Private sector efficiencies

A lot of public sector work is labour intensive. In many cases it involves better terms and conditions than you find in the private sector. Public sector trade union bargaining power is in a different league to what you find in the private sector, which makes it harder to cut public sector costs by hacking back public sector Ts&Cs. TUPE aside, when the provision of services is put out to tender its typically easier for a private sector firm to out-compete its public sector equivalent on cost grounds because, as its labour is cheaper, it usually has a lower cost base. And that’s kind of it really.

To give a practical example, public sector social care providers who help people in their homes are often paid for the time spent travelling between clients whereas private sector care providers providing the same service often aren’t. Instead, the latter frequently spend less time with their clients to meet targets, work free over-time, stress out as they skitter across their patch etc.,

None of the above has anything to do with “private sector efficiencies”. Instead it’s simply the private sector provision of public services and privatisation (and/or the tendering out of services previously provided by public sector bodies) as means of accessing cheaper labour i.e. getting people employed on private sector terms and conditions to do public sector work.

Practically, privatisation now involves a piecemeal, cherry-picking approach that affects one national service here and a range of regional activities there, all the while avoiding any head on political conflict. A recent example of this is the chat about farming some police activities out to the private sector. And again it’s worth reiterating, this is hee haw to do with “private sector efficiencies”, rather it is simply about cheap labour.

Nope I don’t think that was clear enough. Privatising services is nothing, NOTHING whatsoever to do with “private sector efficiencies”. What it is about is getting people to do the same jobs you might find public sector bods doing, but for less money.

Now let’s put that in some kind of context; as I understand it every time someone challenges executive pay or investment banker bonuses, the stock response is if you don’t pay top dollar (emphasis on “dollar” given Britain appears the furthest along the US route when it comes to mad pay for the ruling class in a its not so much a global labour market as it is an Anglo-Saxon model of capitalism with all that says about nation specific labour market outcomes) you don’t get the right calibre of labour.

Cool. So lets apply that same logic to public sector privatisation – if you farm out public sector work to the private sector you’ll be farming it out to employers who don’t pay the top dollar needed to recruit the kind of staff that will provide the best social care for the elderly, checks to ensure illegal migrants don’t get into Britain and so on. Cool(?).

For those winning the tenders the rewards can be incredibly sweet as Emma Harrison’s £8.6m dividend proved. Now for starters she got herself that money helping/exploiting the unemployed through a company being investigated for fraud (how terribly private-sector efficient). But, hey ho. For seconders, though, some hypothetical numbers illustrate how she may well have “earned” it; so assuming labour costs account for say 50% of her former company’s staff base, if she ensured they cost say 20% less than their public sector equivalents (by only providing shit pensions, using contract labour wherever possible, avoiding automatic pay increments and recruiting relatively younger staff, etc.,), then she’d have been able to undercut a rival public sector tender by 10% without breaking sweat or wind.

Except, 10% is a bit much, rather I’m guessing a 5% advantage would be enough cos then she could win the contract AND pocket the difference. Or perhaps the actual figure was 5.7% given her £8.6m appears to have largely derived from the £200m worth of government contracts her company was awarded i.e. in a Superman 3-Richard Pryor type scam 4.3p in every taxpayers pound paid to her company went straight into her pocket. And for what? Am guessing for screwing employees and not much else. Clearly, some of us are in this together more than others.

Green Investment Bank fail

One minute investment banks are the scourge of society, the next they’re a panacea for all an economy’s ills. Pile of utter fucking shite either way if you ask me.

Starting with the scourge and the barbarians at the gate thang, investment bankers receive far too much money for doing deals that deliver no added value over the medium to long term both to the shareholders involved and the actual economy as a whole, is how the argument usually goes. And all that strikes me – enviously if honest, given the wages and bonuses they get – as containing a large chunk of truth, which prompts the question well how da fuck have they been getting away with it for decades then?

