Is there any such thing as a pure nationalised service?

On Friday 27th April at 11 am in the Old Library at All Souls College, High Street Oxford I am giving an open lecture to answer this question.

I will examine the different ways the public and private sectors work together to deliver public services, and offer a new way of analysing services for their public and private sector components.

I will remind the audience that most of the UK railway is provided by the public sector, and a lot of our current health care both within and outside the NHS is delivered by the private sector. People value the free at the point of need main proposition of the NHS but worry less about who provided what within that. They accept drugs supplied by for profit companies retailed by private pharmacies and often prescribed by GPs working as independent contractors to the NHS. I will conclude that there is no such thing as a purely public sector service in a mixed economy like the UK, and argue that a lot of what the private sector does is also public service.

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34 Comments

  1. duncan
    Posted April 11, 2018 at 5:29 pm | Permalink

    It’s ceased to be about provision and now the entire focus is the political control of a vested interest affording the master political power, leverage and control over how the taxpayer is abused to finance this form of political infection of what should be a provider of important services to the end-user

    Labour have spent years abusing the taxpayer to construct a client state using our money to protect the interests of a private political party. That is unacceptable and it is shameful that the Tories have stood by and watch it happen

    Labour use welfare, the public sector to generate state dependency as this affords this party huge leverage. It is masterly and brazen con trick of the C21st

    The public sector today is little more than an employee vested interest and the interests of the taxpayer (who have zero control and influence) and the end-user (who have zero control and influence) are little more than an afterthought

  2. ian
    Posted April 11, 2018 at 5:32 pm | Permalink

    Political parties, the house of commons, the house of lords, civil services, police, intelligence services, the royal family, BBC, arm forces, anything with power over people, EU.

    • John
      Posted April 11, 2018 at 10:02 pm | Permalink

      Ian
      I may read your post incorrectly but I think what you are conveying is that the list you gave are nationalised examples?

      If so then I would say they are not.

      Not in order but BBC was in capitals so lets look there as a start. They want as do their presenters to be paid at corporation tax rates rather than much higher income tax rates which are 40% and 45%.

      Civil services. Who picks up my rubbish and recycling? A private firm paid for by my council tax. The money they earn they pay tax on and spend in this country.

      The royal family, largely a private enterprise that pays corporation tax. the Crown owns large areas of property and coastline, one of the largest in the world. Effectively the UK subject has an equal share in that. That could be seen as communism but is not, we retain a democratic control.

      I will ignore the suggestion that political parties and the House of Commons is a nationalised service.

      House of Lords needs reform

      Police, I have a cousin ex policeman who sells a restraint product to the police force.

      Armed forces, come on, who manufactures some of our missiles? Where did our infamous Snatch defender Land Rovers come from? did the UK government make tanks and other vehicles?

  3. Adam
    Posted April 11, 2018 at 6:26 pm | Permalink

    ‘Free at the point of need’ misleads. All incurred costs are paid, & recovered in compulsory payments, often determined within a matter of months.

    Private medicine may be similarly described as free at the point of need, until its invoice is paid in settlement.

    The differences are timing & discounts for eligible users.

  4. Raymond
    Posted April 11, 2018 at 7:10 pm | Permalink

    I hope JR posts his lecture or, assuming courtesies at the lecture are adhered to, puts it on Youtube with the questions and answers. I think that, by and large, public goods are best provided by the public or third sector. Private goods are best provided in the private sector by competitive industries. Natural monopolies are best run by the public sector otherwise the private sector is generally more efficient; though externalities have to be taken into account. The reason I think this is the best approach is that it potentially (proximately) maximises social welfare while encouraging endeavour.

  5. Skull and Bones
    Posted April 11, 2018 at 7:19 pm | Permalink

    The time has come to assert full spectrum dominance. We have a powerful armada assembled off the coast of Syria (and Russia) simultaneously. We can teach the Russians that their place is no longer at the top table. For years now we have been monitoring the S400 Russian missile systems deployed in Syria and now we think we can defeat them.

    A war with Russia now will also force the UK govt to rely on French fighter aircraft for their aircraft carriers. Thus proving May is right in asserting EU military cooperation (with events forcing an effective EU army).

    • NickC
      Posted April 12, 2018 at 2:40 pm | Permalink

      So you’re saying the EU with the UK onboard should fight Russia in Syria as a backdoor to keeping the UK tied to the EU? And you don’t care what happens to the Syrians either? Meanwhile China and the USA sit back with their arms folded and just watch? Your proposal is insane on all levels.

  6. John
    Posted April 11, 2018 at 7:22 pm | Permalink

    The NHS of course is also funded by the private sector economy.

    You can have one funded by communism, I remember when the Eastern Block countries joined the EU and journalists first began filming their hospitals, orphanages and psychiatric hospitals. I doubt any reasonable human would want that inflicted on their worst enemy.

    • jerry
      Posted April 12, 2018 at 7:40 am | Permalink

      @John; Such problems were to do with different social values, not a direct reflection on the funding method/ownership etc.

      • John
        Posted April 12, 2018 at 6:59 pm | Permalink

        Jerry I would say its a mixture of both. The inadequacy of the communist economy to fund as well as the lack of social and moral standards.

        • jerry
          Posted April 13, 2018 at 5:51 am | Permalink

          @John; Broad-brush nonsense, otherwise how do you explain the genuinely accepted excellent health care found in communist Cuba, even before the more recent changes since Fidel handed control to his brother – being only two placed behind the USA according the WHO’s (over all) comparisons criteria.

          I hold no candle for communism, before anyone accuse me, but nor do I hold a candle for unfettered capitalism either, as I suspect many on this site do.

          • Edward2
            Posted April 13, 2018 at 3:59 pm | Permalink

            Cuba was funded by USSR for decades.
            Otherwise it would have collapsed.
            Then after the fall of the USSR they were funded by China.

          • jerry
            Posted April 14, 2018 at 4:47 pm | Permalink

            @Edward2; Irrelevant, you mean just like the British empire was funded by the “Mother Land” for decades, either directly or through trade, otherwise many of the countries would have collapsed.

            Japan as was W.Germany, and some other western European countries were supported post WW2 by the US Marshal Plan (ERP), the UK was allowed special terms on our national war debt with the USA too, does any of the above reflect badly upon any of the affected countries – of course not, nor would you claim it had..

            Stop trying to use brickbats Eddie, all they ever do is fall on your own feet, your throwing action and aim are appealing!

    • Alison
      Posted April 12, 2018 at 5:23 pm | Permalink

      It might be worth reminding Mr. Corbyn and Mr Milne (Seumas, I think) of those awful sights, of orphanages etc. And of the damage caused by a command economy – the pollution in Lake Baikal.
      Digressing a bit, I also remember running and jumping against athletes from behind the Iron Curtain. It was a matter of prestige for those countries that they won, to show their people that they were best. They usually did win, but what makes me very sad now is that a lot of these athletes did not know they were being fed steroids, and so many have now died, far too early, of things like cancer.

      • jerry
        Posted April 14, 2018 at 6:49 am | Permalink

        @Allison; Just as some capitalist countries treat their unwanted children and adults is disgusting ways too, perhaps leaving them homeless on the streets, perhaps scavenging on waste tips for other peoples throw-a-ways to sell, use or worse. In some countries such people get cast into a third -untouchable- class of citizen etc.

        How many (so called) athletes from western/capitalist countries have also tested positive for drugs misuse in and outside of competition, how many got away with it as you claim those from behind the Iron curtain did, how many amateur/hobby athletes and body builders miss use steroids etc. only to suffer illness and early death simply because capitalist have sold society an image of what people should look like?

  7. Lifelogic
    Posted April 11, 2018 at 7:46 pm | Permalink

    “People value the free at the point of need NHS” well yes people do like free things of value paid for by others. But so often it is free at the point of delay, rationing or just totally incompetent delivery. The free at the point of (usually non) delivery also kills more efficient competition and alternatives. The NHS is a total disaster killing thousands. The US system also has huge problems of over treatment, defensive medicine and absurd litigation madness.

    Surely someone can come up with a working system that avoids the problems of both of these systems!

    The government should stick to law and order, a basic safety net (for the few that really need it), some infrastructure and a solid defence system. About 20% of GDP is more than enough for this. But as they cannot even run these remotely competently why trust them with anything else?

  8. ChrisS
    Posted April 11, 2018 at 8:49 pm | Permalink

    When can we see a transcript or a video of your debate with Adonis ?

    I can find no reference to it anywhere.

    Reply I don’t think they recorded it. It was an OMFIF event and they controlled who came and how it was managed.

    • ChrisS
      Posted April 12, 2018 at 9:55 am | Permalink

      I looked on the OMFIF website and it wasn’t even listed on their events page.

  9. Anarcho-Libertarian
    Posted April 11, 2018 at 10:43 pm | Permalink

    No. There was always cross-fertilisation, in the best possible way, of workers coming from the private sector where they had been expected to work and the habit was not dead. Also basic stuff like stationery provision which did not have to wait for delivery from a couldn’t be bothered nationalised paper manufacturer.It’s worst when you get multiple layers of nationlisation. Things grind to a halt through “contagion” as it were and knock-on effects.

  10. Anarcho-Libertarian
    Posted April 11, 2018 at 10:59 pm | Permalink

    Of course it really will be the end of Mrs May if only one solitary Russian soldier fires back and hits one of our lads.

  11. Trumpeteer
    Posted April 12, 2018 at 12:33 am | Permalink

    “Pentagon officials furious after Trump’s tweets causing Syrian military to reposition its air assets – ”
    Trump never does anything by accident 🙂

  12. Ron Olden
    Posted April 12, 2018 at 12:54 am | Permalink

    This is interesting but I’m afraid misses the big point. Anything that the State makes or buys on our behalf, and either sells, or gives to us, is bound to be terrible value for money.

    The elephant in the room is ‘monopoly at the point of use’ and it’s an even bigger elephant when the producer interest can rely on being paid, regardless of any decision taken by the end user, and regardless of what the producer delivers for the money.

    So it doesn’t matter whether the public sector buys in services from contractors and dishes them out to us, or employs its own staff to create the services and do the same, makes little difference. It’s exactly the same thing.

    The public sector is as inefficient at buying in services and other inputs, as it is at creating the services in house. Note the colossal amounts the NHS pays for drugs. They pay 20 times the amount for Paracetamol as I pay in Asda.

    And the same degree of waste pervaded the service from top to bottom.

    But why would the public sector be any other way? With no shareholders breathing down their neck, there’s no incentive whatsoever for the NHS, Police etc to hire competent staff with the will, let alone skill, to cut their costs and improve efficiency and productivity.

    In fact quite the reverse. The worse the service they provide, the more money they get. So why wouldn’t they run the operation in the interests of the staff, contractors and suppliers?

    They don’t know any better.

    Leaving aside the fact that politicians are incapable of running huge organisations like these, the business model itself, creates a producer interest constituency, to which the government has an interest in pandering.

    And when it reaches the size of the NHS and the NHS’s community of dependent contractors, direct and indirect employees the situation is hopeless.

    It’s no coincidence that nearly all the powerful and politically motivated trade unions are now in the public sector. The only exception is the train drivers, who nevertheless, work for a monopoly.

    If the State provided food for me in the same way that it does health care, i.e. by giving a State owned shop a sum of money every week and telling it to provide me with whatever food it saw fit, would I get ever get good value (or indeed any) food?

    The answer is No. But it would have nothing to do with whether the shop is directly State owned, whether its merely a contractor , or whether the shop bought the food from a private manufacturer.

    It would be due to the total lack of accountability to me as a customer which arises from me having no control over whether or not the shop gets the money spent on my behalf. There would be no link whatsoever between the shop providing the goods or services, and it getting the money.

    Politicians make matters worse by claiming success based upon how much of my money they’ve ‘invested’ (i.e. spent) on something. I and any other normal person, measures the success of our transactions on whether we get what we want in exchange for spending as little as we can get away with.

    Come elections, the politicians boast as to how much of my money they’ve spent on this and that, and how much more of it they intend to spend. The higher the figure, the more likely they think I am to vote for them.

    Anyone going for job as manager or a buyer, who told the interviewer that his big (and only) idea was to spend more of the company’s money and employ more staff. whilst offering no suggestions whatsoever as how to get better value for the cash, (other than spending yet more cash) would be shown the door.

    • a-tracy
      Posted April 14, 2018 at 10:48 am | Permalink

      Quite right Ron!

      Personally I’d start offering patients in Stockport the opportunity of going for an appointment with a private clinic paid for by the NHS to cover colonoscopies, the current NHS hospital can’t cope and is offering patients one appointment date and time in three weeks time and if you can’t make it a 60 day + wait, this isn’t good enough, if you suspect you may have a serious bowel problem you have no choice at all, this service is being run for the benefit of the providers, who told me effectively we should just be grateful, NO, people work, they have jobs to do without people working there is no tax to pay for all this poor service commitment.

  13. acorn
    Posted April 12, 2018 at 6:21 am | Permalink

    Not sure what the point of such a lecture is? Who are you trying to convince? The left leaning voters you need to convince, won’t be there.

    • Narrow Shoulders
      Posted April 12, 2018 at 6:50 am | Permalink

      It is an interesting narrative to begin which I suspect Mr Redwood hopes will open a new front for attacks on Labour’s credibility.

      At present Messrs Corbyn and McDonnell get a free shot every time they mention nationalisation. Their supporters will not be there but the more people able to pause, reflect and comment on the merits of the Labour knee jerk response the better.

      Success in this area will come from retaining the benefits of public/ private collaboration within the narrative as many services are just that and do not lend themselves to profit.

  14. 37/6
    Posted April 12, 2018 at 6:31 am | Permalink

    Most services are nationalised and privatised at the same time.

    Network Rail may well be nationalised but the Orange Army that engineers the infrastructure most certainly isn’t. They are made up of contractors from the private sector.

    • Wessexboy
      Posted April 12, 2018 at 11:35 am | Permalink

      Yep, and because it’s publicly funded nobody really has to work.

