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Tuesday, 1 October, 2002, 14:38 GMT 15:38 UK
Labour conference: Should firms run public services?
Tony Blair has suffered an overwhelming defeat at the hands of his own conference over his programme of using private cash to run public services.
Delegates at the Labour conference in Blackpool supported a union motion calling for a review of the government's Private Finance Initiative (PFI) - using private cash to build public sector projects.
It is only the second conference defeat Mr Blair has suffered since he became leader.
The unions are worried about the creeping privatisation of public services.
Can the public-private partnership work? Should private firms be involved in the running of public services?
This Talking Point is now closed. Read a selection of your comments below.
Am I the only person who objects to paying tax straight into the hands of private company shareholders? Railtrack had a blank cheque (written on behalf of UK tax payers) for too long, do we really need to go through it again with the health service etc?
To those who don't like PFI, could you imagine what it would be like if the state ran an essential service like food retailing? Business exists to make money. It does not do that by providing a poor service. If it can provide a good service and make money, so what?
Great, off we go with PFI for the hospitals and schools. Just like the Prudential you can have all your data processing, A level marking and medical records "keyed" in Bombay - think of the savings
PFI cannot fail to be better value so long as they are able to reduce the inflated incomes and conditions, particularly pensions of state employees.
Time and again experience shows that if the private sector is left to run something, the result is a mess, there is no incentive to get it right, because there is almost no competition, and it's almost impossible to be replaced as a supplier without massive legal costs. The government is kidding itself if it thinks it is transferring the risk of big capital projects to the private sector. BNFL is a classic example. No corporation is going to expose itself to any more risk than it can get away with. At the end of the day the very few big U.S. companies with their noses in the UK government trough have very good lawyers to keep their exposure minimised. This is the way the world works outside of the parallel universe the average Tory voter inhabits.
I think the key factor in the PFI debate is accountability. If the Government still holds a controlling stake in whichever public service is chosen for PFI, then the Government will still control the finances and be accountable to the public. Also, as long as the services are free at the point of delivery - which I think is most people's key worry - then I think PFI could work. However, the commitment to exclusively serving the public will inevitably be diluted in the quest for profit as we have seen in other privatisations.
Whatever the debate over the relative efficiencies of public and private sectors, just one thing is certain - by definition: private firms are in PFI for a profit. The more private involvement there is, the more taxpayers' money must be diverted to the pockets of the bosses and shareholders of the PFI firms - and, often, the less money goes into the pockets of the employees providing those services.
The NHS and other public services are outdated relics from the birth of the welfare state, and need comprehensively re-thinking. Until we get a government prepared to bite this bullet, public services will continue to do precious little good at an enormous cost. As long as we (the voters) are stupid enough to perpetuate this situation, private companies deserve credit for having the guile to make money out of it.
In the 80's and 90's labour (including our present glorious leader) rightly criticised the Conservatives for selling off public services. Now Labour want private companies to run public services. Can someone tell me the difference?
It's alright, I've just realised - Tony wants it done, so now it's a "Good Thing".
Are the supporters of PFI sure that private contractors are taking their share of the risk? There have been many occasions recently - Railtrack, British Energy, the National Air Traffic services - where shareholders and private capital have been happy to pocket their slice of the reward; when that has been exhausted, the risks and recovery costs have reverted to the government and taxpayer.
It is an illusion peddled by accountants that PFI saves money. It's all done with mirrors. Hundreds of millions of pounds of public money is being skimmed off into the pockets of wealthy businessmen who are on first name terms with Ministers.
No - just look at the disaster of Railtrack. I lived in Germany and Austria for some years, where the public sector works very well. The problem in the UK is mainly due to chronic and historic under-funding, combined with lack of commitment from successive governments. If you want public services to work, maybe you should, get the Germans/Swiss to run them?
To all those Labour Party members who hate PFI: Get real, the country won't pay the tax to support the system you prefer. Tony knows that, Gordon knows that and most of the rest of us know it!
