Public service and the private sector

I set out three main conclusions from my analysis of the types of private sector involvement in public service.

The first is, bread and circuses, supplied entirely by competing private sector companies, are as much public services as the supply of water or the provision of health care.

The second is there is no  such thing as a service entirely provided by state employees using state assets. Every public service uses private sector services to help it deliver. The issues for debate are where should the borders be between public and private  in any given case, and which models of private sector engagement and support work best?

The third is there is no simple binary choice between a privately provided service like the bread supply, and a nationalised service. The interconnections between public and private are far more complex and  varied.

I looked in particular detail at the railways. Here Labour says we could improve it by nationalising it. Many do not seem to recognise that it is largely nationalised already. All the stations, track and signals are in public ownership. Network Rail controls the railway as a state owned and state financed entity. The private sector train operating companies have regulated fares, regulated train slots on the monopoly nationalised network, and timetables agreed by the government and Regulator. Quite often they are prevented from expanding or running better services by the restrictions of the monopoly provision of track and inadequate signalling capacity.

I also considered the NHS, where all parties agree we want to keep a public service free at the point of use, and no party wants to privatise. We need to remember however that most GPs run private sector businesses, owning  their own surgeries. All drugs used are supplied  by for profit companies, who also provide most of the research into treatments. A wide range of contractors are used for catering, cleaning, management services and the rest. Labour introduced sending some NHS patients for operations in private sector hospitals.

The sound bites and fury of these nationalsation debates ignore the complex realities.

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80 Comments

  1. duncan
    Posted May 1, 2018 at 5:38 am | Permalink

    Let’s get down to basic truths about state spending and how each political party approach it.

    Labour view the taxpayer as an entity to be abused. This entity is seen as the perfect opportunity to finance the construction, maintenance and expansion of is client state that then benefits Labour when in office and when not in office.

    Labour and its union backers (who incidentally extract their funding from the taxpayer also through the opt-in system) could not care one jot for the efficiency and quality of state provision. Their aim is quite simply absolute political control of all assets under state ownership. Why John Redwood cannot state this in explicit terms is beyond me? Maybe, and I understand this, he’s more concerned about attacks upon him from the well organised union network and their leftist allies.

    There is not one single mention of the poisonous presence of the unions who represent the largest burden on the taxpayer. Their ability to control and force the state to construct provision around its own and its members needs is an example of this. This represents an extra and added burden on the taxpayer above that which is necessary.

    So, why should my taxes be used to finance the construction of Labour’s client state?

    Why should my taxes be used to expand the power base of hard left unions like Unite using the conduit that is nationalisation?

    Unless the Tories confront state reform in a radical programme of change they are storing up problems for the future. The unions and the left are champing to get their teeth into those areas of the economy that affords them political control.

    Nationalisation is not about provision, it is about the power of political control. The power to impose, to control and to force others to bend to the union will.

    Unfortunately we have a party in government who simply doesn’t possess the courage and spirit to prevent the coming catastrophe should the left achieve power

  2. Mark B
    Posted May 1, 2018 at 5:45 am | Permalink

    Good morning

    Competition, competition, competition ! The problem with nationalised industries is, without effective competition and ‘choice’, a word that has sadly dropped from the Conservative lexicon, we have services that effectively are on the basis of take it or leave it.

    If the government removed private health insurance from the tax bill as a benefit and allow people to opt-out paying for the NHS then we might see it modernise as it will lose its sacred cow status.

    Same with the BBC. Once it’s monopoly over what, ani how I wish to watch TV is broken up, the better.

    This government can do many simple yet popular things. But due to a small influential minority we can’t.

    • Ed Mahony
      Posted May 1, 2018 at 11:38 am | Permalink

      The real battle isn’t whether we should have a public sector. Yes, we should (and, yes, not too big either). But that public sector workers aren’t paid too much in relation to private sector workers. I think.

    • graham1946
      Posted May 1, 2018 at 11:45 am | Permalink

      Good afternoon Mark.

      ‘opt out of paying for the NHS’

      Fine until you want emergency attention. Did you know that there are virtually no high dependency units in the private sector? When things go wrong in private hospitals requiring intensive care, patients are shunted on to the NHS. What happens if you are in a road accident, will an insurance company come and get you? I can imagine all the problems claiming for something like that!

      Is that satisfactory for you and yours?

      Yes to allowing insurance to be tax deductable and it would help relieve the stress on the NHS, but not paying at all is not an option.

      • Mark B
        Posted May 2, 2018 at 5:42 am | Permalink

        To answer your questions. It is about choice. Presently we cannot choose and, to assume that the NHS works fine when, from my own personal experience it does not, is rather naive to put it kindly.

        And as an aside. I was once transported to hospital on a private ambulance at no expense.

        • graham1946
          Posted May 2, 2018 at 12:05 pm | Permalink

          What choice? Insurers do not supply Intensive care because there is no profit in it. They never will, they just really want elective stuff with the ability to shove patients into NHS Intensive Care beds when things go wrong. I don’t think you addressed this point at all.

          As for a private ambulance, yes that can be done and the NHS uses them. But don’t expect one with full Paramedics if you get smashed up on the M1.