  15. hefner
    Posted April 12, 2018 at 7:43 am | Permalink

    Will you address how much some private companies (e.g., road construction and maintenance) also are linked to public funding? And will 20-25 years of PPI be part of your lecture?

    Reply Yes

  16. Epikouros
    Posted April 12, 2018 at 9:53 am | Permalink

    All public sector/state organisations use the private sector to provide them with a myriad of items from paper clips to contract work to build their buildings and such like and to providing a complete or partial sub contracted service. It is a Heath Robinson way of providing goods and services as the private sector involvement does not compensate for the fact that a nationalised monopoly is very inefficient at managing itself and those who it contracts to do things on its behalf. In fact the private sector knowing that the nationalised organisation is badly organised and administered take full advantage of that and so is able to frequently overcharge or reap other pecuniary benefits from that fact. A monopoly is the worst sort of business system that we would never allow in the private sector for the obvious reasons. Perversely we do allow it in the public sector. It is time for reason and common sense to assert itself and so stop doing that.

  17. Philip Fyans
    Posted April 12, 2018 at 11:35 am | Permalink

    Is your debate with Lord Adonis available to view?

    • John
      Posted April 12, 2018 at 7:00 pm | Permalink

      I second that.

  18. Alison
    Posted April 12, 2018 at 5:54 pm | Permalink

    Your second para sounds extremely interesting (new way of analysing services for their public/private-sector components) – keen to hear about this!

    Re public-private in ‘nationalised’ service – looking at roads, for example, I worry about the mis-match of interests between the private-sector contractor and the public-sector body. The contractor wants repeat business, so is it in his interest to do such a good repair job that it doesn’t have to be repaired for 10 years? No. Is not the result that the public sector pays more in such instances? Of course, there are efficiency gains, and ideally quality gains, but I think also losses. Our local authority is not very good at keeping track of responsibilities it has passed on to contractors, resulting in unnecessarily high repair costs, and I suspect contractors getting paid for work they don’t do. But who checks? (and what about monitoring costs?) Our local authority has been cutting staff massively, so I fear things are only going to get worse re our roads and pavements.

    I also worry about all the foreign companies who keep on buying UK companies who are contractors to public services, infrastructure maintenance, or indeed build and supply. My gut feeling is that companies building and supplying key infrastructure, such as in the energy sector, should be British. More and more of our big companies are being sold .. GKN … I particularly resent the contract to EDF for Hinkley Point – far too expensive, and, rubbing salt in the wound, the company which should never have been allowed to acquire London Electricity (in my view, EDF was able to compete unfairly because of lower cost of capital).

    Re drugs, interesting developments in recent years, with increasing collaboration at research stage between commercial pharma companies and not-for-profit research (partly reflecting the shift in research towards genetic breakthroughs/science, with the wonderful and massive data collected and provided by eg the Sanger Institute. The NHS tends to prescribe the cheapest form possible, so usually generic, off-patent drugs.

  19. a-tracy
    Posted April 13, 2018 at 11:51 am | Permalink

    Nationalised service to me means; take what you’re given and be grateful. Today two NHS workers told me that being offered one appointment date and time and if you can’t go on that day and time you have to wait over 60 days is where it’s at now and quite acceptable and I need to understand it is a state service and has restrictions. Well, that seems very unreasonable for workers who need to organise time off during busy periods, no consideration at all for that, we are paying for our health service it is not free and it shouldn’t be rationed in such a way. We can attend any other day the following week and any other day the week prior but things are so restrictive this can’t be managed by our nationalised service? It’s acceptable for people to sit around waiting for their appointment as people are block booked in at the exact same time sometimes over five hours.

  20. a-tracy
    Posted April 13, 2018 at 12:01 pm | Permalink

    Public services such as the monitoring of the rights to stay and the rights to work in the UK seem to be totally chaotic at the moment. Why doesn’t our government tell us what all this disruption to the Windrush people is about? There is a woman featured at the moment in twitter who says she has lived here from being a child, educated here, had her children here, worked here all her life the last 16 years in the NHS so WHY is there no record of her?

    Did she not get child benefit for her children paid to her, there’s a record.
    Was she not on the Council tax register, there’s a record.
    If she was working and paying NI she will be on the tax computer system.
    She will have been given a National Insurance Record and seen by a Doctor there’s another record, even if her doctors has closed her NI record of payments to her doctor will still be registered?

    What is this about, are they now coming up to retirement age and able to claim full pension credits and housing allowances if they claim they have been living here without any proof and the civil service working on behalf of taxpayers suspect they’ve been living elsewhere? Your government just leave these accusations to taint your party and it’s supporters and we conservatives are the people of fair play, justice and conservation and respect for the taxpayers in the UK and we want to know what is going on!

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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