As the Tories go to war on the public sector, Nick Palmer asks where does Labour stand?

As covering fire for its cuts, the coalition is deliberately whipping up division between public and private sector workers (and between both of these and people on benefits). The Mail and the Express are leading the charge with crude comparisons of public and private sector pay and conditions (for entirely different types of job). The message is being backed up in successive speeches by Cameron and Osborne.  This was heralded by a menacing warning by Cameron in 2009:

Let me make it clear to everyone who works in the public sector: we will honour existing pay deals, including any three year pay deals. But many of them end next year..

The current message is this: we have a big deficit problem and everyone will have to suffer to some extent. However, the main problem is the bloated public sector, full of overpaid and underworked people paid for by you, the ordinary taxpayer. We must freeze their pay and cut them back.

You don’t have to be a Marxist to recognise the classic tactic of trying to undermine opposition by getting ordinary people to blame each other instead of the government. But it poses a question for Labour that we have not yet addressed. To what extent are we the mirror image, the party of the public sector?

The New Labour answer to this was that we were the party of public services, but not necessarily public ownership. We were committed to first-class services, free at the point of use, but open-minded about who could deliver them. This led to a series of controversies, since the private sector was allowed to bid to supply services from eye clinics to academy schools. Some of these worked out pretty well – the reduction in NHS waiting lists would not have happened so quickly if we hadn’t been able to draw on bought-in private capacity.

Others were costly fiascos, such as the vastly expensive London underground PFI deals.

What should our current position be? Let us begin with two attacks on the coalition approach.

First, it is not just divisive but stupid for the coalition and its media pack to demonise everyone who works in the public sector. In the real world, they are often the same sort of people that work in the private sector: indeed, over time, they are in many cases precisely the same people.

If you are a nurse, primarily you try to get a decent job.  Your employer might be public or private, but you probably can’t afford to pick and choose; and over your career you may well work in both sectors. You don’t become either lazier or more zealous as you move from one to the other.

Second, it’s short-sighted to assume that slimming the public sector necessarily saves taxpayers’ money. Slimming the services clearly does: if the coalition decided à la Beeching to close one train line in three, then naturally less money would go into subsidising trains.

But if you follow, say, Nottinghamshire County Council in dogmatically selling every care home in the county, without actually abolishing the statutory commitment to care, you will merely end up paying private providers what you previously paid for directly.

That doesn’t mean that the New Labour approach was always wrong. Nobody suggests that the NHS should make its own tables or computers: if a private provider offers expertise in manufacture or services, let’s buy them in, so long as the public sector retains control.

If we are against demonisation and ideological decimation, what are we for?

First, we remain committed to providing good public services with a motivated workforce. The frontal assault on public service staff is bad for morale, bad for services and therefore bad for those who depend on them, which is everyone.

Second, we oppose a doctrinaire approach to public service provision. Where a clear case can be made that a private provider will do something better, we’ll consider it. But equally, we oppose cutting the public sector for ideological reasons.  Ultimately, that leads back to two-tier education and health and the madness of private police forces.

Third, where the private sector is involved, it should be based on genuine competition to get the best deal for the public, as did happen in the telecomms sector. Rail privatisation, with its unaccountable regional private monopolies, is a perfect example of how not to do it, and a long-term aspiration for Labour should be to restore a single national, publicly-owned railway service.

Fourth, the slow death of final salary pension schemes in the private sector represents a transfer of risk from the employer to the employee. This is fundamentally undesirable and not a model for the public sector. Rather, we should be working to reverse the trend by giving incentives to employers to maintain or restore final salary pension schemes. There is no reason in principle why these need be more expensive (since over time the risk of market fluctuations should average out to the same result). But it is reasonable to expect all public sector employees to contribute to them in the same way as the private sector workforce.

Finally, if public sector savings need to be made, they should be based on an intelligent and fair review of what we can afford to provide. If we can no longer afford a nuclear deterrent or further expansion of the motorway network, for example, we can make savings accordingly (and workforce reductions could follow). What we should not do is pretend that the same services can be offered with a shrunken and demoralised workforce.

Labour, then, is not just the public sector party, and we should explicitly reject a need to choose between public and private sector workers. We should be the party of intelligent, modern public services, providing the infrastructure on which the private sector depends.

A useful overview of who works in the public sector and how much they earn was published by the Guardian last year.

Nick Palmer was MP for Broxtowe, 1997-2010. He intends to seek to stand again.

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One Response to “As the Tories go to war on the public sector, Nick Palmer asks where does Labour stand?”

  1. John Barrett says:

    There’s a fatal flaw in private-sector final salary pension schemes: no-one can guarantee the company will be in existence and honour its pledges over a 50-year timescale. Many will go bust, get taken over or cheat their way out of their commitments. There’s every incentive for shareholders to eat the nest-egg today and damn the consequences. What are the chances of BA (for example) paying out on all its pension pledges?

    There is actually only one organisation large and stable enough to deliver guaranteed pensions: the government. Government pension provision will work best when a majority of people rely on it for their pensions. Then they will protect it using the ballot box (as for example cuts in the NHS are currently off-limits). The problem with the state pension now is that it is too low and many people think they can do better by various private-sector or investment solutions. Or rely on benefits.

    Whilst the coalition is busy trying to cheat public sector workers out of their pensions to bring them down to the paltry level of provision of the private sector, the Labour party should be looking for innovative ways to extend public pension provision into private sector employees. There’s plenty of cynicism about private-sector pension schemes to tap into.

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