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Democratic Public Ownership after the Crisis

The United Kingdom’s response to coronavirus has been fragmented, ad hoc, and uncoordinated. That is in part a failure of political leadership, which has resulted in the lack of effective strategy and faulty communication. But it is also, more fundamentally, because of the structure of the economy. In short, the United Kingdom does not have a democratic economy.

Years of privatisation, deregulation, and outsourcing have left key services being delivered by unaccountable for-profit companies. Sometimes these companies are engaged in wasteful competition with other for-profit companies; in other cases they have market control thanks to multi-year contracts. When the coronavirus crisis has demanded a coordinated planned response, or swift changes to pricing or service delivery, privatised markets have come up short.

And so it is no surprise that calls for greater democratisation of the economy and public ownership in the United Kingdom, sometimes building on past proposals or campaigns, have gathered apace since early 2020. In the months after this crisis, implementation of these proposals could build an economy and society genuinely founded on solidarity, planning, and democracy – rather than one driven by personal gain and profit.

The Failings of Privatisation Laid Bare

Lewisham was the first London hospital to treat a coronavirus patient. On 14 March it was reported that low-paid staff in cleaning, portering and catering walked out four months after 400 staff jobs had been outsourced. The outsourcing firm ISS had failed to pay staff correctly for weeks. ISS had pledged “change and innovation” but a faulty payroll system meant in the words of a GMB organiser, many workers were in a position where they might not be “able to pay the rent, or put food on their families’ tables.”

This is just one example of where outsourcing has failed workers and patients within the NHS during the pandemic, damaging the effectiveness of the response to coronavirus. Deloitte, once primarily an accounting firm, was appointed to manage the production and sourcing of personal protective equipment. That project was described as a “disaster”, with many workers in the NHS lacking basic equipment to guarantee them personal safety as they risk their lives. Yet in the face of these failings, and decades of outsourcing beset by scandal, the Government has expanded its use of outsourcing in healthcare. For example, coronavirus testing – another area where the Government has not met public expectations – has been managed by Deloitte, and sub-contracted to notorious outsourcers Serco, Mitie, G4S, and Sodexo. Concerns about reliance on private actors within the healthcare system have also been raised in relation to the making of ventilators (ordered from vacuum cleaner manufacturer Dyson) and the provision of hospital beds.

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The social care sector has been strained to breaking point by the crisis, with many identifying the privatisation of the sector as being at the root of the problem. An editorial in the British Medical Journal notes that privatisation of social care increased between 2010-11 and 2017-18, so that 83% of care home beds are provided by the for-profit sector. The editorial points to the fact that “pay is low” in care services, with 24% of people in adult social care on zero hour contracts (and so not entitled to sick pay). Emergency coronavirus legislation has curtailed further legal rights to social care. All in all, the British Medical Journal concludes, the legislative and policy response to coronavirus, combined with a decade of neglect, shows “the state’s abandonment of responsibility for this vital sector”, revealing a “fragmented” system with “serious inadequacies”. A leaked report arising from a 2016 government exercise testing preparedness for a pandemic reinforces these conclusions. It warned that the social care system was not well-equipped for NHS triage plans, which might involve the movement of NHS patients into social care facilities. The result of inaction in response to the exercise has been tragic widespread death in care homes in 2020.

But right across the economy questions have been raised about where privatisation, often initiated in the 1980s and 1990s, has hampered the response to coronavirus. Major outages in Virgin Media’s broadband services, at a time of widespread reliance on the internet with many people working from home, have prompted discussions over whether there should be such dependence on private broadband providers given that the internet is now a public utility. The Government’s decision to suspend rail franchise agreements and to pay a fee to private rail providers for six months was described as “exposing the farce of privatisation.” It has been suggested that the Government’s inability to coordinate quarantining or health checks at airports may be connected to the fact that the United Kingdom has a high proportion of privatised airports compared to international norms.

There has been longstanding evidence that privatisation undermines service quality, wages and conditions, and accountability. But the coronavirus crisis has cast these problems into stark relief, at a time when key services have become a matter of life and death. It has highlighted how a privatised economy has taken power out of the hands of people, eroding the quality of our democracy across the country.

