would be not-for-profit organisations, but that is increasingly being thrown to the wind.
Increasingly, what we are seeing is (for example) wheelie bins which are supplied by a firm now called ESE (Environmental Systems Expertise) – but previously Otto Entsorgungssysteme – and our care homes provided by Southern Cross, whose executives ‘pocketed £35m by selling their entire stakes in the company in late 2007, just before its shares began to plunge’ etc.
Councils substantially – and increasingly – have been reduced from service-providers to mere service-commissioners.

The point is, of course, that as far as we – the taxpayers – are concerned, there is no change. We continue to pay more and more for the same services.

The change to private service delivery was accompanied with much propaganda about the inefficiency and incompetence of local Councils. To be fair, it was probably true. Certainly, as they closed down one works department after the other, even the Councillors were assuring the public that this was securing cheaper deals for their electors.
But what we are finding out now, however, is what we should have realised at the time – that replacing the doddery, indulgent grandparent of a community services provider with a slick, impersonal potential-rapist of a service provider was NOT the cleverest move we ever made.

For a start, we didn’t ask enough questions about how these companies proposed to make their profit at a reduced price. We just believed the propaganda about ‘efficiencies’. When it comes to it, however, most of these companies have made their profits by using fewer workers, with lower qualifications, and greatly-reduced wages and higher workloads. Occasionally we get a scandal, such as the care worker who rushes in and shoves a meal in the microwave whilst failing to notice that the old lady is stuck in the lavatory, but – hey! – they just sack that worker and employ someone else on the same terms.
And our payments-for-services do not go into the pockets of local people as wages, which they then spend with local shops and businesses, but they go off to tax havens and overseas shareholders’ bank accounts as the company’s profit-at-our-expense.

We have also found that our council officers – often non-competitive individuals who joined what they saw essentially as a service profession – have turned out to be hopeless at making contracts. The private companies must have been licking their lips at the sight of these ingénues rattling back and forth between their predatory lawyers and our inexperienced elected Councillors. The result has been – notably in PFI – a series of ruinous contracts where we find we have been, essentially, shafted … and which we are finding in some cases impossible to pay.
And whilst our placatory, socially-motivated officers have turned out to be bad at contracts, they seem even worse at monitoring – they are just not nasty enough.
You or I would have thought, wouldn’t we, that a service contract would have included some form of penalties for incompletion or omissions. Not a bit of it! Every shortfall in provision turns out to be providable … providing we pay more.
Which we do, of course. (Bus services are the prime example of this – having gained the contract by promising to provide a certain service, the bus companies are forever cutting services which they then declare themselves prepared to provide… as long as those routes are subsidised.)

Meanwhile, as for the companies, they are laughing all the way to the bank. For them, not only are they on a hugely advantageous contract, but they are at arm’s length from the consumer. Anybody with a beef about ‘Council’ services does not telephone the company to play hell – he telephones the Council officers! So THEY absorb all the anger and the abuse ... before some 24-year-old, low-grade officer contacts the company and believes every damn-silly story they tell him, so he can phone back the angry member of the public to tell them that nothing can be done…

The Myth of the Small State
We have been sold a lie.
When they told us they were going to ‘reduce the state’, they lied.
Of course they lied … we still need, and were always going to need, the services provided by the state.

All they have done is to take the services which hitherto were provided by the state, and to contract them out to huge, multi-national corporations.
Thus we have a government which no longer supplies services, it merely sits around contracting them out to private firms.

The effect of this has been to take from us providers which were not-for-profit and in the last resort accountable-to-the-public, and to replace them with faceless, rapacious capitalist corporations.
We have been delivered unto the profiteers and the monopolists, and all in the name of some rubbish which promised us that doing so would give us ‘choice’, and engender ‘competition’.
(And if you still believe that nonsense, all I would ask you to consider is the electricity suppliers. What ‘choice’ do we have there? What ‘competition’ do you see there?)

But there has been another, more sinister development happening alongside this process. Because people are asking – when all the state does now is award contracts – why we need so many councillors, so many MPs. The corollary of a state where the public services are provided by corporations is a corporatist state, and the shrivelling of our democratic functions.
We are already seeing at local level the imposition, over the body of Councillors, of executive Mayors and Police Commissioners. How long is it before we decide that, in just the same way, we should impose an executive Duce or Sovnarkom over our brawling rabble of MPs?
(Which is only what has happened in Greece, Italy and Hungary.)

‘The state’ is as big as ever; it is just that it is being delivered
by PLCs for a profit, not by elected bodies for our benefit.

And now they are proposing to do the self-same to the NHS.


  1. So whom do we vote for to have a life worth living New labour, Newer Labour the Liberals the Tories, lets be honest none of them are interested in me or my problems.

  2. And so it happens: