What is a public service?

 

The Uk debate has a rather narrow implied  definition of a public service. MPs and media commentators see the NHS, state schools, the police and the BBC as public services.

To me the provision of bread, as well as water is a public service. Sky Tv is as much a public service as the BBC. Private sector health providers and public schools are public services like their state cousins. Private sector firms may often be working for the state as contractors helping provide public services.

The narrow UK debate seems to centre around a particular idea of how a public service can best be provided. If a service is free at the point of use, deliverd by state employees, and not subject to competition, that is a pure public service in UK eyes. In practice, this idea of a public service scarcely exists in the modern UK. It may be largely true of our defence and police forces, but it is not true of the other commonly identified public services.

In the case of health there are now charges for dental work, for prescriptions and for some items of service. The work may be done by a private sector contractor rather than a state employee. Our state schools face competition from public schools, offering  free places and scholarships to children whose parents cannot afford the fees. The BBC imposes a user charge or tax on all people with tvs, but faces competition from free to air and paying services. It also uses its market presence to advertise its own services extensively.

I find we need a different way of analysing public service from the simple public or private of the rather stultified UK debate. There are fewer and fewer pure public services on the narrow definition. The questions to ask when trying to analyse a public service are:

1. Do users pay at the point of use or not?

2 Is there choice for users?

3.Are the employees and organisations producing the service under state control or  not?

These questions give eight different types of public service or enterprise, ranging from the state monopoly free at the point of use with state employees, to the private sector business delivering a competitive service and charging the customer.  There are more and more hybrids as a result of public service reform by Blair and the Coalition.

The debate would be better informed if instead  of two teams backing either “pure” public service or pure free enterprise, we got down to discussing how each service with a state component can best be organised.

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63 Comments

  1. Andyvan
    Posted July 19, 2013 at 6:20 am | Permalink

    How about another question?
    Do you have money stolen from you at the point of a gun to provide this dubiously named public service or can you exercise you own free will about whether to fund it?

    • Jerry
      Posted July 19, 2013 at 6:49 pm | Permalink

      @Andyvan: To answer you question, yes, I think it’s called emigration….

  2. Roy Grainger
    Posted July 19, 2013 at 6:32 am | Permalink

    I suspect those on the left would include in the definition of a public service that it should not “make a profit”. Hence the wailing from them about the prospect of free schools being run for profit or that for-profit hospitals being integrated into the NHS. This, of course, is a very simplistic view as many involved in the NHS make “a profit” from the doctors, and nurses, and drug suppliers, and contract caterers, and so on.

    • uanime5
      Posted July 20, 2013 at 11:48 am | Permalink

      The problem with something run for profit is that profits are usually made to the detriment of the people involved. I doubt many people would be happy that a school cut back on educating their children simply to make a profit.

      • Edward2
        Posted July 20, 2013 at 6:46 pm | Permalink

        But you will only keep making profits if you satisfy the needs of your customers Uni.
        Exploit them and your profits will disappear.

        • Bazman
          Posted July 21, 2013 at 10:02 am | Permalink

          You actually relive this? The same rules no doubt applies to employees in this fantasy too?

          • Edward2
            Posted July 22, 2013 at 4:36 pm | Permalink

            Why is this a fantasy Baz ?
            I cant imagine you would continue to spend your money in businesses that you don’t like, or treat you badly, or give you bad service or shoddy poor quality products or you feel overcharge you compared to the competition.
            And yes, employees are a crucial element in the success of a business.
            If they are exploited, poorly paid and poorly trained their enthusiasm and willingness to satisfy the customers will be non- existent and then the business will suffer.
            PS I’m talking about the world of competitive business here not your cosy monopolies and State owned businesses.

          • Bazman
            Posted July 23, 2013 at 5:23 am | Permalink

            Then explain companies with revolving door recruitment policies or are you going to tell us they do not exist?

          • Edward2
            Posted July 23, 2013 at 8:06 am | Permalink

            You are back on your hobby horse of zero hours contracts Baz and I agree that these are unacceptable for staff and it needs legislation to stop this practice.
            Perhaps having unhappy staff will in the long term cause unhappy customers who move away thus making these companies fail.

  3. lifelogic
    Posted July 19, 2013 at 6:36 am | Permalink

    What is a public service?

    Well to Cameron, the state sector and the left it is any area of activity where they can get taxpayer funding to unfairly undercut the private sector providers (BBC, schools, universities and social housing style). Or better still from their perspective just legislate them out of the area completely so they have a monopoly letter post, areas of the legal system, building control, licences, driving tests etc.

    To me it is law and order, defence, some basic infrastructure, international relations and a basic safely net for people in real difficulties, not much more than that.

    20% of GDP is plenty to fund it all and then it would be 20% of a very much very higher GDP than we have now. The bloated state, with the nearly 50% of GDP largely wasted, that Osborne/Cameron seems to like is hugely damaging to all.

    On top of this much of the private sector is hugely misdirected too by absurd taxpayer subsidies like wind and PV, rail, the Olympics, culture, housing …………

  4. Mike Wilson
    Posted July 19, 2013 at 6:51 am | Permalink

    I can’t follow the logic of this particular argument. As far as I am concerned a public service is anything that is paid for out of taxation.

    One of my particular pet hates regarding the public sector is the bloody BBC. It is the epitome of everything that is wrong with the public sector. They take your money at gunpoint and then spend it paying themselves (and their ‘talent’) massive salaries and pensions at OUR expense.

    To me it is legalised highway robbery and I, for one, will no longer contribute.

  5. margaret brandreth-j
    Posted July 19, 2013 at 6:58 am | Permalink

    This polemic was discussed between myself , students and friends years ago , as I suppose it was in your circle. The argument then took the direction of what is service at all. Can you truly identify service as a state of affairs which are being paid at all? what exactly does to serve the King and Country mean?
    The division between public and private can be included into categories quite as easily as thus:
    Anything which provides a service to the public as a collective and is necessary for the running and benefit of all in society .
    Anything which is desirable , purchasable and enables providers to make a profit for their own interests.
    Of course these definitions are broad and there are bound to be clauses , like prescription charges to those who can afford it: however in private terms , even those who could not afford a prescription charge, would have to pay.
    Yesterday I read Archbishop Cranmer’s article comparing the NHS to a church. He was not far from the point, although the congregation have not understood the importance of the high ethical principle it was founded on and the continuing ethics of Nurses and Doctors in the church. Our rituals do not appeal to the divine , they appeal to our better nature , yet we get paid for it and so does the Archbishop.The Nurses ‘Code of Conduct’ being founded on egalitarian principles does not specifically recognise the division between private and public , preferring to concentrate on the welfare of humanity as a principle, as does the Hippocratic oath.
    I would prefer if the emphasis was placed on how we can best organise the public sector with a private component. Do private standards fall in line with public ethical standards? If not they are not worthy to pick up the crumbs from our table. I realise the NHS is going through a difficult time jus as the churches are. In effect there is a practice/theory gap, but remove those principles and the slippery slope looks brassy.

  6. Old Albion
    Posted July 19, 2013 at 7:19 am | Permalink

    Prescription charges are levied on England only. Not the UK. As a politician you know this and should convey this fact to us all. Rather than maintain the pretence that the NHS is a single UK body.

  7. alan jutson
    Posted July 19, 2013 at 7:42 am | Permalink

    The problem you outline John is only caused because Government run Public Services are not run efficiently.

    Perhaps in an ideal world.

    Electricity, water, gas, armed forces, police, fire, education and health cover should be provided for by the State, as it should stop profiteering for basic essential services, and to stop them from being controlled by outside sources/countries.

    Unfortunately all Governments of all Coulours make such a mess of running these organisations, they feel it neccessary to farm them out in part or in total, to private contractors and businesses for so called efficient running.

    Your blog yesterday about Network Rail sums it all up.
    Today we learn from the Press that this so called non for profit organisation is going to pay its Directors up to £11 million in bonuses, to reward its poor service and high prices.

    I would love the State to be able to provide the basics for living at a sensible cost, and for them to be run well and efficiently, but history proves that that is never likely to happen, thus we are stuck with the miss match of so called Public services together with private business/ service at public (taxpayer) cost, which the government can still not manage in a sensible and cost effective manner.

    We now hear of profiteering, poor service, poor value for money (PFI agreements) which still costs the taxpayer a fortune.

    To my mind the whole situation needs a drastic rethink, back to square one.

    • uanime5
      Posted July 20, 2013 at 12:00 pm | Permalink

      Actually the 5 heads of Network rail are going to be paid £11 million over the next 3 years but only £5 million is from bonuses. Not sure why these 5 people need an average salary of £400,000, an annual bonus of 17%, or a 60% bonus for meeting Government targets.

      • alan jutson
        Posted July 21, 2013 at 10:30 am | Permalink

        Unanime 5

        “not sure why these people should be paid an average of £400,000 per year and bonuses”

        Absolutely agreed.

        See we have more revelations today about huge payoffs and a gaint black hole in the BBC Pension Fund, amounting to half the licence fee income if reports are to be believed.

        These staggering payoff sums from Government Departments, Local Authorities and the like, simply begger belief.

  8. stred
    Posted July 19, 2013 at 7:55 am | Permalink

    The Building Control and Planning offices of my local LA have provided a public service over the last 3 years. We have built a one bedroom extension and had to use their’service’. The first was to agree a design for an extension to the boundary, then change policy just before approval and reduce the project by 20m2, having bought the house after consultation. (which is now chargeable) Then their recommended structural engineer designed 2 extra steel beams and a steel roof frame which were not necessary and a site inspector decided that the extension might tip into the street because of the cantilever design. The LA engineer decided that the 40 year old beam over the lounge was not deep enough and that the beam and supports should be replaced. The chief inspector decided that we should replace the render facing with brick because that was what was shown on the approved example on the BBA certificate.

    It has taken a year of my time to refute these claims and wasted fees for incompetent engineering provided by an unregistered ‘engineer’. This is the best bit. The chief inspector has looked at their costs and is going to demand a supplementary charge on top of the £1000+ fees because I have been wasting their time. At least I have saved the 25k costs and CO2 for construction which was not needed. At the time, we were unable to find a private building inspector. Fortunately, these are now available.

    • alan jutson
      Posted July 20, 2013 at 9:42 am | Permalink

      Stred

      Until your last couple of lines, I was going to suggest a private Building Inspector as a possible way out.

      In my experience Local Authority Building Control Inspectors are variable, but usually reasonable if you are completely upfront with them.

      I have certainly found that the more experienced ones are rather more sensible, practical and helpful ,than those who have just qualified, who often seem to want to avoid making a decision unless it is belt, braces and a bit of string..

      You can usually tell those that have a bit of commonsense when they first arrive on site and a typical comment is, “Ah looks like someone knows what they are doing”, as they usually recognise a well run and organised site, before they even look at the project in hand.
      A sensible discussion about work in hand can then usually take place.

      • stred
        Posted July 22, 2013 at 7:02 am | Permalink

        Alan. The sensible one, in my case, described the chief engineer’s requirement to replace the 40 year old beam as’ goodwill advice’. The one that wanted the outside wall changed was the chief. He also looked at his file and decided that I had been interfering with the structural engineer’s scheme that the client had commissioned. In fact I had designed and financed the scheme and was the project manager.

  9. Paul Corbett
    Posted July 19, 2013 at 8:06 am | Permalink

    Diversity + Competition = evolution.

    Self-evident to a biologist, seemingly beyond the wit of virtually every politician and commentator, who cry ‘post-code Lottery’ rather than celebrating ‘local freedoms’ or ‘personal choices’.

    The idea that a small (self-selecting!) intelligent, informed, elite can make better decisions and judgements than the mass of the people all making their own decisions, based on personal circumstances, is the modern equivalent of ‘The Divine Right of Kings’ and has as much credibility and basis in reality.

    We need to move away from all centralisation of power – so here’s today’s suggestions:
    – give each and every County Council broadly similar powers to those of the Welsh and Scottish Assemblies

    – make local e-referenda the norm, so local people get to choose between (say) a £10 million Leisure Centre, a new car-park or £50 off their Council Tax.

    – reverse the current planning hierarchy, so that the Parish Council has the final say on developments of <10 acres and District Councils on <50 acres.

    – make the lower the density of housing, the more certain to go through, so 2-3/acre is automatic, 10/acre all but impossible (minimumtoday is 16/acre)

    The idea is to give local people the final say. ‘Here’s this 10 acre field on the edge of your village. Do you want
    a) 20 homes on it,
    b) 50 homes on it or
    c) 160+ homes on it (= minimum today)?

    If you create large numbers of modern homes of the (comparable) size and standard to those built in the 1930’s (pre-planning) with large rooms, large gardens and wide streets, then people will flock to live in them.
    Consequently, the price of ‘Prescott Pens’ will plummet and so ‘affordable housing’ will become a reality – just not by BUILDING new slums.

    That’s so self-evident to me, that it scares me that Whitehall and politicians cannot grasp the central fact – you don’t need to BUILD ‘cheap’ over-crowded, small, dark, densely-packed houses to MAKE cheap houses available.
    You just need to build many, many more houses in places that people want to live and you do that by building ultra-low density housing, such that the local people welcome it, not are up in arms about it.

  10. Jerry
    Posted July 19, 2013 at 8:16 am | Permalink

    Taking your three bullet points;

    1. Do users pay at the point of use or not?

    No, they pay regardless of use, the public service provides what people need not want, or might need.

    2 Is there choice for users?

    Yes there can be, the state might have contracted out or own different choices, state owned railway, bus services and the national road infrastructure is an obvious example – the people pay for all but chose which suite their need best.

    3.Are the employees and organisations producing the service under state control or not?

    Untimely yes, because the state sets out operating policy etc, they need not be directly employed by the state though, the BBC’s staff are not employees of the state (like civil servants and MPs are) but the BBC is Chartered to provide a minimum service and what that service should be. ITV, Ch4 & 5 all have elements of PSB terms set out in their licences (that other commercail broadcasters such as BSkyB do not, and as such they are NOT a public service, existing purely to make a profit for their investors [1]) but they are fully private and commercail companies even though they provide at least the minimum public service (broadcasting) as set out in that licence remit.

    [1] when ITV expressed the view a few years back that their investors would be better served if the broadcaster opted-out of their PSB requirements they acknowledged that they would also have to hand back their ITV (1) licence.

    As for organisation of control, many would argue that fully autonomous control (from the source of funding) is best, but then many would suggest that the BBC has such control, complaining at the same time that the BBC does far more than it should, whilst many consider that NHS Trusts have also abused the freedoms they have. On the other hand both BR and the GPO suffered from far to much civil service/political interference in the day to day business affairs! Ho-hum…

  11. Denis Cooper
    Posted July 19, 2013 at 8:22 am | Permalink

    There is a lot of overlap between your broad definition of “public services” here and what the EU describes as “Services of General Interest”:

    http://ec.europa.eu/internal_market/top_layer/services/general-interest/index_en.htm

    “Services of general interest cover a broad range of activities, from the large network industries such as energy, telecommunications, transport, audiovisual broadcasting and postal services, to education, water supply, waste management, health and social services.

    Although their scope and organisation vary significantly according to histories and cultures of state intervention, they can be defined as the services, both economic and non-economic, which the public authorities classify as being of general interest and subject to specific public service obligations.

    Providers of these services must respect the rules laid down in the EC Treaty and in secondary EU law where these are applicable.

    In the case of large network industries having a clear European-wide dimension, such as telecommunications, electricity, gas, transport and postal services, the services are regulated by a specific EU legislative framework.”

    While in other cases the ECJ decides that it is in the interest of “ever closer union” to unexpectedly expand the scope of the EU legislative framework to interfere with other activities such as our health services.

    But, hey, it’s not all bad, along with Belgium we’ve just won an important case at the ECJ; apparently the UK government had the right to insist that some football matches must be broadcast on free-to-air television channels:

    http://euobserver.com/news/120906

    “Under EU broadcasting law, governments are allowed to designate big sporting events as being of “major importance” to their country even though this goes against the spirit of EU competition law. However, governments are required to formally set out their justifications to the European Commission.

    In both cases, the list included matches involving neither the Belgian or English national teams, but the EU executive arm approved the requests.”