    • Ed Mahony
      Posted May 1, 2018 at 11:50 am | Permalink

      Also, a lot of what i think is inspired by Lou Gerstner, my favourite person in business, who saved IBM from collapse and built it up to a huge, multi-billion company, with a broad range of interesting products, jobs, and departments.

      He business approach wasn’t just about clever accountancy / cost cutting (important as that is), it was also based on a creative understanding of people (clients and workers), creative investment, and a creative way of managing the company in general. We need a similar approach to government and our economy.

    • Lifelogic
      Posted May 1, 2018 at 1:17 pm | Permalink

      Exactly if you want to opt out of the NHS you have to pay many times over. Once in taxes & NI for everyone else using the NHS, then tax and NI on you salary needed to pay the insurance premium, then another 12% (increased by 20% recently by P Hammond) insurance tax! Free at the point of need kills competition and gives you a dire state monopoly.

      The lefty, climate alarmist & vehemently pro EU, BBC likewise.

    • Posted May 1, 2018 at 5:29 pm | Permalink

      All the talk of Monopolies but you fail to spot the obvious one.

      The currency.

      a) Why would the monopoly issuer of the £ need your £’s before it spends ?

      b) Where do you actually get your £’s fom that then allows you to pay your taxes and buy gilts ?

      Answer

      It’s written on the front of every note.

      • libertarian
        Posted May 2, 2018 at 4:13 pm | Permalink

        Derek Henry

        Lol another one with no understanding of money… No wonder you think the EU is useful , you lack an understanding of reality

  3. Epíkouros
    Posted May 1, 2018 at 6:04 am | Permalink

    In fact when it comes to cost, value for money, efficiency, sustainability and quality then the choice of provision is binary. The private sector wins hands down. Funding is not so clear cut as that is rightly as much dependent on political considerations as it is on objective financial considerations so is not binary. However prudence, logic and common sense demands that the largest proportion of funding falls upon the user at the point of use but not apportioned equally. It depends on the amount of surplus wealth that is created by the economy and who society believes should receive the benefit of that surplus. No doubt recipients would be those in greatest need tapering down to those who need no help at all.

    The current system of provision and funding will continue to have the only possible out comes. The quality and quantity of provision will continue to decline because of waste, abuse and inefficiency and the funding with other people’s money(the taxpayer) will pay for less and less as cost outstrips supply and may dry up altogether as the taxpayers are bled dry and reduce their giving either by leaving, evasion or by other circumventions and causes. A Corbyn and momentum or even a so called moderate Labour party in government will speed that process up as they always do. The former will accelerate the process so much that the current system will collapse very rapidly. Leading eventually to at worst an economic and social environment like Venezuela or at best like Cuba. The left will be happy with this outcomes as they will at last have achieved their nirvana a socialist Utopia. Not minding the tyranny or the poverty in the least as everybody will be suffering equally except for those at the top and that is good because they are deserving and being a card carry socialist they hope that that will be them and the rest will be us hated Conservatives and free market capitalists.

    • Epíkouros
      Posted May 2, 2018 at 6:07 am | Permalink

      I should have added Conservatives and free market capitalists are no longer synonyms as the Conservative party is no longer a party that upholds tradition, fair play, high standards and values, a promoter of enterprise and real social justice. In fact under T May and D Cameron it has now move so far to the left that the left can hardly hate it now as it once did. At least the moderate elements of the left should not. The more extreme elements yes but then they hate everybody.

  4. Lifelogic
    Posted May 1, 2018 at 6:12 am | Permalink

    The problem is inertia & a total lack of any intelligent political will. No politician ever dares to touch it. They would rather continue with (for example) some of the very worse cancer survival rates in Europe while pretending the NHS is just great!

    So great is the NHS that about 50% of UK trained doctors do not even want to work for it after their expensive seven + years of university and training. I do not blame them.

    • Lifelogic
      Posted May 1, 2018 at 6:31 am | Permalink

      Each doctor cost about £250K to train so failing to attract up to 50% of them is very wasteful. Not that governments or civil servants ever care much about wasting tax payers money. Indeed that is what they often do best.

      How much is May’s idiotic enforced gender pay reporting cost in time, money and a distraction from productive work for example?

  5. Narrow Shoulders
    Posted May 1, 2018 at 6:38 am | Permalink

    The difference between buying bread and buying water or rail travel is that I get a choice from where to buy my bread, different competing products and different stores stocking those products. Real choice and competition.

    It is not a case of private delivery good, public delivery bad but where there is a monopoly of supply the state unfortunately is required to ensure consumers and users are not taken advantage of and receive good service.

    Introducing fair competition is areas where the state has a monopoly is a more productive discussion that who owns the company delivering that monopoly service.

    Although if Mike Coupe at Sainsburys is to believed the consumer benefits from removing competition.

    • Lifelogic.
      Posted May 1, 2018 at 12:34 pm | Permalink

      I’m in the money ….I’m in the money …….. let’s all sing along now with Mike Coupe,.. I do not like either of these chains myself. They do not sell the right things for me. Waitrose is far better with a free paper and free coffee to, if I really have to use a supermarket.

