This is very last minute, but I hope there’s still time for people to fill in the latest government public consultation theory. I had emails from the pro-nationalisation organisation We Own It and Bring Back British Rail alerting me to the fact that the government has published a public consultation document about their proposed changes to the rail network. It’s to be rebranded as Great British Railways, but despite this nod to Brunel, it’s still the same public- private partnership and rail franchising nonsense. The survey closes tomorrow, so if you want the return of a public railway network that works to the British people, not the rail companies, you have to fill out the questionnaire quickly. I’ve already done so, using the responses recommended by We Own I(t. Here’s their email
‘Dear David,
After the last 30 years of disastrous rail privatisation, you have an incredible opportunity to demand that our railway starts working for people and not profit.
The government wants to hear from the public about our railway. The more of us respond, the bigger our impact.
Can you respond to the public consultation and demand that they take our railway into public ownership?
We have prepared suggested answers and tips for responding to make it easy for you. You have just 48 hours to get your response in.
Our railway system should work for all of us, and not for the private companies who suck a billion pounds out of it every year.
If we ran our railway in public ownership, we could save £1 billion every year. That money could be used to cut rail fares by 18%, instead of the annual hikes we see.
And public ownership is hugely popular with the public.
64% of the public, including a majority of people who voted Conservative at the last election, say our railway should be run in public ownership.
The government’s rail consultation is your opportunity to make sure they know that thousands of us want the government to take our rail into public ownership now.
The consultation closes on Thursday 4th August, which means you have just 48 hours to get your response in.
We know that even this Conservative government recognises that privatisation has failed.
Over the last few years, they have taken some rail franchises into public ownership when private companies have failed.
When Northern Rail and East Coast Rail were thrown into chaos by private companies, the government stepped in and took them into public ownership.
Wales and Scotland both took their railways into public ownership during the pandemic showing that public ownership is the only remedy to private chaos.
It is time to demand that the government end their “public ownership only as a final resort” policy and take on a “people before profit” approach.
The government wants to hear from you. It is your opportunity to make sure they know that thousands of us want public ownership, not private chaos.
This is a big opportunity to demand public ownership of our railway. Please fill out the consultation now. Also, share the link with family and friends and ask them to do it too. The more of us respond, the bigger our impact.
Thank you so much for standing up for a railway that works for people and not profit.
Cat, Alice, Matthew, Kate, Jack, Johnbosco – the We Own It team’
I saw from a headline from the Heil posted this morning on the news section that greets you when you get online that three ostensibly Labour MPs are considering defecting to the Tories. Mike has put up a piece about it this morning, pointing out that no true Labour member or supporter would ever considering crossing the floor to the Tories, because their values are completely opposed to traditional Labour beliefs. Which isn’t to say it hasn’t happened before. Unfortunately it has. I also remember that in the 1980s the SDP was rocked by a series of defections to the Tories after they split from Labour. I don’t think the defectors were exactly met with open arms either. Well, perhaps they were, but there were also a few sneers. The Sunday Express lampooned them in its ‘No. 10’ cartoon, which showed two figures, presumably representing Dennis Thatcher and another Tory watching a clockwork soldier march to the end of a table before falling off. This was matched with some comment about SDP defectors. I only dimly remember it, and not because it was funny. I think it stuck in my mind simply because of its overt, unpleasant sneering.
Mike also points out that if these MPs do defect, it would show how bad the Tory entryism has been during successive leaderships since Tony Blair. Quite. There was a computer game at the time that gave you anagrams of various politicians’ names. I think Michael Portillo came out as ‘a cool, limp Hitler’. Anthony Blair produced ‘I am Tory B’. Or Something like it. And he was, despite all that guff about a ‘Third Way’. Well, the last world leaders to speak about their parties constituting a ‘third way’ between socialism and capitalism were the Nazis and Fascists. They are argued that their noxious regimes constituted such a new politics because they were capitalist, but made ‘social’ by being subjected to the state. Which comes to think of it, does sound a bit like Blair and his enthusiasm for the state partnering with private industry.