State initiated investment banks on the other hand are apparently the panacea for all an economy’s ills according to yer average career politician regardless of whichever party they happen to be in. Hence, all the current shite about establishing a green investment bank. Now the rhetoric here is fantastic – a green investment bank is an economic imperative that will build a hi-tech, future-proofed economy, it’ll ensure Britain maintains its global lead in renewable technologies, generate ‘000s of new jobs by capitalising on established, cutting edge technical competencies, leverage existing engineering and innovation infrastructures and act as a transformative capital provider that will underpin the transformation of I don’t know, things that presumably need transformed. All utter fucking bollocks really, like pure rhetorical shite and fuck all else for the most part.

Like I mind hearing some politicians spout off about it and what became utterly fucking clear was that they didn’t have a fucking clue about any of it. Like knowing an investment bank provides equity not debt would have been a good starting point (that and knowing the difference between equity and debt, obviously). Then following on from that there was the question of at what stage should the investment bank start investing e.g. should it focus on the venturing side and finance blue sky thinking in the first instance? Or what about financing taking an already proven technology to market, or marketing an already established products or is it all simply providing the equity needed to go along with the debt for proven technologies in project finance type situations such as a new windmill farm as opposed to a wave based thingy? And how should these decisions be taken, like are we looking to establish however many committees chock full of ignorant place men and all the vested interests and expenses claims that entails or instead is it actual private equity/investment bods that would decide when and how much to invest given all that entails in terms of them getting wages that are however many times the Prime Minister’s? All of the above boring, practical stuff just seems to be flim-flam getting in the way of a politician telling us how the government is INVESTING in a sustainable future or some other such fucking shite.

The other thing of course is that the actual sums being talked up are fucking pitiful. The £1 billion capitalisation Nick Clegg wanked on about is fuck all when you compare it to say the 75 billion Euros in bonds raised by an existing German state investment bank. Rather, the reality is £1 billion is an arbitrary figure that lets politicians say billion a lot with a bilious emphasis on the “BILL” as if them coming across as if they have a speech impediment fucking counts for something.

I was going to wank on a bit at this point about the Macmillan gap identified in the 1930s, the subsequent creation, then eventual reorganisation of 3i and the associated positive role government funded capital investment can play in an economy where the provision of equity finance definitely was subject to market failure on a sustained, systematic basis. But, I’ve some beers on the go so feck it.

What all this does provide though is a lovely context for the 2011 budget when it arrives on March 23rd and all the sound bite shite about growth that’ll contain.

Like so far my impression is the ConDem government is really and I mean really gunning for libraries and disabled people, cos you know those are exactly the kind of nasty fuckers that are asking for it. At the same time it’s already hacking back on public sector investment to an extent that hugely outweighs all this green investment bank shite (1). Rather, the latter will simply be an exercise in political sleight of hand. Like if you were to point out however many libraries are going to close, the response will be, ahh, but we’re establishing a green investment bank. Or if you pointed out however many home helps are being made redundant, the response would again be ahh, tough choices and we’re establishing a green investment bank, and so on and so on.

Personally, the only debate the above prompts is what type of cunts politicians are. On the one hand you’ve the ConDems simply setting themselves up to prove once again that they are indeed snidey cunts. On the other you’ve got the Scottish parliament voting to build a new Forth Road bridge last December (that it’s currently forecast to cost £2.3bn provides yet another benchmark for the fuck all capital base of the Green Investment Bank). The overwhelming sense I had when the MSPs voted for the new bridge was of a shiteload of mediocre shifters desperately wanting to do and to be seen to be doing something in a half-arsed, unthinking Keynesian multiplier kind of way. I reckon on balance they were well-intentioned when they voted the way they did. I also reckon they did sowhile applying fuck-off selective memories when it comes to the deep inability of government to deliver major capital projects in Scotland (e.g. the parliament and the Edinburgh trams) and what that means in terms of the general public having to eventually cough up fucking shed loads more and lose out on public services to cover their asses. So yeah, what’s worse – snidey cunts or fucking useless cunts, you decide.


(1) To quote the Institute for Fiscal Studies’ latest public sector spending note - “Public sector net investment over the first ten months of this financial year has been £28.1bn, which is 20.8% lower than in the same months of 2009−10” i.e. the year to date figure for January was almost £6bn down on the previous year. Compare that with a £1bn fucking green investment bank, then wonder how fucking stupid do politicians think we are (the answer is very and they’ve got a point).