    I remember Blair in one of his fits of faux patriotism referring to the British as “a proud sovereign nation”; so why do we keep electing MPs who have no belief in the sovereignty of their own Parliament, our national Parliament, and who are content to see our national government grovelling in Brussels and Luxembourg and Strasbourg?

  12. lifelogic
    Posted July 19, 2013 at 9:09 am | Permalink

    I see that the government with Vince Cable is trying to claim the Olympics has benefited the economy by £10B even claiming shopping centres in Croydon as a benefit. The claims are absurd if you take £150 per person off them to fund daft white elephant stadia used for a couple of weeks you clearly harm the economy not help it. They have less to spend at shopping centres in Croydon so make them less likely.

  13. Iain Gill
    Posted July 19, 2013 at 9:16 am | Permalink

    better to have the state move away from owning and running providers of services as much as possible, and rather just take on a regulation and enforcement role. we do need regulations to stop the worst excesses children sweeping chimneys, open doors immigration, no safety kit on site, etc, but we dont need the state running things with a few exceptions (the military, the police, and so on). the bbc, the health system, the schools, would all benefit from end customers havng money to take to any provider they choose. Sure the state can give citizens cheques when their children need a school place, or they need an operation, but let the end citizen take the cheque anywhere they like.

  14. Mike Wilson
    Posted July 19, 2013 at 9:21 am | Permalink

    There is an army of Buy to Let landlords in this country renting out squalid accommodation to DSS tenants. The DSS (i.e. you and I) pay landlords £100 a week for a room with a bed, a sink, a shower cubicle, a WC and a microwave in it.

    Over the last 20 years the number of landlords has increased massively. Those who bought houses before Gordon Brown’s house price boom have seen capital increases of hundreds of percent. Some now sit on property portfolios WORTH MILLIONS OF POUNDS that WE HAVE PAID FOR.

    Now, which bit of this ‘provision’ is, I wonder, a ‘public service’. As we have paid the rent which the landlord has used to pay the mortgage, I would suggest that we should benefit from the capital increase. Or is it right for private landlords to have their tenants’ rent paid by the rest of us while they sit on massive capital gains?

    This really is too stupid for words. If a landlord can go to a bank, take out a mortgage and get us to pay the rent for his tenants – why can’t the government simply borrow money from the banks, take out mortgages and cut out the middle man?

    • Iain Gill
      Posted July 20, 2013 at 8:50 am | Permalink

      Property prices should not be a one way bet. If the market was operating properly there would be regular property price corrections downwards. The risk in property prices potentially going down should be a worry to landlords. As it is the governement has continually rigged the market and forced ever higher house prices, and that is a large part of the problem! If prices were more realistic many more would be able to afford to buy etc, taking the pressure off the system. The government cannot rig the market forever, it will have to stop one way or another, but maybe they will end up in a Greece/Spain like situation before the government is forced to change.

    • Credible
      Posted July 20, 2013 at 10:46 am | Permalink

      Agreed

  15. English Pensioner
    Posted July 19, 2013 at 10:50 am | Permalink

    The real services which the public need are in the hands of private companies. These are gas, electricity, and water which we all need for our daily lives.
    However, the fact that these are in private hands won’t absolve the government in the eyes of the electorate should there be electricity cuts, or gas shortages next winter. If these occur after all the warnings, and dithering by the government, they will never live it down and it could lose them the next election. It’ll be no good saying that it’s the fault of the private companies, or the fault of the Greens, the government in power will take the blame in the eyes of the public.

    • Jerry
      Posted July 19, 2013 at 7:29 pm | Permalink

      @EP: When was the Ambulance, Police, Fire and Coastguard services privatised, sorry but one can live quite easily without mains water, gas and electricity.

      Oh and if the utilities, such as electricity, do end up causing power cuts because they have chosen to give directors mega bonuses and shareholders unwarranted dividend payments rather than investing the profits in the new infrastructure they knew would be needed then that will be the biggest recruiting Sargent for the socialists since 1945 and their “Homes for Heroes” manta… But yes it won’t absolve the government, well one anyway, the one that privatised the industry!