The private finance initiative is merely a clever way of turning public funds into private profits. It has been sold to us by rigged accounting and Tony's big-business chums. They bought this government, and PFI is their payback. There is no way a private company can operate a public service as a profit-making venture and do a better job than if it were non-profit.
The private sector can do the job to the same standard or higher for significantly less cash then I say them have the contract. Long-term it should reduce the size of the civil service hence reducing tax.
Time and again experience shows that if the public sector is left to run something, the result is a mess, there is no incentive to get it right, because there is no competition, and it's almost impossible to be sacked. The government is absolutely right to transfer the risk of big capital projects top the private sector, and to give them the carrot of potential reward if they do a good job and do it on time. This is the way the world works outside of the parallel universe the public sector unions inhabit.
There's no need for an independent review. The Audit Commission has already warned that the use of private money to fund public projects could damage public services in the long run. What is needed is a rebalancing of the risk/profit equation so that the public takes less risk and the private sector makes less profit.
Will, London, UK
Absolutely not. The private industry has no place in public services. We have already seen how private companies have wrecked the water/gas/electricity/rail etc. I want my taxes to go to services, to pay nurses wages etc NOT to shareholders. Railtrack has proved that private companies put profits ahead of safety and good management and I am tired of my money subsidising top management golf trips.
It has to work. They seem to have a strategy for services that involves nothing more than throwing money them and I can't see us happily stumping up more taxes so it has to come from public-private combination.
Why should money have to come from private sources to build things that I'm already paying lots of tax for?
Ifan Morgan, UK
PFI is not value for money. The high cost of NHS trust payments to the private sector is leading to a reduction in funds for other health services. We are getting smaller hospitals with fewer beds. This means longer waiting lists. In addition a poll conducted by a respected company revealed that PFI is less popular than the poll tax! The initiative simply does not make sense, either in terms of value for money or as a way of healing the ailments within the NHS.
I think private firms could be involved in, but certainly not run public services. Usually these services are saddled with astronomical debt that only a nation's government can handle. The occasionally try it here in Holland too, and it doesn't work too well...
PFIs can't work, because the firms will always look to make a profit for their shareholders, which will result in cuts and conflicts with the unions, and if the partnership fails the taxpayer will be expected to fork out the bill.
This is what happens when a government is voted in with a minority of votes and a vast majority of seats. They know that they have the majority of people AGAINST them so why bother to listen to the public at all?
R C Robjohn, UK
It's nice that the unions are looking out for us poor taxpayers with their stand against PFI. However, I didn't pay any union subs and I don't expect them to look after my interests.
Why can't unions be honest about this? PFI means the end of cushy jobs for life in the public sector for their members who will have to fight it out in the job market like the rest of us; they are trying to prevent this on behalf of their members. There's nothing wrong with this, it's what they were founded to do, so stop pretending to have the interests of the wider public at heart, don't be ashamed to do the job you are paid for and stop trying to represent me.
Blair says it is PFI or no funds for public sector services. Rubbish. The Treasury and its antique rules is driving PFI and needs to be sorted out root and branch. That is where Blair should tackle the "forces of conservatism". But he is more scared of Brown than he is of Saddam Hussein.
Whatever the conference decides, Tony Blair will ignore anyway if he disagrees. The whole jamboree is a huge irrelevance.
Why is Parliament not working from July to November? Why do we get wall to wall coverage of three party conferences (plus the TUC)? Blair should be accounting for his actions to us all - not just some sad hack politicos in Blackpool.
What is the point of this conference? Blair will be defeated on PFI and Iraq but will carry on regardless.
It's about time Blair listened to the people who voted him in and not the yes-men who advise him.
These party conferences are for the benefit of the members and are of no concern to me or most of the public. They achieve nothing useful and waste an awful lot of party sponsorship money that could be spent more usefully elsewhere.
Daniel Brett, UK
I am a member of the New Labour party and I stress the "New". I despair at the comments of some of your correspondents who have forgotten that it was Tony Blair almost single handed who got rid of the Tories and brought Labour to power. If it had been left to the likes of Daniel Brett, socialism would have died in opposition.
27 Sep 02 | Business
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