  6. Posted May 1, 2018 at 6:44 am | Permalink

    Agreed – the government needs to be in control of certain services, assisted by the private sector – makes total sens
    The private sector are many times more efficient at getting value for money, and making projects work on budget, but public ownership of the NHS, for example, requires that government exercise control for the good of us all.
    Quangos are one majore anomaly that still doesn’t work for me- not enough state control, and flippant use of resources with inept exec’s cycling around from one quango to another… This is the worst kind of State/private partnership – they have to go, and responsibility passed back to Parliament.

  7. agricola
    Posted May 1, 2018 at 6:44 am | Permalink

    What you say is true and only controversial if you have an axe to grind. Now tell us something we do not know. For instance to what extent were the civil service in the Home Office culpable in the resignation of Amber Rudd. Were they guilty of not informing her of the targets and not correcting her during the select committee meeting when she expressed unawareness of targets. I think they hung her out to dry.

    Reply I do not blame the civil servants in this case.

    • Zorro
      Posted May 1, 2018 at 1:02 pm | Permalink

      JR is correct, they couldn’t have helped her out more really. Brandon Lewis gave the killer punch. Really, let’s be generous – she clearly had a less than full grip on her brief. It shouldn’t have taken her shy of 2 years to understand the performance measurement criteria for IE performance!

      zorro

  8. Narrow Shoulders
    Posted May 1, 2018 at 6:53 am | Permalink

    Off topic

    Could you confirm the government’s understanding of article 50 please?

    Why does the Lords believe Parliament can vote to not leave? Article 50 has been triggered so surely Parliament’s vote is to leave with the agreed deal or no deal. This choice the Lords is asking for does not exist.

    • Helen Smith
      Posted May 1, 2018 at 1:00 pm | Permalink

      I so hope you are right. I also hope that a country like Hungary might veto the deal and save us from the likes of (misnamed individual peer ed)

      For the life of me I cannot comprehend how they can in all conscience stand up and glorify in belittling us and our choice to leave the EU. I also am at a loss as to how the likes of Patten can speak and have a vote when he is in receipt of an EU pension.

      The whole world is watching this farce and doesn’t know whether to laugh or cry for us.

  9. Ian wragg
    Posted May 1, 2018 at 7:39 am | Permalink

    The Public Sector definition. Someone living off the taxpayers and generally a remain voter.
    Today we learn May is thinking of signing an association agreement . This has been the idea all along.
    Just when are you going to get rid of this silly woman.

    • Lifelogic.
      Posted May 1, 2018 at 12:24 pm | Permalink

      As soon as they can agree on a replacement for the lefty robotic, remainer & socialist I suppose. But Tory MP were so daft they that they even relected John Major and followed him over the cliff for 3+ terms. Will they repeat lunacy a secong time yet again? No change no chance, even against Corbyn and his appalling shadow cabinet of very dangerous fools.

    • Posted May 1, 2018 at 5:33 pm | Permalink

      If you were to follow the double entry bookeeping between HM Treasury and the BOE.

      You would quickly realise your taxes fund nothing. Your taxes destroy high powered money and are used to control inflation.

      • Edward2
        Posted May 2, 2018 at 1:12 am | Permalink

        Well lets make all taxes zero and justget the Bank of England to print away.
        We could have a £500 a week min wage too.
        We will all be rich.
        What could possibly go wrong.

      • libertarian
        Posted May 2, 2018 at 4:14 pm | Permalink

        Derek H

        Yes of course thats how it works. So lets scarp tax altogether, not needed just print money… Lol And you want to be taken seriously .

    • ian wragg
      Posted May 1, 2018 at 5:40 pm | Permalink

      Further to my post yesterday which I asked how many Peers were in hoc to the EU I find 56 are recipients of EU pensions but are not asked to declare such and as far as I can understand another 30 are in line for payment.
      As it is EU law that to receive these payments, they must promote the EU and its values, how come they can vote on Brexit.’

  10. hefner
    Posted May 1, 2018 at 7:43 am | Permalink

    And the conclusion is: it is complex. Gee, I would never have been able to realise that by myself. Thank you very much.

    Reply You didn’t have to read it. Did you learn nothing from the analysis?

    • hefner
      Posted May 1, 2018 at 1:24 pm | Permalink

      Reply to reply: Sorry, I have had bad readings: M. Mazzucato, 2018, The Entrepreneurial State: Debunking Public vs. Private Sector Myths.
      Mea culpa, mea maxima culpa.

  11. sm
    Posted May 1, 2018 at 8:06 am | Permalink

    John, you put most succinctly the points I have tried to make over the years, particularly with regard to the NHS in my case.

    Generally speaking, attempts at total nationalisation of production and retailing result in disaster, while complete abandonment of well-considered State regulation on private enterprise leads to corruption and wide-spread misery too.

  12. Peter
    Posted May 1, 2018 at 8:26 am | Permalink

    Railways are a failed privatisation.

    All the awkward and costly stuff was brought back into public ownership. Hatfield rail crash proved privatisation was not properly thought out.

    Now we have franchises who rely on huge subsidies to provide the appearance of a privatised system.

    We need some realism and joined-up thinking.

  13. Lifelogic
    Posted May 1, 2018 at 9:03 am | Permalink

    Meanwhile EU II agreement is clearly being considered by BREXIT means nothing T May:-

    https://www.telegraph.co.uk/politics/2018/04/30/theresa-may-considering-agreement-brussels-brexiteers-fear-would/

    It seems that Mrs May has told ministers that the UK could “potentially” accept an association agreement with the EU, which critics say would make Britain a “rule taker” from Europe.