  16. Neil Craig
    Posted July 19, 2013 at 11:17 am | Permalink

    ” I have never known much good done by those who affected to trade for the public good.”
    Adam Smith

    The difference being that nowadays there is a vast amount of alleged trading for the public good, in most cases with the state subsidising these “traders” due to the want of individual members of the public wanting their overpriced goods (windmills) or getting the advantages of a state enforced monopoly, or in the worst cases, both (BBC)

    • Jerry
      Posted July 19, 2013 at 7:31 pm | Permalink

      @Neil Craig: Just because Adam Smith was blind to the good doesn’t mean it wasn’t there.

      • Neil Craig
        Posted July 20, 2013 at 9:45 am | Permalink

        Your knowledge of the18thC may be greater than Adam Smith’s but you would be more convincing if you produced evidence not simply assertion.

        • Jerry
          Posted July 20, 2013 at 6:44 pm | Permalink

          @Neil Craig: Can anyone prove a negative, I can’t, nor could Adam Smith, I would be amazed if you can…

  17. Mike Wilson
    Posted July 19, 2013 at 12:33 pm | Permalink

    Talking about public services – why don’t you, Mr. Redwood, and your colleagues in the House of Commons perform a valuable public service and pass some simple legislation to outlaw these endless bloody nuisance phone calls. I have been interrupted 3 times this morning by a call from 01638 599261. When you answer the call there is no-one there. Frightening for elderly people to receive calls from the same number with no-one on the other end. If you dial the number there is a recorded message from someone called ConnectAQuote – who tell you they will call again about your car insurance.

    This is really beginning to make my blood boil. Politicians are regarded by most people as congenitally useless – sorry, but there it is – why not do something genuinely useful and haul in the people running Ofcom and GET SOMETHING DONE!

    • Denis Cooper
      Posted July 20, 2013 at 4:53 pm | Permalink

      Been there, had blood well boiled.

      This may help:

      http://www.tpsonline.org.uk/tps/index.html

      “The Telephone Preference Service (TPS) is a free service. It is the official central opt out register on which you can record your preference not to receive unsolicited sales or marketing calls. It is a legal requirement that all organisations (including charities, voluntary organisations and political parties) do not make such calls to numbers registered on the TPS unless they have your consent to do so.”

  18. stred
    Posted July 19, 2013 at 1:18 pm | Permalink

    George Osborne is on BBC News now claiming that “we are bringing down the debt”. Is this true? Improved borrowing by HMG is possibly caused by larger tax receipts earlier this year. In my case, I worked out my tax on the computerised return and it came out around £3700. Then having submitted it, a message came on requiring £5700 to be paid now. I paid and six months later they want £330 more. After listening to the announcements on how to pay for 5 minutes, I managed to speak to a taxwoman who told me the extra £2k was a payment on account. I gave up asking how they worked this out and was assured that they would work it out more accurately when I made the next return. If this is happening to everyone, then it is no surprise that tax receipts are up. The wisdom of Homer is paying off.

    • zorro
      Posted July 19, 2013 at 6:30 pm | Permalink

      He is incorrect to say that he is ‘bringing down the debt’, because he isn’t. It is rising each year as we overspend. He is, in a miniscule fashion, slowing the rise in the rate of that debt, by ever so slowly slowing the rise in the annual deficit. However, if, from your example, HMRC continue to mug people without explaining their sums, he might make a dent in his deficit. It’s not on if HMRC are taking money from you without proper calculations or explanation…..

      zorro

      • Leslie Singleton
        Posted July 20, 2013 at 5:57 pm | Permalink

        zorro–All this is far too serious.–Have you ever tried to look up “miniscule” in a dictionary? XX

        • zorro
          Posted July 21, 2013 at 3:21 pm | Permalink

          It means ‘very small’, an apt description I would have thought….

          zorro

          • Leslie Singleton
            Posted July 21, 2013 at 6:24 pm | Permalink

            zorro–Nought out of Ten for Spelling I’m afraid

          • zorro
            Posted July 24, 2013 at 8:50 pm | Permalink

            Indeed, I do like conventional spelling, but that spelling is an acceptable alternative. Watch out or I’ll set chief anarchic speller Lifelogic on you!

            zorro 🙂

    • Mike Wilson
      Posted July 20, 2013 at 8:59 am | Permalink

      You really ought to fork out for an accountant.

