The state and local government
Yüklə 5,87 Mb.
|
| 666; and all four firms which conduct business as local authority treasury management advisers use the phrase “authorised and regulated by the FSA” on their letterheads and promotional literature even though their ‘activity…is, under the legislation by which the FSA works, not regulated’.667 Nevertheless, as Horsfield recommended, all councils should be required to place their short-term deposits only in the DMADF
Top of Form Post Your Comments until, as further argued in this study, all banks are publicly owned. Chapter Nine
The first section of this Chapter focuses on the history of the Private Finance Initiative (PFI) and its current crisis. The second section discusses Strategic Service-delivery Partnerships (SSPs), which are long-term, multi-service, multi-million pound Public Private Partnerships (PPPs) between local authorities and private contractors. The third section looks at recent developments in Essex County Council, Barnet Council and Lambeth Council where another phase of radical reorganisation has started. New Labour’s Private Finance Initiative The PFI was introduced in 1992 by the Tories. It represented a relaxation of the so called ‘Ryrie Rules’ which constrained the use of private sector funding to situations where it could be demonstrated to be more cost effective than a comparable publicly funded project; and it resulted in a corresponding reduction in public spending. The guiding principles of the government’s PFI programme as laid down by the Chancellor at the time were: the private sector must genuinely assume risk without a guarantee by the taxpayer against loss; value for money must be demonstrated for any expenditure by the public sector; and all new public sector capital projects must be tested for private sector potential before they were approved. Following New Labour’s election victory in 1997, the PFI process was reviewed and led to the establishment of the PFI taskforce within the Treasury to develop the appropriate expertise within government. This was superseded in 2000 by Partnerships UK, itself a Public Private Partnership jointly owned by industry and government which operates at arm’s length from the Treasury. By November 2007, according to the House of Commons Public Accounts Committee (PAC), there were 800 PFI contracts with private sector suppliers for services worth in total £155 billion up to 2032.668 John Hutton, then Secretary of State for Business Enterprise and Regulatory Reform, in December 2007 asked Dr. DeAnne Julius CBE to lead a review of the Public Services Industry – a euphemism for the private contractors who provide privatised public services – which was published on 10 July 2008.669 ‘We lobbied for it’, the CBI’s Director-General Richard Lambert said smugly in June 2008; and, as David Walker also points out, Lambert’s members would ‘not be disappointed’ because it’s ‘a gung-ho document, echoing the ultra-Blairites’ enthusiasm to outsource to the maximum’. Lambert, moreover, ‘welcomed restraints on public spending if they force the government to outsource more services.’670 Julius, according her biography, is Chair of Chatham House and a non-executive director of BP and Roche. She is on the advisory boards of British and US hedge funds, Vice President of the Society of Business Economists and Senior Advisor at Fathom Financial Consultants in London. From 1997–2001 Julius was a member of the Monetary Policy Committee of the Bank of England. Prior to joining the MPC, she held a number of positions in the private sector including Chief Economist at British Airways and Shell. She has been senior economic advisor at the World Bank and a consultant to the IMF and UNCTAD.671 However, not included in Julius’s official biography, is the fact that she was at one time an analyst for the CIA.672 The Julius report defines the ‘Public Services Industry’ (PSI) as: ‘All private and third sector enterprises that provide services to the public on behalf of government or to the government itself’.673 In 2007/8 the turnover of the PSI was £79bn. It generated £45bn in value added and employed over 1.2 million people. If indirect and induced impacts are included, its value-added rises to £88bn and jobs supported reaches 2.3 million.674 Since 1995/96 the PSI has grown at an average annual rate of over 8 per cent in nominal terms or 5.4 per cent in real (inflation adjusted) terms. ‘However, in recent years its rate of growth has slowed’.675 Analysis of the size of the PSI for a sample of OECD countries, when expressed as percentage of GDP, shows it ranges from just over 6 per cent in Sweden and Australia to less than 3 per cent in Spain. The PSI here accounts for 5.7 per cent of GDP, up from 4.2 per cent in 1995/96. This is slightly higher than its share in the US and nearly double that of France and Spain.676 In 2007/08 