Govt drive for privatisation shows private sector not fit for purpose

It is a delicious paradox that the one persistent theme in the Coalition’s ideology is privatising everything in the public sector that moves, yet nothing has exposed the inadequacies and incompetences of privatisation so ruthlessly as the Government’s enthusiasm for it.   The highlight at the moment is the Olympics security fiasco caused by mismanagement at G4S private company in failing to meet its contract target to provide 17,500 guards for the Olympic Park.   As a result the State has had to step in by providing 3,500 military personnel plus substantial extra police reinforcements (who as a result will not be available for their normal duties in safeguarding the public).   A Tory MP on the Commons Public Accounts Committee castigate G4S for charging ‘colossal fees’ for ‘very poor service’.   It would be better to nationalise G4S to improve its management capability, lower its charges, and secure reliability of service.

But this is only the latest in a series of ignominious failures.   G4S has already suffered a previous humiliation last year when it lost its contract to deport rejected asylum seekers following a death in a violent struggle on the plane and 773 complaints of abuse.   Another notorious recent failure involved A4E, the welfare-to-work company whose chairman and founder, Emma Harrison, was forced to resign in February because of curruption within the company.   Not only did A4E have an extremely poor record of failure in its contract to get people into work, it also has a high-life culture of lavish trips abroad and big-spending hospitality.

But even that is dwarfed by other private sector calamities leeching off the public purse.   Metronet and Tube Lines were two private companies given huge contracts for repair and maintenance of the London tube network.   Both went bankrupt  leaving behind multi-billion pound losses which had to be picked up (the State again) by Transport for London.   The privatised contracts for installation or upgrading of IT networks for Whitehall departments have turned into a catastrophe: the NHS one recently had to be abandoned after £12bn had been spent (wasted).

Then there are the iniquities of PFI.   The latest estimate is that these privatised design, finance & build contracts will cost the taxpayer £301bn over the next 40 years – contracts which will have first claim on future public expenditure even when the nation is undergoing huge cutbacks and austerity.   Is PFI more efficient.   The Tory-dominated Treasury Select Committee in their report last August found that “the cost of capital for a typical PFI contract is currently over 8% – double the long-term (30 year) gilt rate of around 4%”.   Enough said.

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