    Philip Hammond, the Chancellor, and David Davis, the Brexit Secretary, are also open to the idea. I read that Javid is very close to “IHT ratter and giver of the highest and most complex taxes for 40 years”, Philip Hammond. That alone is sufficient evidence against him for me plus he supported remain as he wrongly “though it was better economically”.

    Firstly it is not better economically at all and even if it were democracy and self determination are far more important (more important for the economy too).

  14. Rien Huizer
    Posted May 1, 2018 at 9:03 am | Permalink

    Of course, there are no black and whites here. Still, it is amazing that replacing the NHS as a service provider, alongside a much smaller private provision system, is not on any serious political agenda in the UK. For a country ostensibly dedicated to liberal economic ideas, having a quasi-communist health utility is strange to say the least. A little more courage and government resources could be redeployed elsewhere, with better welfare potential.

    • Iain Gill
      Posted May 1, 2018 at 11:59 am | Permalink

      People want “free at the point of use” state backed medical insurance (which they dont really get as dentists are expensive, parking at hospitals is expensive, and many people are forced to go private as the NHS fails to deliver any care at all)…

      what they are not tied to is state owned, run, and controlled organisations providing all of the care. they would rather have a lot more control and choice about how their individual state backed health insurance payout is spent.

      sadly the state, political parties, and state broadcaster, continue with propaganda using the NHS “brand name” and confuse a lot of the above

      the NHS is not “the envy of the world” every single other developed country provides better more responsive healthcare than we do, and its about time our political class acknowledged that

    • Zorro
      Posted May 1, 2018 at 1:08 pm | Permalink

      It is the shibboleth of British politics unfortunately…..

      zorro

    • Richard1
      Posted May 1, 2018 at 4:29 pm | Permalink

      Dead right, it’s amazing that this is the case, but any attempt to increase involvement of the private sector in the NHS which could be damned as “privatising the NHS” is a heresy. The U.K. population and taxpayers suffers as a result.

  15. Denis Cooper
    Posted May 1, 2018 at 9:04 am | Permalink

    Off-topic,

    Having spent quite a lot of time and effort, plus money for postage and fares, on trying to persuade our unelected legislators-for-life in the House of Lords that they should insist on the Nice Treaty being put to a national referendum it’s quite amusing that they now think we should have a referendum on whatever withdrawal deal the government manages to negotiate with the EU.

    Like the Commons they have never had the chance to change even as much as a comma in any of the successive treaties that past governments have negotiated to take us further and further into a European union, but they didn’t object to that and they certainly didn’t ever argue that the people should have the final say directly in a referendum.

    That was true in 1972 when the Lords were still largely hereditary – Heath’s European Communities Bill barely touched the sides as it went through a chamber full of people who couldn’t care less about our national constitution, including the sovereignty of their own Parliament – and it has been just as true with the reformed chamber with the successive treaties to further the process of EEC/EC/EU/USE integration and transfer more and more power to the European institutions.

    What a bunch of hypocrites they are, and they need to have their teeth drawn.

    • HollyH
      Posted May 1, 2018 at 11:32 am | Permalink

      Exactly Denis..throw them all out and put in a peoples committee instead…a Robespierre type..but just cannot understand what Fox is doing..i thought he was minister for getting us new deals overseas..I don’t see much happening there either?

    • alan jutson
      Posted May 1, 2018 at 4:28 pm | Permalink

      Dennis

      Agreed.

      The House of Lords needs to be culled or scrapped, its as simple as that.

      It and its members are now well passed their sell by date, and are of absolutely no use to the Country in their current form.

      Time to put your thinking cap on JR, along with some other sensible elected Mp’s, and between you come up with a more sensible workable arrangement.

      They may not be willing to vote themselves out of a job, but eventually the public will take the matter into their own hands, and vote for a Party that will.

      They call themselves Democrats, but they no more than simply Arrogant b…….s, and believe me, they will eventually pay the democratic price.

      • alan jutson
        Posted May 1, 2018 at 4:36 pm | Permalink

        Mrs May will also pay the price at the ballot box if she caves in to the EU any more.

        Someone, anyone, please either get some backbone into these so called negotiations, or get out of the way, and make room for someone who has.

        We are becoming an absolute laughing stock in front of the World.

        New Trade deals throughout the World, don’t make me laugh.
        We will get walked over by Countries as small as Iceland (no disrespect to them) such seems to be our willingness to surrender.

    • acorn
      Posted May 1, 2018 at 4:57 pm | Permalink

      I would like to know where this “national constitution” is, I would like to read it. The last I read, our Common Law Judges, had aggregated a bunch of parliament’s Statutes into a sort of, “constitution”. As to the “sovereignty” of parliament; who knows? Did the Fixed Term Parliaments Act 2011, finally give the Monarch’s “royal assent” the red card? I don’t think so!

      • rose
        Posted May 1, 2018 at 9:20 pm | Permalink

        We have an unwritten constitution which many intelligent people consider superior to a written one.

