Shrink the state: Cameron and Clegg complete Thatcher's task

Jan 10, 2013
Neil Clark

Privatising the probation service is not about cutting the deficit – it's a purely ideological coalition move

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IT ALL started on a late spring day back in 1979. Delivering his very first Budget, Geoffrey Howe, Chancellor of the Exchequer in Margaret Thatcher's new Conservative administration, announced the government's support for "sales of state-owned assets to the private sector" and that "the scope for sale of assets is substantial".

Very few people listening to Howe's speech that day could have envisaged just what the government's privatisation programme would lead to. Or that, 34 years on, we'd be witnessing the wholesale outsourcing to private companies of our probation service, set up in 1907.

Chris Grayling, the Justice Secretary, says that he hopes his new plans, announced yesterday, will lead to a "steady year-by-year decline" in re-offending rates. But make no mistake - this is an ideological move, and part of the Tory mission to finish the radical 'shrink the state' economic project began by Margaret Thatcher in 1979.

Thatcher was set on destroying the genuinely progressive mixed-economy post-war model, which a succession of Labour and Conservative governments had supported prior to 1979. Influenced by free-market thinkers, she wanted to roll back the frontiers of the state and allow private companies to take over the roles carried out by public corporations.

In the period 1979-97 we saw the sell-off of numerous public enterprises, including the gas, electricity and water industries, the railways and buses and much of our national infrastructure. Under New Labour, there were no major new privatisations, though the role of the private sector was increased by outsourcing.

Now, with the Conservatives in coalition with similarly pro-privatisation Orange Book Liberals, it's full steam ahead to complete Maggie's ambitious project.

Don't fall for the line that 'public sector reforms' - a euphemism for privatisation and outsourcing - are necessary to cut the deficit. The deficit is being used as a convenient excuse to carry out further diminution of the state's role. In other words, even if our public finances weren't in the red, the sell-offs and outsourcing would still be taking place.

"Public services should be open to a range of providers competing to offer a better service," David Cameron wrote in the Daily Telegraph in 2011. "Of course, there are some areas, like national security services or the judiciary, where this wouldn't make sense. But everywhere else should be open to real diversity, open to everyone who gets and values the importance of our public service ethos. This is a transformation: it ends the state's monopoly over public services."

Lest you think this just a Tory argument, here is Nick Clegg in 2008 criticising Gordon Brown for not opening up public services to non-state providers: "We have nationalised education, nationalised health, and nationalised welfare: run by inflexible, centralised monopolies. It adds up to the nationalisation of our whole lives."

The coalition had only been in power for six months when they sold the Channel Tunnel Rail link to Canadian pension funds. In June 2011, they sold the Tote, the publicly-owned bookmaker set up by Winston Churchill in 1928. Privatisation of the police is well under way, while the coalition's controversial Health and Social Care Act opens the door for the privatisation of the NHS.

Our jails are going private too: in October 2011, HMP Birmingham became the first publicly owned prison to be privatised. Last November, Chris Grayling announced the privatisation of five more. In 2013, we are likely to see the sell-off of the Royal Mail, in state hands since its inception in 1516, while David Cameron has even mooted the idea of allowing private firms and investment funds to build, operate and maintain Britain's most important roads.

It's de rigueur to describe the Venezuelan leader Hugo Chavez as an 'ideologue', but if we're looking for genuine, hardcore ideologues we don't need to travel to Latin America to find them. The support of leading members of the coalition for 'progressive' measures such as same-sex marriage shouldn't blind us to the fact that we are governed by a bunch of ideological, uber-Thatcherite extremists, hell-bent on destroying state provision.

Does all of this really matter? Yes it does, because the transfer of the entire public sector (with the exception of national security services and the judiciary) to private companies will mean us paying much more for more basic services - as we already do with the railways, buses and our gas, water and electricity bills.

We should also not forget that the much-maligned mixed economy post-war model delivered to ordinary working-class Britons a major rise in living standards and an improvement in their relative position, whereas since 1979, it's been the one per cent who have been the major beneficiaries.

In short, 'shrinking the state' is bad news for the majority, while for the likes of G4S and Capita, and the City of London backers of the Conservative Party, it's one big financial bonanza.

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If the crash of 2008 should have taught David Cameron or Clegg anything is that Hayek, Thatcher, and Regan were wrong and Hayek said so in an interview that if there is a financial meltdown then his ideas were wrong and Keynes was right !

Give a Tory a fish and you feed him for a day; teach him how to asset-strip and you feed him for life.

Dunno who authored this (reeks of Owen Jones) but the 'idealogical' accusation is spot on, if one considers a requirement to avoid bankrupcy an idealogical standpoint. The postwar 'mixed economy' which the author is so fond of, lend to an IMF bailout, and the complete amortisation of British Industry.

Excellent article,one of the best I've read. We are being systematically impoverished by these overgrown schoolboys who know the cost of everything and the value of nothing. They and their cronies do not use these services,and see no point why they should contribute anything to their upkeep.
Once you introduce the profit motive,everything else is subordinate; the Americans have been at it for years, and have learnt that services cost more in the end because of the army of inspectors,accountants,lawyers etc etc you have to employ to monitor what is being provided.Otherwise staff cost are shrunk and services are the poorest possible they can get away with.
The point about ideology is particularly moot with regard to the Probation Service.The stated intention is to 'steadily shrink the re-conviction rates,particularly with regard to people coming out of prison having served less than twelve months'. At present, the Probation Service does not supervise anyone serving less than a year in prison,but Grayling does not make that plain, because it does not fit his agenda.He is also not waiting for the results of pilot schemes set up around the country,he is rushing straight to privatisation because he knows he will not get a second chance after 2015.
There is also a central flaw in his reasoning; if payment is by results, what private company will want to restrict it's opportunities for profit by reforming anyone at all?
That is just not how they work,quite apart from the morality of allowing some of the most vulnerable people in society to be exploited by a multi-national company.
This is despicable, narrow, ill-informed ideology, yet another instance of this governments intellectual and moral bankruptcy. No wonder that all the lords are leaving, they know they must make their extra millions before their cronies in parliament get thrown out.
Roll on the day, it can't come soon enough.

The article is nonsense. We can't continue to have the state spend more than 50% of our national income. Nor can the state continue to borrow 25 % of this money every year. The state has never been this big before. Utility bills were the smallest in real terms they had ever been until Labour piled on the renewables, regulation, windfall taxes, h&s, etc etc. more than 50% of our bills are for this stuff , the minority is for gas, water and electric.
Post Office privatisation is an EU legal requirement ; the Germans have done it to Deutsche Post , I bought shares in the IPO.
I wont waste more time refuting his artile point by point. But it's all wrong

If the Tories & Clegg (and Labour was bad enough) wish to privatise all services and sell assets to profit making corporations - citizens should have the right to opt out of private services they do wish to pay for. That's capitalism and you cannot have it both ways.

Therefore we should only pay tax for services we want. I'm not interested in probation services or jails and I couldn't give a damn about some G4S corp and it's profit enterprises. why should I contribute tax to them?. Let their shareholders fund their activities.