And Blair very definitely favoured Tories. His Government Of All the Talents included Tories like Chris Patten. When a Tory defected, Blair quickly had them parachuted into a safe Labour seat. The result of this has been a series of Labour MPs so right-wing that even Tories wonder what they were doing still in the Labour party. Years ago the arch-Tory Anglican blog, Cranmer, commented approvingly on Frank Field and invited him to cross the floor to the Tory ranks, assuring him of a warm welcome. This was the Frank Field who demanded conditions be made even more harsh for the unemployed in order to make them find work. Then there was the Labour bureaucrat, who ended up as a moderator on a Tory website. He astonished the Tories there with his invective against the Labour party which was actually far more vicious than theirs. But the Tories in Labour’s NEC don’t like you to mention it. When a Labour member has asked what these bozos are doing in the Labour party when they’re behaving like that, they’ve been expelled for ‘bringing the party into disrepute’ or some such nonsense. Some constituency parties were quite open about this entryism. There was one that was so horrified during Corbyn’s leadership by the sudden influx of real, socialist members, that the leader started pleading for Lib Dems and Tories to join.
Mike quotes the Mail, which said that the defections could greatly harm Stalin’s leadership. Well of course they would. As Mike says, it would show that he prefers Tories to real Labour people and suggest there were more closet Tories in the party. I don’t doubt that. I can see any defectors making exactly this comment, as well as encouraging those still hesitating to join them over on the Tory benches. Mike says that it might even make more of these quisling consider leaving, so that real socialist can be elected instead.
Of course, what could happen is that the defections could also give the message that Starmer is too left-wing and weak even for the parliamentary Labour party. This could push Starmer even further to the right. Or if ends up being the target of the kind of right-wing coups and defections that the right inflicted on Corbyn, he made have to swallow his Thatcherite pride and start trying to appeal to the left to bolster his leadership. But I don’t see that happening.
But what might happen is that Starmer goes down through infighting and plotting by his own side, which will further show just how unpleasant and treacherous they are.
Yesterday, Boris Johnson and his viciously incompetent, murderous government decided to wind up Public Health England. They’re replacing it with a new body, the National Institute for Health Protection. The excuse is that Public Health England was too incompetent in its tackling of the Coronavirus. In fact, as a government-owned body, it took its decisions and orders directly from Johnson, Hancock and co. It is they who are responsible for its failings, and for the failure to impose a lockdown as soon as possible. This has led to the deaths of 70,000 Brits, over half of which may well have been preventable.
The new body, by contrast, seems to be a public-private partnership with the same corporate giants that have been heavily involved in the government’s own failures to tackle the virus, such as the lack of provision of adequate PPE supplies to the frontline NHS staff. Many of whom have now died thanks to Boris’ incompetence and sheer indifference to ordinary human life. Medical experts are warning that the disruption caused by the switch to the new body in the middle of the pandemic could be disastrous and cost even more lives.
And people are not impressed by the person appointed to chair the new organisation, Baroness Dido Harding. She’s a Tory peer, who owes her position in health administration to David Cameron and has a disastrous record as the manager of string of companies. Johnson is now denying it, but it looks very much like she owes her position solely to her connections to Johnson, Cummings, Cameron and Matt Hancock. There have been a string of articles already criticising her. Yesterday the I published a profile of her on page 3, written by Jane Clinton. While not as devastating as the articles about her by left-wing bloggers and commenters on the web, it nevertheless leaves the reader in absolutely no doubt that she is completely unsuited to her job. It runs
Who is Dido Harding?
She came to prominence during the pandemic when she was put in charge of the NHS Test and Trace in England, which has been widely criticised. The Conservative peer is chair of NHS Improvement and has been appointed the new interim chief of the National Institute for Health Protection following the scrapping of Public Health England. She will lead the search for a permanent successor.
She has made headlines in the past.