        Unfortunately the new breed of civil servant is trying to change this, and guess who is doing the writing.

        • hefner
          Posted May 2, 2018 at 6:04 pm | Permalink

          Looking at “What is the UK constitution?” on the http://www.ucl.co.uk website, I realise I am not among the many intelligent people. In fact I think that the lack of a proper document (as what the early Americans were very keen to establish) allows the tabloids (e.g., Daily Mail in the Gina Miller saga) to write rather inflammatory headlines without Joe Public being able to check quickly the veracity of the assertions: Was she really wrong to ask for Parliamentary scrutiny?

          Not to even question properly the good/bad aspects of an “unwritten constitution” denotes what I might possibly call (a bout of) ILS (for Intellectual Laziness Syndrome).

    • Posted May 1, 2018 at 5:36 pm | Permalink

      Never thought of that way

      Excellent Denis truely excellent !

  16. Lifelogic
    Posted May 1, 2018 at 9:08 am | Permalink
  17. Lifelogic
    Posted May 1, 2018 at 9:20 am | Permalink

    Littlejohn today asks sensible questions after the Rudd resignation:-

    Why is lying to the Commons any worse than lying to the electorate?
    In Rudd’s case, she stood on a manifesto promising to take Britain out of the EU, out of the Single Market and out of the Customs Union.
    Yet ever since she was re-elected (with a tiny majority of just 346) she has worked ceaselessly to renege on that promise.
    So have other Tory ‘rebels’ such as Anna Soubry and Nicky Morgan. For that matter, the Labour Party made exactly the same manifesto commitment to a proper Brexit, but they’re back-pedalling, too.
    It happens all the time, whichever side you’re on.
    What about the £9 million of taxpayers’ money spent on the pack-of-lies pamphlet distributed to every home in the country by Project Fear?

    • Blue and Gold
      Posted May 1, 2018 at 5:26 pm | Permalink

      Vote Leave spent the whole campaign talking a ‘pack of lies’, and of course their great friend Farage had his poster, that had nothing to do with the EU.

      Gullible people took that in. We all know Brexiteers are xenophobic and live in a totally unrealistic fantasy world.

      It was apparently going to be very easy to leave the EU we were told….ahem, another lie.

      • rose
        Posted May 1, 2018 at 9:23 pm | Permalink

        Hundreds of thousands of illegal immigrants breaking into the EU has nothing to do with the EU? Rewriting the Dublin agreement has nothing to do with the EU?

      • Edward2
        Posted May 2, 2018 at 1:18 am | Permalink

        Remainers project fear was the truth was it?
        Your usual smear of 17 million voters is ridiculous.
        Read the Leaflet.
        Go back and listen to what Cameron our PM repeatedly said during the referendum.

      • Anonymous
        Posted May 2, 2018 at 6:29 pm | Permalink

        Which is why the BNP/NF did so well in Britain (not).

  18. Richard1
    Posted May 1, 2018 at 9:33 am | Permalink

    Where there is choice and competition there is the probability of good value and good service (but not a certainty). Where there is no choice or competition there is little chance. In addition if the producer is not exposed to any market discipline, eg in pricing or cost of capital, there is a very high chance of waste as well as bad service. This is why monopoly nationalised industries are the worst possible form of economic organisation. Private monopolies are the second worst – and require regulation to avoid rip-off pricing and bad service. But best of all is private operators in competitive markets. Are there really any arguments against it after all these decades of evidence?

  19. ale bro
    Posted May 1, 2018 at 9:39 am | Permalink

    Yes we all know that the railways were re-nationalised by Labour last time they were in power.

    Since re-nationalisation, the rail network has done nothing to improve its service delivery. This country is still stuck with timetabled services that run at antediluvian speeds, with as far as I can tell, zero plans for improving the offering to service users. Some services are no faster than they were 100 years ago, and some are probably slower.

    The current government has cancelled rail electrification projects, which were a manifesto commitment.

    Clearly, the service has ossified. I think a new approach is needed – why not allow the TOCs to buy the track they are using? The current framework of independent asset owning companies and train operating companies just isn’t delivering for anyone.

    • forthurst
      Posted May 1, 2018 at 12:31 pm | Permalink

      Railtrack was teetering on the edge of bankruptcy at the time it was re-nationalised. Railtrack was an operational and financial disaster culminating in the Hatfield crash and was one consequence of the pathological ineptitude of John Major’s privatisation.

      TOCs are awarded contracts which are very much shorter than the amortisation period for rail infrastructure which in reality is infinity as the railways will never give a payback; meanwhile Network Rail pretends to be a proper business and sticks its sunk costs onto its balance sheet not the P&L account whilst buying all sorts of financial products which have nothing whatsoever to do with running a railway.

  20. acorn
    Posted May 1, 2018 at 9:54 am | Permalink

    “The sound bites and fury of these nationalsation (sic) debates ignore the complex realities.” You can say exactly the same about the “leave” campaign debates.

    The UK problem is far more fundamental than how the public sector controls its private sector output for socioeconomic purposes. The problem with laissez-faire neo-liberal governments is, they don’t understand how profits are generated in fiat currency economies, and the part budget deficits play in that process.

