Reimagining Public Services: A Call to Prioritize People Over Profit
Outsourcing might have potential if directed towards companies prioritizing people over profit, assert Tom Lloyd Goodwin and Neil McInroy.
The much-touted “world-beating” test-and-trace system in England has proved a colossal failure. Plagued with issues from the start, it barely functions, facing demand exceeding capacity by up to fourfold, with a mere 10% of tests meeting the 24-hour turnaround goal.
Yet, the shortcomings of test and trace extend far beyond government mishaps. Over the past three decades, Britain has shifted from a market economy to a market society, where significant portions of public services are outsourced to the private sector. NHS test and trace exemplifies this trend, with management consultancies like Deloitte and Serco overseeing substantial aspects of a system seemingly prioritizing shareholder value over frontline service requirements.
Let’s be unequivocal: expenditure on public services differs fundamentally from other financial allocations. While price and quality matter, public services serve citizens, not merely consumers, embodying critical public values like democracy and the common good.
Our public services were never intended to be profit havens for highly compensated consultants and shareholders fixated on dividends rather than community needs. Yet, we find ourselves in a landscape dominated by a handful of large firms, profiting handsomely while compromising service quality.
Outsourcing originated from Margaret Thatcher’s government, which mandated competitive tendering in the early 1980s. This policy, compelling local authorities to outsource services like cleaning and maintenance to private entities, aimed to quell strikes, reduce council and NHS staff, and cut costs. White-collar workers in the NHS and local authorities bore the brunt, experiencing significant salary cuts.
This policy shift birthed a litany of failures. In 2018, Carillion, a British multinational, collapsed, costing taxpayers £148 million and thousands of jobs. Similarly, G4S lost its contract to run Birmingham prison in 2019, following government intervention due to rampant violence.
In adult social care, years of outsourcing have enriched billionaires at the expense of care quality. The top revenue-generating care providers often receive poor safety ratings, while caregivers struggle without sick pay or a living wage.
Outsourcing has reshaped our perception of public services. In the 1990s, cost dominated service delivery decisions, with contracts awarded to the lowest bidders, regardless of expertise. Moreover, opaque tendering processes and complex corporate structures hinder accountability.
A paradigm shift is imperative in public service delivery. Many local authorities recognize the pitfalls of outsourcing and are reclaiming services like refuse collection, saving costs, and bolstering accountability. However, systemic change requires adequate funding, which has dwindled significantly since 2010.
Given the economic strain of the pandemic, prudent allocation of public funds is paramount. While insourcing may not be universally applicable, involving organizations sharing public values, such as cooperatives or nonprofits, could enhance service delivery.
A system of “social licensing” could ensure businesses aligned with public interests access public sector contracts. Such a framework would prioritize entities fostering positive outcomes and mandate fair taxation and wages.
In the words of John Maynard Keynes, the free market is neither intelligent nor virtuous. As England grapples with the fallout of a failed outsourced test-and-trace system, these sentiments resonate more than ever.