She was CEO of TalkTalk when in 2015 it fell victim to a data breach that led to nearly 157,000 people’s personal data being accessed by hackers. The company was fined £400,000 for “security failings”. During her time at TalkTalk she received two wooden spoon awards, in 2010 and 2011, for poor customer service dished out by the Daily Mail’s Money Mail section. There is a rather sullen photograph of her with one of the wooden spoons – according to the newspaper she would not pose with both “awards”. At the time she admitted that the company’s customer service was “not yet good enough”.
Wasn’t she a friend of David Cameron?
Yes, they were at Oxford together; where she studied politics, philosophy and economics. She was appointed a member of the House of Lords by Mr Cameron in 2014. She held senior roles at Tesco and Sainsbury’s and was made CEO of TalkTalk in 2010. In 2017 she was appointed chair of NHS Improvement. She has also been a jockey and is on the board of the Jockey Club, which owns Cheltenham Racecourse. She is married to the Conservative MP John Penrose, who is on the advisory board of the think-tank 1828, which has published reports calling for Public Health England to be “scrapped”. It has also called for the NHS to be replaced by an insurance system.
Yesterday Mike put up another article tearing into her appointment and the dismantling of Public Health England, which contained a number of searing comments from the good folks on Twitter, Independent SAGE experts and the head of the Nuffield Trust, Nigel Edwards.
In a previous article criticising the decision, Mike also reproduces a Tweet from neil flek Waugh, which also shows how corrupt and nepotistic her appointment is.
Matt Hancock’s relationship with Dido Harding is totally corrupt. She raised more than £600,000 for his leadership bid. And as Health Secretary he rewarded her with the position of head of TTT, which failed. He is now scrapping NHS England, and she will head up the new body.
Her connection to Cheltenham Racecourse is cause for concern in itself. There were calls earlier this year for the Cheltenham Festival to be cancelled because of the threat of the Coronavirus. It wasn’t, and as a result there was an outbreak in the town. More profit before people.
And does anyone really believe that she does not share her husband’s desire to see the NHS sold off and replaced by an American insurance-driven system, the system that has seen millions of Americans unable to afford proper health care, and going bankrupt and dying because of it?
This is yet another step in the Tory privatisation of the NHS. And Cameron, Johnson, Hancock and Harding are fully behind it.
Cameron formally announced today his ‘right to buy’ scheme, which would see the remainder of Britain’s stock of social housing sold off. Tom Pride and Mike over at Vox Political have already posted pieces on this today. I’ve reblogged Mr Pride’s, in which he tells it like it is. It’s just a return of Thatcher’s ‘right to buy’ scheme from the 1980s.
He goes further, and describes Cameron as ‘a pound-shop Maggie Thatcher’. Which is pretty much exactly what he is. Though it does leave you feeling that we’ve been short-changed. Surely with his blue-blood and Eton education he could be something a bit more up-market. A Fortnum & Mason’s Maggie Thatcher, perhaps, or may be a Harrod’s Maggie Thatcher? Or perhaps something a little more popular, but still offering quality: a Sainsbury food hall Maggie Thatcher?
Mr Pride also points out that the beneficiaries of the original right-to-buy fiasco weren’t the ordinary tenants, but the private landlords who purchased them and then hoiked the rents up accordingly. People like Charles Gow, the son of the minister, who privatised them. Young master Gow is a multi-millionaire with forty of them.
Johnny Void also wrote a piece I’ve reblogged earlier last year, when IDS announced it as his big idea, pointing out, along with Mike, that it would lead to a complete absence of council houses, and that the affordable housing that’s supposed to replace it isn’t anything of the sort. It won’t solve the housing crisis. It will only make it worse.
Which was Private Eye’s view in their last issue a fortnight ago. In ‘Housing News’ they wrote
The wheels are falling off Tory housing policy as the desperate search for votes intensifies.
Chancellor George Osborne’s final budget saw yet another ineffective give-away to first-time buyers in the form of “Help to Buy ISAs” – up to £3,000 in taxpayer cash to top up savings for a deposit. Like umpteen other schemes designed to help those who can’t afford a mortgage, this one may just inflate prices further while failing to address shortage of supply.