Emerging Consensus on Greater Democratic Public Ownership – and Barriers to Change

In response to these failings, a growing coalition of actors has called for the government to bring essential services into public ownership. We Own It has called for all private hospitals to be brought into public ownership. In an international context, others have raised “whether the entire chain of healthcare provision, including the manufacture of health equipment, should be in the public domain where present and future needs could be properly planned.” This could be include UK proposals made in 2019 for the establishment of a state-owned generic drug manufacturing company, as well as calls to insource healthcare services. Privatisation has broken the chain relied upon to deliver high-quality public health services.

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The British Medical Journal has called for public social care as part of “a national and publicly accountable system so that high quality care is delivered by a trained and properly equipped workforce with decent terms and conditions of service.” The Journal’s editorial notes that this could assist in gathering essential data; monitoring staffing levels and capacity; and facilitating the safe movement of people between NHS institutions and social care facilities. A nationalised social care system sitting alongside the NHS, which could be called a National Care Service, would transform “a system that fails those in need, fails carers (paid and unpaid), and shames the UK.”

There have also been renewed calls for broadband to be brought into public ownership and to be made free, following discussions in the 2019 general election. Government-commissioned work on the cost of rolling out a full-fibre broadband network showed that £12 billion could be saved by rolling it out through a monopoly rather than a competitive model. Competitive construction of full-fibre broadband results in too much being built, as different providers build multiple networks when only one is needed, and too little – since the profit motive may not justify building across the country. A full-fibre network – only 10% built at the time of writing, under a system of privatised broadband delivery – has been estimated by Openreach to boost UK productivity by £59 billion (if rolled out by 2025), bring 500,000 people back in to the workforce, and allow 400,000 more people to work from home, supporting childcare activities as well as reducing carbon emissions.

Public ownership of rail and bus companies has been suggested, in part to provide support for companies with reduced revenue through the crisis – though the clear case for more permanent public ownership of public transport services remains strong. Analysis published in April 2020 showed that a “fragmented railway” has lacked a “guiding mind”, resulting in £725 million flowing out of the railway every year into shareholders’ pockets. There has also been resurgent focus on the failure of the privatised childcare sector; parents and families facing extended periods with children at home during the pandemic have seen more acutely the inefficiencies and costs of privatised childcare. Nurseries and other childcare providers have been reported to be facing widespread financial precarity. These failures point to the need for a universal publicly owned childcare service, which can integrate early years care and education through to the beginning of primary school, and provide decent terms and conditions to childcare workers. This should occur at the same time as reforms are made to parental and carers’ leave, to allow greater family time with children in all-important early years.

There are strong arguments for public ownership of these services (as well as public ownership of energy, water, mail, and other services). It is well-known that public ownership is popular in the United Kingdom, with support for public ownership increasing in recent years. Academics, campaigners, and commentators have suggested public ownership solutions to problems arising in recent months. So what are the barriers to turning this emerging consensus into action?

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There are clear vested interests that favour ongoing privatisation in the UK. Many of the areas where public ownership has been mooted are also areas of dynamic and expansive financial activity, including activity by private equity firms. To take just one example, some of the major fibre broadband outfits have been recently purchased by private equity firms: Cityfibre was bought by Antin Infra and West Street Infra in 2018 and Hyperoptic by KKR in late 2019. In other words, these privatised services have been identified as sources of quick profits, meaning it is likely that those who stand to gain from such profits are likely to mobilise (and have already mobilised) to prevent public ownership. One other site of vested interests is the Government’s existing relationships with large professional services firms, such as Deloitte and PwC, which contribute to consultancies being a ‘default option’ for outsourcing where quick solutions are sourced. Any push for greater public ownership will have to contend with these financial interests, and government networks, ideally with a counter-movement of people power that can outweigh other pressure that might be brought to bear on government decisions. It will also have to continue to build up the evidence base in favour of public ownership, as has been done in recent years, so that activists, campaigners, and politicians are armed with arguments in public debate.

The Values Underpinning a Shift Towards Public Ownership

The coronavirus crisis shows the government needs to be better at planning. Being better at planning is not just about ensuring individual ministers are better skilled or organised. It is about ensuring structures of government are set up to enable long-term, coordinated action. Public ownership allows long-term coordinated action. It allows the Government to decide strategic priorities – say, to support renewable energy to tackle the existential threat of climate change or reduce prices for broadband or rail. It allows the Government to bring actors together quickly. It allows the Government to make the most of economies of scale, lower costs of borrowing, and the ability to integrate services (so that, for example, some infrastructure can be shared across water, energy, and broadband networks). As part of revitalised public ownership capacity can be rebuilt in the public sector, so that government is more resilient in the face of dealing with heightened risks. The market is simply ill-equipped to deal with some of the large-scale emerging challenges (such as in public health and in relation to the environment) that we will all have to reckon with in the years ahead.