the turnover of the PSI for the British central state and local government was £79 billion, an increase of 126 per cent from £31 billion in 1995/96.677 The PSI has grown since 1995/96 from £31 billion to £79 billion at nominal prices and from £42 billion to £79 billion at real prices. Over the first eight years of the period the PSI grew by 7 per cent per year in real terms, but since 2003/4 growth has fallen to an annual average of 3 per cent. This fall partly reflects the slower growth of total government expenditure, but it also indicates a slowdown in the rate at which government is contracting with the PSI.678 Another way to view this is to calculate the share of total public services (that is, current spending excluding transfer payments, debt interest and procurement of goods) provided by the PSI. This peaked at 33.6 per cent in 2003/04 and has since fluctuated around 32.6 per cent.679 Julius makes three projections for the growth of the PSI:
Julius therefore concluded that the time is ripe – provided public bodies impose fewer conditions of a ‘social or environmental kind’ in contracts – for a ‘significant expansion’ of PSI: and that central and local government ‘should seek to introduce competitive challenge into areas of service delivery where it has not yet been tried and consider how best to incentivise further innovation in sectors where it already exists’.681 To answer the question ‘[h]ow much scope’ there is for further privatisation Julius used Public Expenditure Statistical Accounts and DCLG data ‘to compare the current usage of the PSI in different central government departments and local authority activities’ as ‘an aggregate measure of the maturity of the PSI market’. Tables 9.1 to 9.3 show the massive scope for further privatisation in both central and local government that Julius identified for New Labour. Full ‘maturity’ for Julius is where ‘an activity or Government department’ has ‘been completely outsourced’, though she does concede that ‘[p]ublic sector staff will always be needed for policy and parliamentary duties and, of course, to manage the commissioning and project management process’.682 Table 9.1: Proportion of privatised and directly provided public services in various advanced capitalist countries (2006/07)
Source: Julius, 2008, Fig 5.8 Table 9.2: Proportion of privatisation and direct provision in the British central state (2006/07)
Source: Julius, 2008, Fig 6.1 Table 9.3 Proportion of privatisation and direct provision in English local government (2006/07)
Source: Julius, 2008, Fig 6.2 Julius’s views, moreover, are similar to those of the Thatcherite Nicholas Ridley, then Conservative Secretary of State for the Environment, who in his 1988 pamphlet entitled The Local Right: enabling not providing argued that the local government should cease to provide services directly and contract out delivery to the private sector. Councils, as “enabling” authorities, would then only need to meet once a year to hand out contracts for services.683 Nicholas Ridley’s New Right aims are also near to fruition under New Labour. For, as Dave McLuckie, a Cabinet Minister on Redcar and Cleveland Council in 2002 said: Elected members have stopped coming to the town hall as decision-making has gone to the executive, or services have been transferred….It means that in time you’ll be left with a small group of councillors meeting to sign contracts.684 Hence New Labour put in place the optimum internal management arrangements for privatised local government services: which their successors will fully exploit to implement the Julius and CBI neo-liberal agenda they both share. This is why the alternative progressive policies and strategies required to resolve the crisis in local government proposed in Chapter 14 are so essential. In September 2008, the PAC estimated that in 2006 some £180 million was spent on changes to PFI contracts. They point out that a third of contract managers at PFI hospitals and one in six contract managers of PFI schools surveyed by the National Audit Office described their teams as under-resourced, and 15 per cent of PFI projects were not being managed on a full time basis, which is a clear risk to value for money. Major changes costing £100,000 or more accounted for 90 per cent of the total value of changes to PFI projects in 2006. Nearly 30 per cent of major changes which could have been competitively tendered were not. The companies involved in a PFI deal establish a separate company, known as a Special Purpose Vehicle (SPV), to manage the project, including any competitive tendering for new work. For most small changes, SPVs simply act as conduits, passing requests for changes from the public sector authority to the facilities management provider and back again. However, many SPVs charge additional management fees for processing change requests. These fees ranged