Not to be outdone, the Iain Duncan Smith faction promptly leaked the latest version of its own pet idea: to extend the Right to Buy to Britain’s 2.5m housing association tenants. This sounds like music to Tory ears until one realises that, unlike the social homes owned by the councils, housing association assets are private property.
For decades, governments trying to keep the national debt down have restrained council borrowing by tying up council housing assets in ring-fenced housing revenue accounts (HRA) and making it almost impossible for councils to build. Housing associations, on the other hand, are independent charities so their £65 bn in borrowing is safely “off balance sheet”.
As the chancellor must be only too aware, compelling housing associations to sell to tenants and use the RTB discounts enjoyed by council tenants (up to £102, 700 in London and £77,000 elsewhere) would cost serious amounts of taxpayer money and bankrupt a few housing associations. Then again, as this is the eighth election in row where the Conservative party has said it will extend RTB to housing association tenants, will the vote-catcher fare any better than usual?
That isn’t the end of the TRB saga. Under localism, some councils have found a way round Treasury borrowing caps via public-private partnerships, using the new “general power of competence” to create their own “local housing companies” and build homes – for sale and for social rent – and keep them outside the HRA. Not only does this evade the borrowing caps, but it also means the new homes are not, er, subject to the Right to Buy. Housing minister Brandon Lewis is not happy, and has threatened councils with serious reprisals. So much for localism.
Now public-private partnerships, like the Private Finance Initiative, are by and large a colossal waste of money and a massive drain on the state, all in order to provide contracts to the Tories’ donors in private industry. But if local councils are using such schemes to build more social housing, then perhaps we could do with more of them in this specific instance.
As for Osbo and his Help-to-Buy ISAs, one of the commenters over at Tom Pride’s or Johnny Void’s blogs stated that the last thing the Tories wanted was for the price of housing to go down, as this would have a knock-on effect on the rest of the economy through the way mortgages are used to stimulate finances elsewhere. Hence in the short-term, I really don’t think Osbo would be at all worried about housing prices going up, so long as the bubble burst when someone other than the Tories were in power.
As for the ‘Right-to-Buy’ policy having now been wheeled out by the Tories in eight elections in a row, that shows that they have absolutely no intention of honouring it. Not if it’s been touted in the past, but obviously not been put it into practice, if they’re still claiming they’re going to do it this time.
This means that Mr Pride was probably being overgenerous in his description of Cameron as a ‘pound-shop Maggie Thatcher’. The stuff in pound shops is cheap, but it’s still good quality. This, however, is a decidedly shop-worn policy, that is definitely past it’s sell by date. This is the Arthur Daley, Trotters Independent Traders version of Maggie Thatcher. If the policy was an animal, it’d be the dead parrot in the Monty Python sketch, gone to join the ‘choir invisibule’.
I also found this story in Private Eye’s issue for the 18th to 31st October 2013.
McNally Pally: How Lobbying Works
Documents released to Private Eye under freedom of information show how scandal-hit welfare-to-work contractor A4E used last year’s Lib Dem party conference in Brighton to get around obstructive civil servants and arrange an official meeting to lobby justice minister Lord McNally directly over probably contracts.
Along with other “workfare” providers, last year A4e wrote to all Ministry of Justice (MoJ) ministers asking for a meeting as the department made plans to privatise the probation service and dole out some very big contracts.
Given that at the time A4e was facing allegations of fraud (these led to nine former employees being charged last month) senior MoJ civil servant Jenny Giblett was not keen.
“From our perspective there would be no specific need for a meeting,” she wrote. In particular, she highlighted “presentation and media handling” issues since “A4e suffered some reputational damage in connection with the earlier allegations of fraud.” She stressed that meetings with ministers “are declared, and are the subject of repeated parliamentary questions and freedom of information requests”.
Justice secretary Chris Grayling and two of his ministers declined to meet A4e. But an anguished civil servant revealed: “Lord McNally has let me know this morning that he agreed whilst he was at Lib Dem Conference to meet with XXX for A4e.”
