Public services—for whom? (2001)

From the September 2001 issue of the Socialist Standard

Who are the public services run for, and why all the fuss about public-private partnerships?

“Education, education, education” was the slogan Blair gave priority to in the 1997 general election campaign. This was a pledge not to improve education but to make it worse, and he duly delivered. The intent was to increase pressure on kids and teachers by bringing in more exams and more league tables, so as to supply British capitalism with workers who had already experienced and absorbed the competitiveness that is a key element of the prevailing enterprise culture. At the same time the doors of schools were opened even wider for business enterprises to penetrate; some schools were even handed over to profit-seeking enterprises to run.

During this year’s election Blair’s emphasis was on “public services”. He never actually sloganeered “Public Services, Public Services, Public Services”, but this too was a pledge to make things worse. To most people, a public service will be a service provided to people by. Blair, however, has spin-doctored the words to make them mean something else. For him, a public service is any service provided to people, irrespective of whether this is by a public body or by a profit-seeking private enterprise.

We Socialists have never been particular fans of the public bodies set up to run these services. We have seen them more as providing services for the capitalist class. Schools to train their workers. Hospitals to patch them up and send them back to work quickly. Public transport to get them to and from work. We knew, from our understanding of how capitalism worked, that under capitalism they were inevitably only going to be run on a cheap, utility basis providing for the needs of capitalist industry as cheese-paringly as possible; they would never – could never, given capitalism’s priorities – provide a quality service for their users.

Even so, it is true that some of these reforms did benefit workers. For instance, the 1870 Education Act which introduced free primary education and the 1948 NHS Act which introduced free medical treatment on a national scale. However, no reform is secure under capitalism. In fact, the workings of capitalism continually undermine any reform that has been introduced. It was the same Labour government that had introduced the NHS that, faced with the need to find money to finance a rearmament programme to protect British capital’s interests abroad, first re-introduced health charges. And the bodies set up to run these services under capitalism were required to make a “surplus” to pay interest to the bondholders or the government who had provided their capital (as we explained in our 1946 pamphlet Nationalisation or Socialism?).

Since the end of the post-war boom in the early 1970s, it has been downhill all the way for all public services as successive governments, Labour as well as Tory, have cut back on their spending so as to leave more money for capitalist corporations to retain as profits. Things were by no means perfect pre-1970 but there were a lot more services provided, especially at local level, than there are today.

Actually, the capitalist class have been in somewhat of a dilemma here. Public education, hospitals, transport and the like are primarily a service for them and were brought in as such. In other words, they are useful to them and so it is in their interest to maintain them at a reasonably efficient level. On the other hand, they cost money to run and this can only come in the end out of taxes, which ultimately fall on profits. The dilemma, then, is that if they let these services run down too much they will suffer in terms of a less efficient and more discontented workforce, but to pay for them they have to be prepared to hand over some of their profits to the state so that it can run them.

The capitalist class, and their politicians, have been split on the issue, some choosing the short-term benefit of less taxes, others warning that in the longer term profits will fall if these services are not properly maintained because the competitiveness of British goods on the world market would suffer. In the 1980s the Tories opted for “short-termism” with a vengeance: giving priority to short-term profits even if this meant running down the services that the state provided for capitalist industry. A good example of how such short-termism harmed the capitalist interest was the cut-backs in spending on training and apprenticeships in the Thatcher years which have now led to shortages of certain types of skilled labour.

By the 1990s sections of the capitalist class were already complaining about the effects of such short-termism. So the cry went up “Bring in Labour. They’ve always served us well on such occasions in the past”. Thus, the Financial Times supported Labour even in 1992 and of course again in 1997 and this year. Eventually, the voting public too got fed up with the Tories and booted them out. Many capitalists were delighted.

The newly-elected Labour government hasn’t specially increased government spending on the public services, but they have now been given a remit by the capitalist class via their media to put these services – whose primary purpose is to serve the capitalist interest in having a properly trained and productive workforce – in order.

Since Labour, no more than the Tories, now believe in trying to solve a problem “by throwing money at it” (by which they mean “by throwing a part of the capitalists’ profits at it”), their plan is to develop an idea hatched by the Tories to help their business friends: involving profit-seeking private enterprises in the running of these services. Under the Tories this was called “Private Finance Initiative”. Under Labour it has been renamed, typically, “Public Private Partnership”. The idea is that the government signs a contract with some private enterprise to invest in and run a part of a service for a given period of time.

Naturally, the contract contains a generous provision for profit, based on the comparable rate of profit in ordinary capitalist industry. These private contractors can increase their profits if they can reduce costs even further. One way of raking in such extra profits is to cut costs by worsening working conditions and driving the workforce even harder. This is one of the main advantages for the government: they don’t have to employ the workers to do the job on existing public service terms, and nor do the new profit-seeking employers.

This is why the public service unions are opposed to such privatisation. They fear a worsening of conditions, and they’re right. One of the aims of PFI/PPP is precisely to worsen the wages and conditions of the workers. In fact, in some cases – the negotiations for the PPP-isation of the London Underground, for instance – the City financiers behind the firms interested in running the public service insist that the government first weaken the power of the unions before they will sign any contract. Hence the series of strikes on the London Underground, relatively successful to date. This is not a case of the public service workers in being bolshie, but simply of them resisting attempts to worsen their conditions.

National and local government contracts have always notoriously been a source of easy profits for capitalist enterprises – and of corruption. The directors of firms that have obtained or are seeking PFI/PPP contracts frequently use the word “lucrative” when describing such investments to their shareholders. And all this is being promoted by the Labour government.

Clearly, the Labour Party has come a long way since the time when some of them saw the introduction of free public services run by national or local government on a non-profit basis as stepping stones to socialism. Though those Old Labourites were wrong – socialism cannot emerge gradually from a series of piecemeal reforms enacted under capitalism – they were right on one thing. In a socialist society education, housing, telecommunications, water, gas and electricity supply will be run as free public services on a non-profit basis, but as genuine services to people not as services primarily to provide capitalist employers with a trained and profit-producing workforce. And within the context of a society based on common ownership and democratic control with production directly for use not profit.

Adam Buick