  19. Ian Phillips
    Posted July 19, 2013 at 2:42 pm | Permalink

    A small point: I, for one, dislike the phrase “public service” as it is ill defined. I believe that it is used by many on the left because of it’s similarity to “public goods” (defined as those being both non-rivalrous and non-excludable). I think that a better term would be “government managed services” as this more accurately describes them while still allowing for either state or private sector provision.

    • Jerry
      Posted July 20, 2013 at 8:17 am | Permalink

      @Ian Phillips: There are two types of “public Service”, indeed some are government managed services (the MOD is one such service), meaning that whilst the public pays for the service the public doesn’t directly use the service, on the other hand for example the Ambulance, NHS, Fire & Rescue, the Police, the Public Library service or LA socail services ARE truly “public Services” because the public both fund and can access their use directly.

  20. uanime5
    Posted July 19, 2013 at 3:08 pm | Permalink

    2) Most users have a choice, specifically using the Government service or not using it. For example you can pay for a TV license or you can chose not to watch TV.

    3) This can be difficult to determine as Ministers want an organisation to be independent but at the same time what total control whenever this organisation does something they don’t like.

    Regarding the best type of service I’d say not-for-profit is the best as it’s cheaper for the consumer.

    • libertarian
      Posted July 19, 2013 at 7:59 pm | Permalink

      You clearly don’t understand profit

      ALL organisations HAVE to make a surplus over expenditure ( profit)or they die.

      For profit organisations pay tax on their profit and then reinvest some back into the growth of the business and the rest is distributed to shareholders where its taxed again.

      In a not for profit business the surplus ( profit ) ISN’T taxed and is just put back into the organisation.

      So in fact neither in necessarily cheaper but a for profit business does more public good as it contributes to public income

      • uanime5
        Posted July 20, 2013 at 12:14 pm | Permalink

        Actually companies can survive as long as they avoid making a loss. So they don’t need to make a profit, they just need to break even.

        What happens in a private company which doesn’t have any shareholders? Is all the profit invested back into the business?

        In any case the main problem with for-profit public services is that part/most of the profits go to the shareholders, rather than improving this service.

        • Edward2
          Posted July 20, 2013 at 6:50 pm | Permalink

          Breaking even Uni, only works in the short term because not enough is generated to pay for R and D, investment in new products or new machinery.
          Other more profitable competitors will have enough funds for all these things and in the long term you will be out performed.

        • Ken Adams
          Posted July 21, 2013 at 5:30 am | Permalink

          Sorry but how can you claim all profits in a private company which does not have shareholders are invested back into the business! That cannot be true, they might go to supporting a lavish lifestyle of the owner. Or am I missing something?

    • matthu
      Posted July 19, 2013 at 10:20 pm | Permalink

      There is absoutely no reason why “not for profit” should be cheaper.

      Is the BBC a profit organisation?
      Is the RSPCA a profit organisation?

      Absolutely nothing about “not for profit” precludes massive wastage or massive salaries or bloated perks.

      • uanime5
        Posted July 20, 2013 at 12:18 pm | Permalink

        Not for profit is cheaper because they don’t need to make a profit, they only need to cover their costs. So a non-for-profit company can provide good quality services, while a for-profit company will provide less good quality services in order to make a profit.

        • matthu
          Posted July 21, 2013 at 7:13 am | Permalink

          You miss the point that without competition “not for profit” organisations can inflate their costs by paying executives massive and unjustified benefits so there is no guarantee that they will be cheaper.

        • Edward2
          Posted July 21, 2013 at 7:16 am | Permalink

          Uni
          A not for profit company doesn’t necessarily give the profit element back to its customers in the form of cheaper prices.
          And a profit making company doesn’t automatically exploit its customers to generate its profits.
          Assuming that there is some competition in both instances.

  21. They work for Us
    Posted July 19, 2013 at 4:06 pm | Permalink

    It was of interest that the City of Detroit is bankrupt because its tax revenue does not match up to the level services it wants to provide.
    The Today program presenter asked them how things were going and the reply was that they were reduced to the provision of basic services like dustbin emptying, the police force and the fire dept from the taxes that they actually did receive.
    There is a lesson to be learned here as to what local authorities are really for and what would be “nice to have” (as long as someone else is paying for it!