The firm’s Lobbyist had already used the conference, where ministers are free of their civil servants, to extract a promise of a full meeting with the minister in his office. Though Lord McNally was advised of the ministry’s position and the possible pitfalls, he made “very clear that he is going to meet with XXX of A4e, as he promised …”
One civil servant’s email reads: “He is going to need some very robust advice if we think he shouldn’t proceed with a meeting. Lord McNally has been chased directly by A4e twice already.” Another said: “If we’re going to convince him not to do it (which it seems to me we should!), I’m going to need to give him some more robust arguments. Do you think you could outline in an email the reasons you think such a meeting would be ill-advised.”
In the event the official Whitehall meeting went ahead. By nabbing Lord McNally at the party conference, A4E was able to overcome its “fraud” issues and gain official access to the MoJ ahead of other companies.
The record of the Whitehall meeting last November says A4e’s lobbyists expressed “concern that the level of risk organisations are being asked to take, at least initially, should not be too burdensome” for probation contracts, and tried to talk down “the risk of huge penalties for initial failure to meet targets” on such contracts, which Lord McNally said he “understood”.
This shows how the workfare companies continue to get contracts: through very aggressive lobbying, aided and abetted by politicians, who have absolutely no qualms about talking to a firm mired in a corruption scandal. And it all tells you all you need to know about the ‘business-friendly’ Lib Dems that McNally ‘understood’ A4e’s demands to have as little risk put on their shoulders as possible. It’s an attitude that has seen the taxpayer continually picking up the tab for late and shoddy work in other parts of the public-private partnership system.
This is also from Private Eye for the 20th April – 3rd May 2012, and covers David Cameron’s attempts to set up an investment fund for his Big Society projects.
Big Society
Capital Idea?
Funds might be hard to come by, but there was no shortage of self-congratulation at the launch of Big Society Capital, the big idea for getting private money into good causes.
Speaking at the Stock Exchange launch, David Cameron boasted that his predecessors had talked about social investment but “this government is actually delivering it, within two years – Big Society Capital with £600m of funds to invest”.
The idea is that the money, £400m from unclaimed bank accounts and £200m invested by the big banks, will attract further private investment too. This will be handed to fund managers (imposing a further layer of costs) who will then invest in “social enterprises” that do good works while making sufficient profit to reward their investors.
The “profits” of these enterprises, so the theory goes, will come from their results. Thus when a social enterprise finds work for disadvantaged youngsters, say, or keeps ex-prisoners on the straight and narrow, it will eventually get its reward from taxpayers. With worrying echoes of the private finance initiative, the costs to government are therefore kicked into the future and nthing shows up on the books today. If the enterprise providing what would otherwise be a public service gets into trouble, of course, it simply goes to the wall.
The big hope for Big Society Capital is pulling in private money alongside its £600m. But where will this come from if only relatively low returns are on offer?
Nick Hurd, so-called minister for the civil society, says “high net worth” individuals are already eyeing the new “market” and “that’s before you even look at the £95bn that charities and foundation trusts are sitting on, managing in very conservative ways through their very conservative, traditional financial instruments”. In other words, charities now struggling with huge cuts in income (said to be more than £1bn a year) should stop being fuddy-duddy and plough some of their funds int6o riskier social enterprises.
This is all the brainchild of Gordon Brown’s former confidant, non-dom private equity guru Sir Ronald Cohen, who chairs Big Society Capital and who, Cameron drooled, “help turn UK venture capital into a sustainable, successful and vibrant industry”.
The idea is to repeat the trick for the Big Society. Or as Sir Non Dom put it: “The power of entrepreneurship and capital markets … which we’ve unleashed for the benefit of economic profit needs now to be unleashed for dealing with social issues”.
The problem is that the private equity fund management model has unleashed vast profits for fund managers but done precious little for anybody else. And likening private equity to venture capital, which generally funds start-ups, has always been more of lobbying-ploy to sweeten the pill than anything real. Less than 5 percent of private equity investment goes into early stage businesses; most ends up in highly geared asset-stripping buy-outs – hardly a model for a new world of social activism.
