Praxis (Glasgow)

It has been suggested that the British government is quietly intending the privatisation of many government social services – housing, cleansing, community leisure facilities, neighbourhood level policing. I’m not sure, but I’m worried enough to start the ball rolling on the debate…

Exaggerated Privatisation

“Privatisation” is often misused or over-used as a propaganda scare word applied to just about any process that the speaker happens to dislike. Like ‘fascist’, it can become a general abuse word with no actual meaning. That is unfortunate, since real privatisation is nasty and should be opposed, and, like the boy who cried wolf, exaggerating what is privatisation and what is not means you are going to be less effective when real privatisation strikes.

So I was unhappy with the housing stock transfer from Glasgow City Council to Glasgow Housing Association Limited being described as privatisation – when it obviously wasn’t – it was transfer from Glasgow City Council to an arms length management organisation of the Sottish Executive: which is an internal transfer within the different layers of the public sector. Using language like that risked loss of credibility on the anti-transfer side. Similar earlier transfer of further education colleges from Strathclyde Regional Council to ALMOs controlled by the then Scottish Office Education Department were similarly denounced as privatisation.

A definition of privatisation is in order: for me, it is transfer to an entity which is not under government control – in all actual cases that has meant a profit making corporation, but in theory that would include transfer to a charity or mutual firm, that is, an NGO (non governmental organisation) then rather than a Quasi-NGO. The successor to Railtrack, Network Rail Infrastructure Limited, would be the sole exception except that it appears to in fact be under government control rather than being a non profit making private corporation as the government sometimes claims it is.

Anarchists in particular should be wary of applying the derogatory ‘privatisation’ label to everything that deviates from rigid state control. The CNT run workplaces/syndicates in revolutionary Catalonia were not state controlled, but it would be perverse to describe them as ‘privatised’. And the same goes for modern community land trusts and co-operatives.

Most arms length management organisations and quangos are simply shams, constructed to place a veneer of independence over what remains as intimately a part of the government as it was pre-transfer; and secondly as a legal ruse to enable the government to attempt to escape full liability for pensions and redundancy costs in future years.

GHA, for example, has some tenants on its board of management, but that is purely for show, like a Potemkin village, because its entire board has no power in practice and makes no decisions. GHA was given political direction on the ground for its first few years by the recently retired Labour MP Maria Fyfe, who held the nominal position of vice-chair of the board, but was in effect functioning as the Scottish Executive junior minister. And administrative direction came from the Scottish Executive agency Communities Scotland, another pretend-ALMO, but really just the Ministry of Housing with a silly name. The Chief Executive of Communities Scotland (really the permanent secretary for Housing) was consulted before every major and minor decision made by GHA, including such minor issues as the decision to remove two tenant members from the sham board of management. And the Chief Executive of Communities Scotland, Angiolina Foster, herself served as acting Chief Executive of GHA (on secondment from Communities Scotland) immediately prior to her promotion to her present job. Finally, the Comm unites (=Housing) Ministers in the Scottish Executive at all times exercised direct guidance and control over GHA. Sticking a silly name on a government department does not amount to privatisation, and, given the above, an employment tribunal or higher court may rule that in law GHA was a part of the Scottish Executive for pension and redundancy costs should the GHA to fail to honour them.

It is a common trick of politicians to try to push their hapless civil servants into the line of fire over controversial decisions, to pretend to wash their hands in the style of Pontius Pilate. Protest then gets diverted to the scare crow figure. So it is believed – I think wrongly – that the Principal of the University of Glasgow, Sir Muir Russell, has control over the decision to close the University’s Crichton Campus in Dumfries, when more likely the Education Minister made the decision, or in any event would have the power to reverse it. Governments tend to be very hierarchical organisations. Don’t waste time talking to the monkey when you can talk to the organ grinder. And exaggerated privatisation rhetoric can mislead potential activists about who is really in charge – to the relief of politicians wielding executive powers.

ALMOs and quangos are well worth opposing for their own sake: accountability and openness is lost (journalists and members of the public may be prevented from observing meetings, decisions and minutes of meetings are often not published, freedom of information laws tend not to apply) giving greater risk of corruption which is especially a worry where public assets are involved such as with housing and parks; wasteful administrative costs tend to increase, especially at senior employee levels, which is a benefit to the middle (social) class at the expense of ordinary people; and workers are in a less certain position for job security, pensions, redundancy. But they are not privatisation.

Yes I’d love to hear your complaint little girl,
but I’m afraid the new “Coin Collection Arms Length Management Organisation”
I’ve set up means you have to go talk to the monkey instead.

