Saturday 17 October 2015.
Dear Mr Cameron,
There two basic types of privatisation, The first is the standard business model, for example, Royal Mail, which operates by selling a product to the public at the point of use.
The second type of privatisation is contracting out services which remain publicly funded because there is no sale of product involved. These are services which are taxpayer funded and free at the point of use, like the NHS, fire services, police, ambulances, etc.
In selling something like Royal Mail, it is advantageous to sell at a time when as a business it is showing a profit thereby making it attractive to buyers who desire to see a return on their investment. The state receives a one off payment but loses out on all future profits, a short term gain for a loss of income in the long term. Once something like the Royal Mail hits the casino of the stock market, traders can buy and sell on the long or short term, holding or selling stock in order to make a profit on their investment, either way, the state (and the public) is no longer in the game.
Contracting out a service is an altogether different proposition. Companies bid a contractual price which they will be paid by tax payers to deliver that service. That fixed price has to continue to provide the service, meet staff costs and so on, but within that price must also be factored a cut for the bidding company as a fee for running the service on behalf of the state or, more correctly, tax payers.
Both these privatisation models are economically illiterate in terms of value for money for the tax paying public who have paid to build and maintain them throughout their time in public ownership and, in the case of Royal Mail, have seen a return on that investment either to reinvest in the business or put into the general tax pot. In business terms, as with the Post Office before its privatisation, in providing a universal service such provision may never show a profit but is paid for and run as a universal public good. Applying a ‘for profit’ business model to a public service is inappropriate because the service is paid from the common purse for the common good, the cost is spread across the whole of society for everyone’s benefit. It makes sense not to have a pay meter on every street corner for street lighting at night, street lights are a universal benefit paid for by all whether there is one person walking down the street, thousands or no one.
General taxation exists for general benefit regardless that at times individuals may not be benefiting specifically. Sickness benefit or unemployment benefit is a universal insurance, some may never have need of such universal benefits but they exist just in case they do, it is a universal safety net and a mark of a civilised society.
Contracting out services does two things, it funnels the tax money of the many into the hands of the few and those few carve a chunk off, calling it profit, for personal gain. The NHS, unlike Royal Mail, is not a for profit business and its privatisation is a deceit being pulled off by destabilising it and pretending that private companies will make it better. They wont and don’t, the public and workers lose out because businesses have to force more from less. The current chaos in the NHS is entirely caused by a government who have sold out and are selling us out to the private sector whose interests are in making a profit and not serving the common good. The privatisation of the state is a monstrous, perfidious, scam!