Indeed, the chief executive of Big Society Capital is one Nick Donohoe, formerly of investment bank JP Morgan, where he sat on the management committee as it bought and sold dodgy securities. This entailed a massive bailout and landed the bank with a $153m fine for selling dodgy “collateralized debt obligations” to pension funds while a related hedge fund was “shorting “thm.
On Big Society Capital’s website Cohen explains where he’s coming from: “The gap between the very successful ahnd the unsuccessful has got bigger and bigger and we nee something other than government or charity to deal with that.” Is this the same man who ten years ago persuaded Gordon Brown to reduce capital gains tax to 1- percent, leaving private equity bosses paying lower tax rates than their cleaners? It certainly is!
I’ve blogged before about how much of the Nazi gleichschaltung (co-ordination) of industry took place through the Nazis incorporating large, state-run businesses, like the Heinrich Himmler steel works, named after and run by the head of the SS, as private companies. The Nazis also co-opted business leaders into the civil service and state industrial sector, in a similar way to the promotion and appointment of contemporary businessmen to official positions under the Tories. This is part of the same policies.
There is, in theory, absolutely nothing wrong with encouraging business to invest in socially responsible and improving causes. This, however, is certainly not the way it should be done. The Eye points out that the type of funds Big Society Capital aims to draw on and uses as a model are highly profitable for the fund manages, but offer poor returns for the investors. The Eye actually points out that these funds are used as part of ‘asset-stripping buy-outs’, in which previously successful companies are bought out and then effectively destroyed for the private of the purchaser, who then often moves on to prey on another company. As an instrument of the socially and economically destructive side of capitalism, it’s clearly completely unsuited for financing and rewarding socially constructive enterprises and schemes.
And as you’d expect from a public-private partnership scheme, it’s run by a crook, whose company was fined for exploiting its customers in America. As for Cohen under Gordon Brown leaving private equity managers paying proportionately lower taxes than their cleaners, that’s truly grossly immoral. It’s also something that’s become the norm under the low tax policies persuaded by successive administrations since Thatcher.
The investment capital fund idea on which Big Society Capital is based is completely inadequate to fund charitable or socially constructive enterprises and projects. These need government investment. This, however, is completely against Tory and Neoliberal dogma that state intervention and state expenditure is always bad. Hence such spending will not be made. It wasn’t after all made when setting up Big Society Capital – as the article says, £400m of this came from unclaimed bank accounts. The result will be that charities and social enterprises and projects will continue to be starved of funds through the simple inability of state and private capital partnerships to provide them. It may, however, help Cameron to make a spurious claim that his government has done something to address the problem, while in fact they have done very little.
Private Eye in the issue for the 22nd July -4th August 2011 also reported on the way David Cameron launched his policies further placing government services in the hands of private companies, including those running the various workfare schemes, at a conference organised by one of the organisation working for the same companies.
Will It Workfare?
When David Cameron launched his “Open Public Services” white paper last week, he did so at a conference arranged by a think-tank funded by the very firms who will benefit from the privatisations his document proposes.
Cameron unveiled his plan at a Canary Wharf event hosted by “Reform”, a right-wing charity funded by business “partners”. Cameron and his ministers regularly appear at Reform events; and the PM proposed “releasing the grip of state control and putting power in people’s hands”.
The list of Reform’s backers suggests who those people will be. They include leading hospital privatiser General Healthcare, prisons and schools firm G4S, cleaning and catering outfit Sodexo and all-purpose giants Serco and Capita. Telereal Trillium, which already gets £284m a year for running government properties, also funds Reform, as does PA Consulting, which makes millions as an adviser on several privatisations.
But will the outsourcing plan actually work? Given how existing arrangements are panning out, it seems unlikely.
