Thanks G4S! You’ve Reminded Us All Why The Private Sector Ain’t The Answer.

G4S’s abject failure to keep its side of the bargain over Olympics security ought to act as a damned great neon warning sign when it comes to the private sector taking a public role.

We’ve had to put up with the bleating of the ideological right for way too long.  “The private sector is more efficient,” “the private sector delivers value for money,” “the state shouldn’t be taking on roles that business could fulfil.”

The G4S debacle ought to serve as an object lesson in how the private sector serves its own interests and not those of the nation.

Yes they’re likely to pay a penalty for not having delivered on their contract, but a fat lot of good a penalty would have been if the state hadn’t been able to make good G4S’s mistake by calling in the military.  If we didn’t pay for the armed services through our taxes then the whole £8 or 9 billion corporate binge that is the Olympics could have been fundamentally compromised.  G4S’s liabilities however wouldn’t have covered a fraction of that bill.

Just as with the banking bail-out the state provides a safety net for the private sector just as it does for citizens.  But while the government is quick to act against people on benefits for relying on that safety net they’re a lot slower to act against big business.  Of course they government points the finger but it doesn’t follow up the rhetoric with concrete action.

Rather than do that they throw a couple of high profile scapegoats to the wolves – Fred Goodwin and Bob Diamond being two fine examples – but once the public appetite for blood has been sated the rest get to breathe a sigh of relief and carry on much as before.

And not only does the state cover the fat behind of big business when it screws up, it allows it to get away with a far lower degree of scrutiny and accountability.

Companies providing public services are allowed to claim ‘commercial confidentiality’ to avoid answering questions.  They are far slower to answer in the media than our elected representatives.  The G4S story cropped up last weekend but it took the company’s boss Nick Buckles a whole week before he buckled to public pressure and went on the Today Programme to face an appropriate grilling – for days we didn’t get so much as a proper statement.

We’re seeing this right across our public services these days.   Even after a Coroner slammed St George’s Hospital in Tooting for killing a patient suffering from dehydration by sedating him after he called police to complain rather than giving him water, no one from the damned trust would go before the media.

What happened was little better than corporate manslaughter and they don’t have the decency to face questions.

The absolute minimum for private sector companies providing public services should be that they are held to the same standards as the public sector – no commercial confidentiality, no refusing to answer questions, complete transparency and direct accountability to the public.  If you take on a public service contract you contract to become a public servant – not a service provider.  Why?  Because if the public are paying for you to serve them then the public is the boss, or do we have to explain the basic customer/retailer relationship to people in the business world?

But even with proper transparency and accountability there is still a major flaw in the whole notion of private provision of public services.  It’s not addressed often enough – it comes down to contracts and it’s very simple.

With any contract, public or private, you set a budget and you agree a level of service.  With public provision of services if you achieve greater efficiency you can raise the level of service and deliver more for the taxpayers contribution.  With private provision companies deliver up to the agreed level of service and no further.  Efficiencies don’t result in a better deal for the public, they result in bigger profits for shareholders.  You don’t get to drive up the level of service until the contract comes up for renewal – and in some cases that could take up to 25 years.

And that’s just the start of the problem because while it’s relatively straight forward to agree a budget and build it into a contract, nailing down a level of service in an operation as complex as a hospital is far harder.  And when the right witter on about how much better equipped the private sector is I’d unhesitatingly agree with them in one respect above all others – they have better lawyers.  If the public sector is bad at one thing it’s contracts.  Nine times out of ten the private sector runs rings around government and once a bad contract is in place we’re stuck with it.  So drawing up an enforceable service agreement is tough enough, but arriving at one that delivers ongoing and incremental service gains to the public is nigh on impossible to frame.  We can only lose.

So perhaps it’s time that we started to think about how the public sector can take the best of the private on board, encourage innovation, reward excellence at every level, make staff a real part of the public enterprise, so we can start to deliver what the private sector can’t – for while listed companies are bound by law to deliver for their shareholders, public enterprises can be bound by their having to answer to all of us so that they deliver better and better for the communities and the society they serve.

And when we hear Conservative ministers, in the wake of the G4S farce, praise our armed forces as the best in the world we shouldn’t let them forget that it’s an unashamed admission that the state, the common weal, the public collectively through our taxes and the work of our public servants, can deliver unrivalled excellence.

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