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Tories point the way to in-sourcing!

A curious thing happened before I wrote this article yesterday. The Tory government decided to force the hand-back of the running of a privatised prison to the public sector next year. It is Wolds prison in Yorkshire, and admittedly it is a prison run by G4S, so maybe this can be written off as belated punishment for this infamous company after the Olympics debacle they were responsible for, from which they had to be rescued by the army (public sector) who on everyone’s account did a brilliant job.

So far, so good. But what’s interesting is that the reason officially given is that the privately run prison had “clear weaknesses”, including behaviour problems and high levels of drug abuse by inmates. A perfectly good reason to withdraw it from its private contractors – and one that could set a precedent for in-sourcing across the board.

Instead of the neoliberal ideology of public sector bad, private sector good, or vice-versa, and instead of the issue being how to secure the cheapest possible option, the right way to decide choices of this kind is to determine what are the highest performance criteria that can reasonably be expected and then how can these be obtained at the most cost-effective value for money. Where outsourced or privatised services are not meeting these criteria, they should be in-sourced provided that the criteria can be more fully and effectively met by the public sector within a comparable budget.

This principe should not only apply in the context of outsourcing, but also more widely in the case of privatised companies and indeed in the case too of companies which have traditionally been in the private sector, but whose performance has been poor enough to undermine the national effort. In the former category would be rail companies, healthcare and education providers, house-builders, and pension providers. In the latter category might be energy companies, pharmaceuticals and banks. Vesting in the public secor might be temporary or permanent, and apply to particular companies or across the industrial sector.

The performance criteria would clearly vary considerably according to the sector, but would certainly include labour relations and environmental standards as well as high achievement in accordance with the requirements of the sector. Of course there are other means more readily employed which can incentivise companies to achieve what the nation has a right to expect from them, including access to public contracts and regular publication of performance not only in terms of turnover and profit, but also in terms of good corporate citizenship including community support and due payment of tax.

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