    Prof Bill Mitchell says Pn = I + (G – T) + NX + Cp – Sw which says in English, that gross profits after tax (Pn) equals gross investment (I), plus the budget deficit (G – T), plus the export surplus (NX), plus capitalists’ consumption (Cp) minus workers’ saving (Sw).So the gross profits after tax will be higher, the higher is gross investment (I), the larger the budget deficit (G – T), the higher is capitalists’ consumption (Cp) and the lower is workers’ saving (Sw).

    So the gross profits after tax will be higher, the higher is gross investment (I), the larger the budget deficit (G – T), the higher is capitalists’ consumption (Cp) and the lower is workers’ saving (Sw).

    The way in which the budget deficit generates profits is via its effect on national income. The budget deficit means that the private sector is receiving more flows from the government than it is returning via taxes. Budget deficits provided an increased capacity for capitalists to realise their production because they expand the economy.

    Prof Bill Mitchell quoting Michal Kalecki, said that budget deficits allow the capitalists to make profits (net exports constant) over and above what their own spending will generate.

    Brexit AND Austerity will be incompatible.

    • Edward2
      Posted May 2, 2018 at 7:47 am | Permalink

      Higher the State deficit the richer we will all be.
      Is that a real economic theory?
      Hilarious.

    • libertarian
      Posted May 2, 2018 at 4:18 pm | Permalink

      acorn

      Lol the king of cut and paste equations. Give the real world a try sometime…. Oh you’re a retired college lecturer, no wonder…..

  21. Ed Mahony
    Posted May 1, 2018 at 10:00 am | Permalink

    Good article.

    I’m a strong advocate of private sector.

    But something i think some people are forgetting (not you): the public sector is good for women (which in turn is good for the family and the country, saving money for the tax payer in the long-run).

    Firstly, we need jobs where women can work but also focus on their family. A lack of maternal presence in the family, leads to all kinds of problems in society, leading to higher problems in mental health, physical health, lower productivity and so on). It’s huge. The public sector suits women well here. And either women go into private sector (and then all kinds of long-term problems costing the tax payer more). And / or they go on the dole (cost the tax-payer more).

    (There is also the case that some men aren’t capable of working in the private sector – if they did, the might end up with serious mental issues costing the tax-payer more, and or go on the dole, costing the tax-payer more).

    Just as there are lots of people in the private sector with high work ethic, there are some without. But the exact same can be said about the public, sector, too. In other words, people aren’t just motivated by greed (which can be the case in private sector) or laziness (which can be the case in the public sector), they’re also motivated by work ethic.

    Lastly, the real battle, i think shouldn’t be private versus public, but that public workers aren’t over-paid in relation to the private sector.

    People need to be pragmatic (and focus on data and analysis from science and clinical psychology about human behaviour), not ideological, about private versus public.

    • Ed Mahony
      Posted May 1, 2018 at 10:09 am | Permalink

      Lastly, Japan and S. Korea have very low public sector, and the Sweden, Norway and Demnark much higher public sector – Sweden, Norway, Denmark have much higher GDP per capita than Japan and S. Korea.

  22. formula57
    Posted May 1, 2018 at 10:03 am | Permalink

    You doubtless know that the sound bites and fury generated in the nationalization debates are there for their own sake, to create trouble and disaffection, not to aid enlightenment about complex realities.

    It would be pleasing if those in government joined your efforts in providing a robust refutation of that mischief by explaining the realities but I fully accept such cannot be sought from the weak and vacillating who too often show they are not on the side of the people.

  23. Iain Gill
    Posted May 1, 2018 at 10:09 am | Permalink

    The thing politicians need to realise, which few do, is…

    People want more control over their own life, they want to make their own choices, they dont want the state telling them what to do, or rationing, or allocating.

    People want proper buying power in the relationship with schools and hospitals, and so much more, and real power to go elsewhere if they dont like the service.

    And empowered consumers would force change for the better much more effectively than top down control from central government or Quangos ever can. It would not be entirely smooth, but it would get there more quickly than anything else. It needs a willingness to allow suppliers that fail to attract enough consumers to fail, and those that succeed in attracting more customers to get the money that should go with it.

    People want to know in advance what they are insured for, and not be subject to random luck and rationing on the whim of some bureaucratic fashion that week in that location. And when they are entitled to a pay out they want to be able to choose where to take it.

    The sink schools on the sink estates are still there through generations of politicians.

    The NHS is still allowed to get away with sub 3rd world care in many cases.

    The hype and propaganda we are subjected to is wearing thin.

    A proper Conservative agenda would hand more power to individuals and away from the state, and that is the way to win elections!

  24. Alison
    Posted May 1, 2018 at 10:15 am | Permalink

    V sorry to go off topic. The Telegraph and Express are reporting that the Brexit committee are now considering some sort of association agreement. Aside from the betrayal that I suspect such an idea represents, this really is the pits. Are these ideas coming off the hoof? The UK negotiating team should not be punting new ideas (or are they ideas channelled somehow from the EU Commission??). They should be standing up for the UK. New ideas when June is a few weeks away – why is this a good idea?

    David Davis seems to be very malleable. Can somebody please put a bit of true Brexit steel into him, right now, with this restoration of steel immediately evident.