    • uanime5
      Posted July 20, 2013 at 12:23 pm | Permalink

      Detroit is having problems because of contracts it negotiated decades ago when times were good, which are now unaffordable due to this city’s economic decline. So it’s hardly fair to blame the people of Detroit for wanting too many services.

      • Edward2
        Posted July 22, 2013 at 4:39 pm | Permalink

        And Uni the failure of the state government to reduce in size as the private sector declined.

  22. Ken Adams
    Posted July 19, 2013 at 5:27 pm | Permalink

    If a service is free at the point of use, delivered by state employees, and not subject to competition, EU competition rules do not apply. But as soon as you start to use private contractors to supply a service competition rules do apply, hence used in that way EU competition rules are being used to force privatisation of all national services.

    • Denis Cooper
      Posted July 20, 2013 at 5:19 pm | Permalink

      This from 2002 agrees with at least some parts of what you say; apparently a wider question is whether a service is classed as “internationally tradable”:

      http://www.parliament.the-stationery-office.co.uk/pa/cm200102/cmselect/cmhealth/308/308ap26.htm

      “JOHN AUSTIN MP

      Q935-937 Has the Confederation considered that if the health care system in this country increasingly becomes a mixed economy of provision, even though public funded, there is an argument that it then comes within the remit of the WTO?”

      “… we understand there has been some discussion of health services by the WTO. For the WTO rules to cover health care the Department of Health would need to agree that health was an internationally tradable service. Whilst opening the provider side to competition in the UK automatically means that it is open to firms in EU members it is not clear that this is the same as declaring health as an internationally tradable service. If health services were to come under the remit of WTO there would be a need for significant negotiation of the terms for this. Interestingly although the government has talked about increased plurality there has not to our knowledge been any formal notification of firms in other EU countries. The view of our expert advisor is that this position is probably untenable if not actually illegal.”

  23. margaret brandreth-j
    Posted July 19, 2013 at 6:18 pm | Permalink

    Notice that Australia have a deficit problem.

  24. John Wrexham
    Posted July 19, 2013 at 7:32 pm | Permalink

    We shouldn’t overlook the large number of private companies that are not exactly examples of free enterprise a) monopoly or near monopoly providers such as the utility companies and the railway companies b) companies that rely heavily on government contracts such as G4S, Serco, A4E; c) companies that rely heavily on public private partnerships eg the developers who benefited from the PFI hospital rip off d) the big four accountancy firms e) companies that rely heavily on government subsidy and tax breaks eg wind energy and fracking, farming, etc etc f) the list is endless. in short the shades of grey starts at Whitehall and goes all the way through to the one man/woman band delivering a service or providing a product in a highly competitive market.

  25. Pleb
    Posted July 19, 2013 at 10:52 pm | Permalink

    John why do you worry about such triva as you face a total loss in 18 months time.

  26. Credible
    Posted July 20, 2013 at 11:04 am | Permalink

    John,

    These are the wrong questions.

    A private company exist to make money. This is beneficial in raising standards and increasing innovation only if there is enough competition.

    The questions you should ask are:

    1. If privately run – would the drive for profit be beneficial? In other words, is there sufficient competition to raise standards, efficiency, create innovation and inhibit cost cutting and profiteering.
    2. If publically run – would the lack of profit motive lower standards and stifle improvements and efficiency. In other words provide a poor service.
    3. If privately run – would the service only be affordable for the wealthy.
    4. If privately run, are state subsidies and regulation still needed.

    In the cases of the utilities companies, transport, education, NHS, police, military there is not enough competition and state subsidies and regulation would still be needed. The private sector is still a valuable component in all these areas, but when completely privatised the opportunity for profiteering does not provide value for money. We get taxed for the subsidies and we get taxed by price increases and ultimately the poorest suffer the most.

  27. Lindsay McDougall
    Posted July 21, 2013 at 2:28 pm | Permalink

    What I dislike are public services that are “privatised” but where the State makes the key decisions. That leads to Government power without responsibility, which is not a good thing.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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