Transfer as Preparation for Privatisation

That said, many transfers may be precursors to actual privatisation, of sale to real capitalist corporations, including foreign owned multi-nationals. That really is something we don’t want to happen: they will asset strip, raise prices, be anti-union, use aggressive hire and fire policies, and divert profits to senior corporate executives and to shareholders. Competition won’t even shield consumers from price rises and quality decline here because these services tend to be natural local monopolies. And while government, or a government regulator, can be set up to control prices, controlling quality externally is an impossible task, so privatised companies can and will make huge unsafe savings there.

It is easier to privatise an already semi-separate ALMO or quango than a fully integrated government department. And the transfer to ALMO or quango may help ease public opinion for the actual privatisation – especially if anti transfer campaigners foolishly muddy the waters by claiming that the transfer to ALMO or quango actually is a privatisation.

Even where privatisation is the ultimate aim, it does not always succeed. The Thatcher government transferred Scottish water control from Regional Councils to a quango, as a precursor to privatisation as in England. But both it and the later Labour government never managed to go that far. And the various NHS trusts and internal markets were all intended to pave the way for full hospital privatisation as in the United States. But, 17 years on, no government has yet been brave enough to grasp the third rail of NHS privatisation. Similarly Royal Mail remains state owned, so far.

Those unrealised privatisations have failed the “Dracula test” – they haven’t stood up to the light of day. That is, the weight of public opinion has scared off any pro privatisation politicians. That only works for so long as public opinion continues to be opposed to privatisation however.

The Nightmare Vision

If privatisation was really to be aggressively pushed again, the current pattern of ALMO/quango creation would allow it to easily settle on lucrative ‘common good’ real estate and provision of services and management to that. Here is what Glasgow has, worst case, being readying:

* [tentative/speculative/future] A proposed new quango that would deliver combined GHA and council services – from Glasgow Housing Associations development plans for Maryhill. Council services to be transferred would be cleansing, roads, parks and recreation, neighbourhood relations teams and community safety wardens – most everything outside education and social work.
* Culture and Sport Glasgow – charitable company formed in 2007 from Glasgow City Council Cultural and Leisure Services Department. Nearly 2500 workers. Has a small profit making subsidiary, Culture and Sport Glasgow Trading Community Interest Company.
* City Building (Glasgow) Limited Liability Partnership – profit making company formed in 2006 from Glasgow City Council Building Services Department. Over 2000 workers.
* Glasgow Housing Association Limited – charitable company formed in 2003 from Glasgow City Council Housing Services Department. Has a small profit making subsidiary, Glasgow Housing Association (Management) Limited.
* The many other, older, housing associations. Those formerly were ‘community based’ housing associations, but government encouraged mergers have grown them outside community boundaries.
* (I’m leaving out here the FE Colleges, universities, NHS trusts, which would seem to be too sensitive to be included even in a nightmare scenario, at least for now.)

The ultimate distopyian future of this vision would be where all rental housing was owned by profit making firms, which also managed all public buildings and parks, and which also controlled the streets, both through services such as repairs and cleansing, and also through provision of low level policing. Sworn constables with power to arrest would still be provided solely by the state, but they would rarely be seen: ordinary ‘community’ policing (absent any special power to arrest) would be done by corporate security guards/concierges/neighbourhood relations teams/community safety wardens. The whole lot, over a specific geographical area, would be bought and sold to and from different foreign multinational capitalist corporations. Public accountability would enter in only through (ineffective) monitoring of multi-year-duration service provision contracts by elected politicians.

Can it happen here? Let’s hope not, but the trend is worrying. Union reps in Glasgow City Council and its new ALMOs are genuinely concerned, which is a worrying sign.

But today’s newspaper stories appear good – if water can’t even be mutualised then the new executive can’t be too in with the nightmare privatisation idea. The new Edinburgh Council administration doesn’t seem to be in . Of course, these are early days for the new administrations, and the corporate lobby will be rushing to crawl all over them in the next few days and months. Perhaps lobbying of one kind or another from us might be in order?

Andrew Fraser, May 2007.