Days before the white paper, the Department for Work and Pensions quietly published some research on the previous government’s “welfare-to-work” outsourcing scheme, which pensions secretary Iain Duncan Smith will soon expand with a new “work programme”. The model involves layers of bureaucracy that would be derided in the public sector: first “prime providers” creaming off the fees, then subcontractors doing the leg work. And it’s not going well.
The DWP report reveals that, so parlous is the economics, “60 per cent of subcontractors have sought financial assistance from their prime provider”. As for the notion of the private sector bearing the risk, the researchers record: “The 23 percent of subcontractors receiving guaranteed referrals from prime contractors are much more likely to feel financially secure.” When the insecurity of any of the 77 percent translate into failure, the taxpayer will pick up the pieces.
Perhaps more revealing than the research is the fact that it was conducted by PricewaterhouseCoopers. With the inside track, PwC last month withdrew its bid to act as a prime provider and subcontractor on IDS’ new work programme.
PS: The work scheme is at least providing jobs for former Labour ministers.
Jim Knight, given a life peerage after losing his South Dorset seat in the 2010 general election, is a former employment minister who last month became a non-executive director of Alderwood Education.
This company was launched specifically to cash in on the Duncan Smith initiative; its executives saying that “welfare to work is a huge growth opportunity”. Well,, it has been for Lord Knight, who until recently was an opposition employment spokesman in the upper chamber and now joins a gaggle of other ex-Labour ministers in the work programme field. The include David Blunkett (A4E), Jacqui Smith (Sarina Russo) and Angela Smith (Vertex).
This provides further proof of the fact that the public-private partnerships favoured by the Right since Thatcher don’t work, are massively inefficient and need to be regularly bailed out by the taxpayer. This is also demonstrated by the way the PFI contracts awarded to the private firms building and running hospitals regularly go way over time and budget. But such contracts aren’t really about providing services efficiently. They’re about giving public money to private firms, which fund the political parties and provide lucrative directorships for politicians.
This is another story from Private Eye, this time from 2011. According to the Eye for 30th September – 13th October 2011, the government was awarding A4E the contract for designing the rules under which A4E, amongst other contractors, would bid to provide public welfare and social services.
Welfare Reform
Contract Claws
The Cabinet Office has appointed A4E, one of the government’s biggest contractors, to design the kind of contracts for which it will itself bid.
A4E will design the “payments by results” rules for the welfare contracts funded by “social impact bonds”, the government’s new big idea for public services. By putting its main welfare contractor in charge of designing welfare contracts, the department is effectively repeating one of the central failure of the private finance initiative.
The contract is worth up to £300,000 and covers pilot schemes in four regions to help families with multiple problems. Private investors fund welfare and social work schemes and the government then pays the investors back over years based on the public money “saved” by unemployed people finding work or ex-offenders staying out of jail.
The Cabinet Office is seeking “more innovative financiers, with a bigger appetite for risk”, so it will take very tight contracts to prevent these aggressive investors getting big returns over long periods for ill-defined “savings”, as the PFI example shows. Asking A4E to guarantee the “robustness of the savings estimates” seems perverse as the firm has repeatedly failed to give good results on its existing welfare-to-work contracts (Eyes passim), and it has every interest in government contracts being as soft as possible.
A4E may be excluded from bidding for the contracts it is drawing up in Birmingham, Leicestershire, Hammersmith and Westminster (all Conservative councils); but exclusion is not automatic; A4E is being asked to guard against “cream skimming/cherry picking” and ensure “value for money” – but critics say that A4E is itself guilty of the former and does not offer the latter.
Such conflicts of interest and soft corruption are, of course, no strangers to welfare reform and the public-private contracts governments since Maggie Thatcher’s have pursued. The Skwawkbox today blogged on the close links between George Osborne and the company, which bought up many of the Royal Mail shares at a discount. Way back in the 1990s, one of big accountancy firms being employed by Major’s government to adjudicate the bids of companies competing for a government contract, then decided to bid themselves as they decided they were the best candidate. A4E in this instance is merely part of a long line of such cases. It was all part of the ‘sleaze’ of the Major years, of which a French politician said ‘You call it ‘sleaze’. In France we simply call it corruption.’ The point of such contracts in any case isn’t to guarantee quality of service, or provide transparency and accountability, but simply to award lucrative government money to big companies that will then reward the politicians concerned with directorships.