    • Ian wragg
      Posted May 1, 2018 at 12:34 pm | Permalink

      No. The idea was plainly discussed in the 5 Presidents report.
      It is intended to be a slow lane to federalisation.
      This has been the game plan from the beginning.
      Vassal statehood for this once proud and independent country decided by 350 unelected unaccountable and certainly unwanted Quislings in the Lords.
      Revolution is only a smidgen away.

  25. Hope
    Posted May 1, 2018 at 10:16 am | Permalink

    It is certainly no coincidence that the Lords are acting in concert with the traitors in the commons and civil service. It is not possible the timings and acts are accidental, it is coordinated. We know this because of comments from traitorous retainers. Lords filled with cronies of like minded politicos. Time for radical change in Lords.

    May has allowed all this to take place with no rebuttal or utterance whatsoever. She has incrementally capitulated on every major issue, and lied about the divorce bill with no legal liability pay, hoping to change our minds so she could say there is no alternative.

    No punishment extension, no customs union or single market nor regulatory divergence/alignment. Leave as democratically voted and mandated to act upon. It was clear in both manifestos and previous votes. Brexit is not difficult it is being made difficult by those who wish to remain against the public will.

    Time for change, bring her down and force another general election if necessary.

    • Peter
      Posted May 1, 2018 at 12:11 pm | Permalink

      The trouble is May has done a great job for herself. Promoted way beyond her ability, never called to account for failures and seemingly safe from any possibility of a leadership challenge.

      Even when she was questioned on TV yesterday about her own blame for the Windrush fiasco she managed to avoid the questions and deflect the conversation.

      The leave challenge fails to appear. The current excuse is the imminent local elections but after Thursday I doubt anything will change.

      Prepare for Brexit in Name Only. She will be gone after the next election and Conservatives prefer not to rock the boat and delay their punishment for a little longer.

    • Helen Smith
      Posted May 1, 2018 at 1:58 pm | Permalink

      Completely agree. Clean Brexit made a confidence vote, if the Tories lose then labour has to negotiate, it can no longer be all things to both its Leave supporters and Remain supporters.

  26. Hope
    Posted May 1, 2018 at 10:22 am | Permalink

    JR, as we have seen with fiasco concerning passports, the EU procurement rules apply and the Govt will not use national security to help our own businesses like the other main countries do. Your tory Govt is a mouthpiece to do what it is told by the EU and even pretends that some of the EU ideas was its own!

    May’s Florence speech was partly written/edited by the EU! Who does that? Who skulks silently at night to visit the EU to give away part of our nation? She has allowed every delay, break every promise, allow everyone to plan and coordinate with the EU negotiator, allow fake civil servant reports, allow remain ministers to speak against govt policy, slap down leavers who promote govt policy. What other evidence do you need to act?

  27. Adam
    Posted May 1, 2018 at 10:35 am | Permalink

    Privately-arranged services are superior with simple efficient laws regulating safety, quality & excesses.

  28. Ron Olden
    Posted May 1, 2018 at 12:55 pm | Permalink

    The NHS is not ‘Free at the Point of Use’.

    We pay Dental Charges, Prescription Charges, Charges for spectacles, and one or two other, treatment related charges.

    Some benefits received by pensioners and others also stop if your hospital treatment lasts for more than 28 days.

    Ironically (or perhaps not so) much the most prompt (and definitely best value), medical attention we get is from the wholly privately owned High Street optician chains.

    We also get pretty good treatment from privately owned pharmacists.

    No one ever complains that they are ‘working for profit’, whereas when, we of to a go to an NHS GP or Nurse, who is working for personal profit in an NHS building, built and maintained by contractors who are working for profit, and treated with equipment and drugs made by firms working for profit, the State is thrilled, and duly sanctimonious about it ‘not being for profit’.

    It’s thought to be ‘disgusting’ that anyone ‘makes a profit’ out of providing health care. But in my non medically qualified opinion, having food to eat, and clean water to drink and wash in, is EVEN more important than health care.

    We’d all be dead with two months without it.

    Yet no-one thinks it’s ‘obscene’ that the food is produced by businesses making a profit and sold by shops making a profit., In fact they provide such great value for money that its’ all most of us can of to avoid getting obese.

    If the State was running food production we’d be eating grass.

  29. Sir Joe Soap
    Posted May 1, 2018 at 1:04 pm | Permalink

    Since the BBC gave no right of reply. Can I suggest your readers listen to this misguided Tory MP being interviewed and respond accrodingly

    Dear Dr Wollaston,

    Having just listened to your interview today, I am appalled that you seem to regard your duty as an MP as being to guard people against your idea, for which there is no evidence, of what might make them poorer. You seem to consider that your plans for peoples’ future trumps their right to be heard in a democracy. This is completely false, and what you are proposing is tantamount to authoritarian -“we know better than the little people”.
    Well, you don’t.
    In the face of absolutely no arrangements being able to be made with other third countries, you assume that any such deals will be worse than what we have now, when the evidence is to the contrary.
    Even in your own field, who is to say that in 20 years’ time, a wonderful new medicine hasn’t been invented by an Indian researcher working in a UK University, who would never have been admitted to the UK under current rules, and therefore that thousands of people would have been cured which wouldn’t have been cured had we stayed with EU immigration rules?
    I suggest you think again, and trust the people rather than your own ideas and prejudices.