Public ownership also boosts democracy. Ending privatisation in sectors like broadband, water, energy, rail, and mail – and bringing services inhouse, including at a local government level – does not have to spell a return to top-down bureaucratic management. It can be done in a way that engages the public, through including workers and consumers and residents on the boards of publicly owned companies, and ensures publicly owned companies are at the cutting-edge of new developments. The knowledge (including technical know-how) of workers and unions can be harnessed through new participatory structures. Through these structures – and through the establishment of new public institutions that can endure across generations – public ownership can also secure solidarity, a value that has been central to getting through the coronavirus crisis, as well as core economic and social rights. It can ensure we have an economy based on serving the needs of people. It can be part of a broader set of reforms to democratise the economy and society, including giving consideration to how constitutional change can protect a democratic economy, as has occurred in other countries.

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These, then, are some of the values and frames that could underpin a drive for greater public ownership. We now all have a responsibility to build support for specific changes: through trade unions, campaign groups, electoral politics (including local government), and elsewhere. That will help us to lay the foundations of a better society in the aftermath of coronavirus.

Endnotes

  1. https://www.independent.co.uk/news/uk/politics/coronavirus-hospital-cleaning-staff-walk-out-nhs-private-contractor-wages-a9402086.html
  2. Ibid.
  3. https://www.theguardian.com/business/2020/may/04/uk-government-using-crisis-to-transfer-nhs-duties-to-private-sector
  4. https://www.theguardian.com/business/2020/may/04/uk-government-using-crisis-to-transfer-nhs-duties-to-private-sector.
  5. https://www.theguardian.com/business/2020/may/04/uk-government-using-crisis-to-transfer-nhs-duties-to-private-sector
  6. https://www.bmj.com/content/bmj/369/bmj.m1465.full.pdf
  7. https://www.theguardian.com/world/2020/may/07/revealed-the-secret-report-that-gave-ministers-warning-of-care-home-coronavirus-crisis?CMP=Share_iOSApp_Other
  8. https://www.standard.co.uk/news/uk/virgin-media-wifi-broadband-down-uk-a4425486.html
  9. https://www.standard.co.uk/news/uk/virgin-media-wifi-broadband-down-uk-a4425486.html
  10. https://twitter.com/MaxHarr03421445/status/1254375059482972160?s=20
  11. https://weownit.org.uk/bring-all-private-hospitals-public-ownership
  12. https://socialistproject.ca/2020/04/coronavirus-and-the-crisis-this-time/
  13. https://www.independent.co.uk/news/uk/politics/jeremy-corbyn-state-drug-company-labour-medicine-cheap-conference-a9118851.html
  14. https://labour.org.uk/wp-content/uploads/2019/09/12703_19-Towards-the-National-Care-Service.pdf
  15. https://www.bmj.com/content/369/bmj.m1465
  16. https://www.theguardian.com/world/2020/may/07/revealed-the-secret-report-that-gave-ministers-warning-of-care-home-coronavirus-crisis?CMP=Share_iOSApp_Other
  17. See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachmentdata/file/727890/FTIR_Annex_A-_FE_Report.pdf at p. 102.
  18. https://www.openreach.com/full-fibre-impact
  19. https://www.independent.co.uk/news/uk/politics/coronavirus-airline-railways-bus-nationalised-uk-grant-shapps-covid-19-a9407276.html
  20. See https://labour.org.uk/wp-content/uploads/2020/03/GB_Rail_Labour_Opposition_White_Paper.pdf at p. 9.
  21. https://www.bbc.co.uk/news/uk-england-51966152
  22. https://www.independent.co.uk/news/uk/politics/labour-party-election-corbyn-leader-polls-nationalisation-a9248511.html
  23. See David Hall, ‘Acquisition of Existing Fibre’, unpublished research note, 2019.
  24. Hilary Wainwright has written about protections of democratic public ownership in the Uruguayan constitution, for example: https://www.opendemocracy.net/en/oureconomy/make-public-ownership-truly-democratic-we-need-transform-state/.

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