I’ve already discussed the use of personnel from big business and industry in government, and the establishment of government organs as private corporations in the Third Reich in my post on Spamfish’s post on Wolin’s idea that America is now an ‘Illiberal Democracy’. Another example of this was the appointment of the industrialist Carl Krauch as general plenipotentiary for chemicals and director of the Reich Office for Economic Consolidation , a subordinate body to the Reich Ministry of Economics. The Reich Ministry of Economics was itself in practice the ‘executive organ of the Commissioner for the Four Year Plan’. Under Goring’s management the Organisation for the Four Year Plan appointment a number of business leaders, like Krauch, as general plenipotentiaries.
Krauch had been on the board of I.G. Farben from 1926. From 1933 onwards he was an adviser to the Aviation Ministry, and to Brabag, which was responsible for producing artificial fuel. Krauch initially headed the research division of the Office for Raw Materials and Stock in the Organisation of the Four Year Plan. IN this role he had the full support of I.G. Farben’s board, and could use the company’s planning staff. He also took some of the staff from I.G. Farben to work with him in the Office of the Four year Plan. He was made general plenipotentiary for chemicals in 1938. The Reich Ministry for Aviation and Economics urged him to resign from I.G. Farben and become a state official, and was willing to appoint him state secretary. Krauch turned the offer down after consulting Bosch. he retained his seat on the I.G. Farben’s board, and in 1940 was appointed head as chairman of the company’s supervisory board. Krauch’s position in the Reich ministry was honorary, and he was not officially employed by them, nor was he included in the organisation’s budget. He was regarded with suspicion by other firms because of his continued links with I.G. Farben, and by the state economic bureaucracy, which was used to the strict separation of public and private organisations. The use of expert technicians like Krauch was expanded and became increasingly typical. While Goring and the General Council of the Four Year Plan were responsible for the ministry’s decisions, these were strongly influenced by the suggestions of their plenipotentiaries and by members of staff from the private armaments industry. These were ultimately responsible to the Armaments Ministry, but the ministry’s central administration rarely rejected their suggestions. Krauch described this adoption of managers from private industry in government as the assumption of state duties by the independent sector of the economy. It was described by other political theorists as a new form of ‘Commission Management’. In addition to using advisors and personnel from the Nazi party bureaucracy, the management apparatus of official from private industry was also used at the expense of a uniform state administration. The parallels here between the Nazi use of managers and technicians from private industry, and their use, along with Special Advisors, by contemporary British administrations since Margaret Thatcher as part of an ideology of Public-Private Partnerships are very strong indeed.
The Friends of the Reichsfuhrrer SS
Private industry also sponsored the SS. The Friends of the Reichsfuhrer SS was a group of heads of industry and bankers in Berlin. They donated money and even equipped whole SS units. AS a reward, the group became honorary members of the SS and influential personal contact with its leader, Himmler. One of the advantages this gave the group’s members was access to cheap labour from the concentration camps. To use this slave labour, the SS demanded a price of 6 marks per man per day.
Clearly there is no real comparison between Cameron’s policies and the Friends of the Reichsfuhrer SS, except in the most general sense of private industry donating money to the Conservatives, and other political parties, such as New labour, in return for governmental favours. There might be some if, the DWP adopts the recommendation of independent policy advisors to expand the use of residential centres for the disabled and long-term unemployed, to be employed on workfare, run by private contractors. Nevertheless, it demonstrates the ultimate extent to which the Nazis attracted and exploited contacts with private industry.
Sources
Martin Broszat, The Hitler State (London: Longman 1981)
Friends of the Reichsfuhrer SS, in James Taylor and Warren Shaw, A Dictionary of the Third Reich (London: Grafton 1987) p. 132.
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