  30. Denis Cooper
    Posted May 1, 2018 at 1:21 pm | Permalink

    Off-topic, I hope the cabinet will have understood this tomorrow:

    https://euobserver.com/uk-referendum/141721

    “Irish and EU officials also said that for the UK to opt back into the bloc’s customs union after Brexit would not be enough to avoid a hard border on the island of Ireland.”

    “That would require full regulatory alignment in some areas between north and south Ireland to keep the border open … ”

    “It would also require legal monitoring and conflict resolution, creating a need for the European Court of Justice (ECJ) to play a role … ”

    Plus from the EU’s domestic ally Chuka Umunna:

    https://www.independent.co.uk/voices/labour-brexit-northern-ireland-border-michel-barnier-irish-corbyn-a8329591.html

    “The optimum position would be for the UK not to leave the EU – that is, of course, the ultimate way to avoid this issue. However, if Brexit does happen, there is clearly no solution to the Irish border issue other than for the UK to continue to participate in the customs union and single market.”

    Not just the customs union, but the customs union AND the single market; the customs union alone would not be sufficient, and in fact would only solve some of the least difficult problems; it would have to be BOTH, otherwise it would be better to have neither.

  31. mancunius
    Posted May 1, 2018 at 2:23 pm | Permalink

    “the NHS, where all parties agree we want to keep a public service free at the point of use”.

    Not this party. I am in favour of a modern, tiered insurance system, with a basic safety net for the very poor – of whom there are far fewer than are currently subsidised by the net taxpayer.

    Stop preventing the middle classes from earning and funding their own way through life. Since 1945 every single decision in this country has been made dependent on the mawkish ‘oh but what about the poor devil who…’ litany. The result is a thriving recruitment industry in ‘poor devils’, and politicians competing for their votes.

  32. Sanity in Government
    Posted May 1, 2018 at 2:33 pm | Permalink

    I went to Morrisons garage today, in Hinckley and the Manager said to me “I don’t know about the second world war, but this country has become a dictatorship”. People have noticed Theresa May is a fraud but they have also noticed she is acting with extraordinary powers and no one can get rid of her. The public are scared.

    • Edward2
      Posted May 3, 2018 at 11:26 pm | Permalink

      Closest House of Commons vote balance for many years.
      Ridiculous to say it is a dictatorship.

  33. The PrangWizard
    Posted May 1, 2018 at 2:40 pm | Permalink

    Where in the Conservative party and its leadership is the passion, the vision, and the inspiring and convincing promotion of free enterprise, freedom of the individual and the wealth, success and happiness that derives from it?

    We know the answer, the leader has no belief in such a philosophy.

    Enemies of freedom are thus left to fill the void with warm promises of easy solutions, that the full nationalising of public services and major industries provides the answer to problems. Many people just want a quiet life and someone to solve their problems and frustrations. They are not especially interested in details.

    Even if they only half believe what they are told, they are liable to vote for them when there is no-one to persuade them otherwise.

  34. Anonymous
    Posted May 1, 2018 at 3:47 pm | Permalink

    A reminder to all that surgeons and SAS troopers are trained and employed in the public sector.

    You don’t get more competitive nor more excellent than that.

  35. 37/6
    Posted May 1, 2018 at 3:53 pm | Permalink

    “Quite often they are prevented from expanding or running better services by the restrictions of the monopoly provision of track and inadequate signalling capacity.”

    Presumably adequate signalling capacity will mean the provision of more trains and carriages. I was given to understand that the main reason for crowding and high pricing on peak trains is a lack of rolling stock.

    Seeing as people want to arrive at terminus stations during rush hour the new signalling will need more platforms at the end of the route.

    Surely more carriages on existing services is the answer.

    This is a problem which could have been sorted out ages ago.

  36. duncan
    Posted May 1, 2018 at 5:18 pm | Permalink

    Time for May to get go and disappear into her liberal left utopia. We want a true Conservative back at the helm of our party before it’s too late

    She’s a socialist. She’s a liberal left supporter with authoritarian tendencies. She’s a Europhile. She’s outstayed her welcome

    We don’t need a New Labour stooge as our leader

    we need a patriot. Someone who believes in a sovereign, independent UK,. its people and our heritage

  37. Posted May 1, 2018 at 5:42 pm | Permalink

    The real issue here is not about public or private.

    It is the competition authority and monopolies commision need more teeth. In the age old battle between Capital and against labour it is quite clear to me that over the last decade or so Capital is out of control.

    We need to make Capital compete more for Labour and we need to give some teeth to these institutions to make that work.

    Force Capital to compete for Labour which in turn will improve our productivity over all.

    • Edward2
      Posted May 2, 2018 at 1:21 am | Permalink

      Which is why big business supports the EU as they like their open borders policy which makes labour cheap and plentifull.

    • libertarian
      Posted May 2, 2018 at 4:23 pm | Permalink

      Derek H

      What are you going on about. We ARE competing for Labour… We have the worst shortage of skilled people we’ve ever faced. The tier 2 cap is a farce and the minimum wage is what is holding down salaries along with the increased cost of employment .

      I love hearing from people that have never run a business and who know nothing about the labour market lecturing us.

      I explained all of this to you before

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    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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