from 2 per cent to 25 per cent, adding an estimated £6 million to the cost of changes made in 2006.685 By November 2008 there were 628 signed PFI deals with a combined capital value of £62.81 billion. Five areas – Transport, Health, Defence, Schools and the Scottish Government – account for 64 per cent of all projects and 84 per cent of the capital value (see Table 9.4). However, 165 of the 628 signed PFIs were either non-operational or still included in the departmental balance sheet, which Julius failed to point out. These PFIs are therefore not included in Table 9.5, which only covers the 463 PFIs that are both operational and excluded from departmental balance sheets – so that they are not included as public expenditure. Though the move to International Financial Reporting Standards from April 2009 put the bulk of PFI finance on the balance sheet of the public authorities involved.686 Moreover, according to Mark Hellowell: The addition of more than £30 billion in capital….would also, at a stroke, eliminate one of the main advantages of the PFI from the point of view of the Treasury. While the move to IFRS will address accounting anomalies, one perverse outcome is that NHS trusts with PFI projects will have to pay twice for the use of their facilities - one charge to their private partner…already higher than average NHS costs…and one to the government in the shape of the capital charge, set at 3.5 per cent of the value of their entire estate. This is basically an administrative anomaly...the current confusion is undoubtedly contributing to a sense among NHS trusts that proceeding with the PFI is just not worth the candle.687 Table 9.5 shows that by November 2008 the total value of these 463 PFIs was £26.01 billion; and 59 per cent (274 out of 463) of these are local government PFIs and 41 per cent (189 out of 463) are central state PFIs. The total value of the local government PFIs is £12.9 billion, which is 50 per of the total value all these PFIs; and the central state’s share is also 50 per cent (£13.1 billion). The total value of the central state’s 69 (36.5 per cent of the total) PFIs for NHS Trusts in England is £4.4 billion (33.3 per of the central’s state total). Most of the of the Scottish Government (33), Northern Ireland Executive (21) and Welsh Assembly Government (12) central state PFIs, are also for hospitals. The value of the Ministry of Defence’s 35 PFIs is £3.6 billion (27.3 per cent of the central state’s total). The total value of the 104 PFIs (38 per cent of the total local government PFIs) for schools in England is £4.4 billion (34.1 per cent of the total). Similarly, most of the Scottish Government (32) local government PFIs are for schools. The 29 local government transport PFIs are for street lighting and roads and their total value is £2.2 billion (17.3 per cent of the total). The DCLG’s 47 PFIs are mainly for civic offices and their total value is £1.4 billion (10.8 per cent of the total). The 20 DEFRA PFIs are for waste management and their total value is £2 billion (15.2 per cent of local government’s total). Table 9.4: Main PFI areas (November 2008)
Source: HM Treasury, 2008b Table 9.5: Central and local government PFIs (November 2008)
[a] contract 10.67 years [b] contract 10 years [c] contract 30 years Source: HM Treasury, 2008b. However, despite the Julius Report’s rhetoric, there is now massive evidence showing the extra costs of private sector delivery of public services: and its failure in practice when it comes to critical core public services to be more efficient than the public sector. For example, under the Department of Health Independent Sector Treatment Centre (ISTC) programme in England, the private healthcare industry is providing elective surgery, diagnostic and other clinical services to the NHS. Allyson Pollock and Graham Kirkwood at the Centre for International Public Health Policy, University of Edinburgh, evaluated the performance of the Scottish Regional Treatment Centre (SRTC) during its first year of operation from 1 December 2006 to 31 January 2008. Scotland has only one ISTC in operation. In November 2006, NHS Tayside Health Board contracted with Amicus Healthcare (Scotland) Ltd., a subsidiary of Netcare (UK), which is a subsidiary of the South African healthcare company Netcare, to provide elective procedures over three years for up to 8000 NHS patients at a total cost of £18.7 million. Netcare operates out of an NHS hospital; the shared operating theatre is used by the NHS during weekdays and by Netcare on evenings and weekends. They found that more than £3 million of public funds was paid to Netcare for surgical procedures never carried out and concluded: ‘If wave-one ISTCs in England perform similarly to the SRTC then as much as £927 million may have been paid for patients who did not receive treatment’. Yüklə 5,87 Mb. Dostları ilə paylaş:
|