Appendix – three newspaper articles Friday 25th May 2006

Swinney looks at a £1bn spending overhaul
[The Herald http://www.theherald.co.uk/news/news/display.var.1425199.0.0.php ]
A review of Scotland’s public sector has recommended sweeping changes to the way taxpayers’ money is spent.
It coincided with a promise by John Swinney, the new SNP Finance Secretary, to deliver a slimmer government and more spending power at local level.
The independent inquiry, carried out by experienced government officials, has suggested some highly controversial changes, with £818m in savings and a further £430m potential in further efficiencies. They are thought to represent around 4% of Scottish Executive spending.
The Howat Report was controversially suppressed by Labour and LibDem ministers in the months before the election but was published yesterday by the new SNP administration.
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For universities, it suggests a move to a three-year basic degree, from Scotland’s traditional four-year model.
The review argues for one centre providing shared services for Scotland’s 13 university campuses, as well as one for further education colleges.
It recommends the abolition of Learning and Teaching Scotland, official adviser to the executive on the school curriculum, while saying school closures should be a high priority. It says £57m in bus company subsidies could be withdrawn, with the reckoning that would lead to a 17% increase to fares. Road maintenance could be cut by more than half, saving £67m annually.
Health boards could save £50m on the NHS drugs bill each year, while senior consultants should lose the £20m of bonus pay which was found to be distributed by “buggin’s turn” and without scrutiny.
The review found the Cities Growth Fund, set up four years ago and worth £42m each year, should be wound up, as it is not having the intended impact. Legal aid could be cut by 10% or £17m, and police, fire and ambulance training should be in one centre. Many budgets were found to be capable of 7% efficiency savings. The review team also recommends Scottish Water should be taken out of direct ministerial control and turned into a mutual company, saving the executive £182m in capital allocations each year.
That was the only one out of scores of recommendations that was firmly rejected by Mr Swinney yesterday, as the Finance and Sustainable Growth Secretary set out his guidelines for spending more than £30bn of public money over each of the next four years. He announced the budget process is likely to run at least a month behind schedule be-cause it will not be clear until mid-October how much the Treasury will release in Scotland’s block grant over the next three years.
The normal budget process would require the Finance Minister to bring the budget before the Finance Committee by mid-September.
Mr Swinney said all of Howat, except for the Scottish Water recommendation, would be considered as part of the budget review.

Swinney won’t mutualise Scottish Water
[Scotsman http://news.scotsman.com/scotland.cfm?id=811342007 ]
JOHN Swinney yesterday ruled out turning state-owned Scottish Water into a mutual company at arm’s length from the government.
The Cabinet secretary for finance refused to accept the Howat report recommendation to change the utility’s status, a move what would free up more than £180 million.
Mr Swinney, who is understood to have looked at the idea when the SNP were in opposition, told The Scotsman last night that Scottish Water was part of the new administration’s plans to strengthen Scotland’s infrastructure.
The new government’s move to keep the utility under public ownership was the only firm decision which it made yesterday in response to the Howat report.
Mr Swinney said: “We think that Scottish Water should be a public asset. Mutualising it leads you almost inevitably into the position of privatisation and we are against that.”
He said that he had been given responsibility for the company because he was responsible for economic growth in Scotland.
The new minister added: “Scottish Water will be part of the infrastructure that gives us the support we need for economic development.”
Earlier he told MSPs: “We will not be taking forward the recommendation to turn Scottish Water into a mutual company.”
Despite the fact that the idea was the policy of the Conservatives and the Liberal Democrats, the new government was “not persuaded by the arguments”. Mr Swinney added: “Scottish Water will retain its current status – that is our clear policy position.”
Alex Johnstone, a Tory MSP, criticised Mr Swinney over the Nationalists’ refusal to consider the plan. He claimed such a move would free the organisation from the “dead hand of government” and would bring significant savings to the public purse.
Mr Johnstone claimed Mr Swinney did not support the move because “he is committed dogmatically to the principle of public ownership in water supply”.
A Green Party spokesperson said: “We welcome this clear decision to keep Scottish Water under public ownership – and control – where it belongs. Mutualisation would have been a backdoor step towards privatisation and we’re glad that this is being resisted.”

New council leader questions predecessor’s flagship projects
[Scotsman http://news.scotsman.com/scotland.cfm?id=810952007 ]
JENNY Dawe, the new leader of Edinburgh City Council, yesterday warned that a number of the city’s flagship projects face an uncertain future under the new regime.
In an outspoken interview, marking the day she officially becomes council leader, the Liberal Democrat hit out at plans to overhaul Haymarket station and warned she had major concerns about Edinburgh Zoo’s expansion.
A high-speed rail link between Edinburgh and Glasgow, trumpeted by her Labour predecessor, was branded “pie in the sky”.
And she questioned the need for more collaboration between the two cities – in the wake of the appointment of a £55,000-a-year director to work on joint projections.
An apparent shortage of family homes being built on the Granton Waterfront is also to be investigated.
Regarding Haymarket, which includes proposals to bulldoze the existing station and Ryrie’s Bar, both listed buildings, she said: “I don’t see the point of knocking down perfectly good buildings, particularly when you put something that looks like a bus terminal in its place.”
Edinburgh Zoo hopes to sell some of its land for housing, but she said: “That does not mean that planning permission is guaranteed and it may be that the new planning committee will take a different view and not agree that development there is appropriate.”