Friday, 27 April 2012

Tuesday, 24 April 2012

The state, markets and the private sector

I am just back from a short trip to meet with colleagues allied to a GFTU project I am currently managing and our meeting was hosted by project partners at Toulouse Business School. More details of the project are here:
On the flight to Toulouse I was struck by the symmetry of two articles in Sunday’s Observer which posed fundamental questions around the role of the state as a guarantor of fundamental safeguards of, first, our civil freedoms and second, our basic needs.

The first article ( focuses on the concern of the Independent Police Complaints Commission (IPCC) on its current inability to fully investigate the role of a private sector employee, when engaged in security or policing activity, and there is an allegation of misconduct.
Naturally the subtext of this concern is the rapidly expanding grasp of the private sector across all aspects of the UK’s criminal justice system (police, prisons, probation, immigration detention, border controls etc etc). As the article states:

The Independent Police Complaints Commission – responsible for investigating deaths in custody, public complaints and allegations of wrongdoing – wants the power to investigate all staff who carry out police duties in a move to preserve public confidence in the service. At the moment the IPCC has no automatic power to interview or discipline private staff, even if misconduct or individual failures contribute to a death.

Deborah Glass, deputy chair of the IPCC, told the Observer: "We believe it is vital for public confidence that all those who perform police-like functions and powers are subject to independent oversight.

"It cannot be right for someone doing the same job as a police officer not to fall within the IPCC's remit simply because the police have contracted the job to a private company. But any change in this area requires a change in the IPCC's powers. We have told the Home Office that we believe these powers are necessary, indeed crucial."

Why then is the Home Office dragging its feet in extending this crucial entitlement to the IPPC? Why, as the private sector inches closer to taking on frontline policing roles, would the government allow an essential feature of the state to occupy a privileged vacuum wherever its operations were conducted by the private sector?
The rationale for this must lay centrally in the Coalition’s strategy to open core areas of public sector service delivery to the market. The article also, rightly, underlines a concern of the prominence of ex-public officials in the network of private sector companies across the criminal justice sector.

The theoretical and practical overlap arises with an article by Will Hutton ( where he argues in favour of the principled position of the Argentinian government in nationalising a Spanish-owned gas and oil company that the Argentine state had previously privatised. The reason for this intervention (an echo of Chavez) was the imminent sale of the company, YPF – owned by the Spanish Repsol , to the Chinese state-owned company Sinopec. The rationale for the government’s intervention, Hutton argues, is the state’s ultimate right, and I would argue its essential role, to safeguard national interests where a purely market-based approach might conflict with the basic needs of its citizens. As Hutton argues:
For too long, companies and the rich worldwide, egged on by American Republicans and British Tories, have shamelessly exploited the proposition that there is only one proper relationship between them and society: they do what they want on their own terms. And society must accept this because it is the sole route to "wealth generation". Capital exists above state and society.

Fernández's actions, however clumsy and unfair in their execution, are part of a growing worldwide reaction to the excesses that this proposition has brought. Repsol does not, and did not, have a God-given right to sell control in YPF to whomever it pleases while Argentina's interests can go hang. It exists in a symbiotic relationship with the society in which it trades. The right to trade and to own are privileges that come with reciprocal obligations as the Ownership Commission, which I chaired, argued earlier this year. They cannot exist in a vacuum because companies' actions have profound effects.

Moreover, companies, especially energy companies, need public agencies to help mitigate the risk of undertaking huge investments in a world where the future is unknowable. Across the globe, business and the rich insist on denying these elementary truths. Now they are reaping the whirlwind as a hostile reaction gathers pace worldwide. Capitalism's self-appointed custodians have become its worst enemies.

Hutton concludes by turning his spotlight on the UK and asks rhetorically what the implications of the Argentinian adventure should mean for British governance as it relates to the market, the state and the private sector:
Labour leader Ed Miliband was roundly and universally criticised as a leftist innocent just seven months ago when he differentiated between good and bad capitalism; now he looks extraordinarily prescient.

If more of his party – especially the shadow cabinet – would rally to his cause, there is a phenomenal political opportunity. The mood is changing. It needs to be channelled: the creation of a new and different compact with business, finance and the rich. It is what electorates across the world want to see. President Fern├índez, in her gauche way, has tapped into a global mood.

Whilst the essential thrust of Hutton’s argument is to welcomed, we need more than the Labour Party as the advocate of this proposed new compact: the legacy of New Labour (and of Miliband’s role within it) is far too closely associated with turbo-charging the Thatcherite neo-liberal assumption that market should reign supreme, that regulation should be of the ‘light touch’ variety and ultimately, that the private sector was just as reliable, if not moreseo, as the public when providing public services and providing for the essential utilities that we all need and rely on.
Plenty to think, and worry about, here. As ever questions/comments are welcome.


Tuesday, 10 April 2012

An Incredulous Credibility


When, earlier this year, the labour frontbench unequivocally adopted the Coalition’s economic policy – including the public sector pay freeze – it did so from the perverse logic of devising its own economic credibility based on this vacuous programme of default policy shadowing.

Ed Balls was adamant that, on the road to creating a ‘responsible capitalism’ (answers on a postcard to help define what that is!) Labour had to adopt an ‘inevitable’ stranglehold on public sector pay as part of a package to regain ‘economic credibility’. Much was written at the time when Balls made his move, but here is a Guardian piece, with a linked interview:

In a short piece by William Keegan in yesterday’s Observer he echoed the concern of many on the left that Labour had, in its craven adoption of what is in effect Tory fiscal policy on deficit reduction, abandoned any reasonable suggestion that, for example, public sector workers should not be penalised for an economic situation not of their making. He writes:

“Those members of the Blairite right who are urging the Labour leadership to become more credible by matching the coalition's cuts programme are doing themselves, their party and the country no good.

The crux of the matter is that the coalition's economic policy is itself not credible: as manifested in last autumn's major revisions to the economic forecasts, the policy has already been found out. Moreover the Office for Budget Responsibility's recent forecasts show that the effects on demand of George Osborne's latest venture are, as one official has conceded, 'significantly different from zero'.

There you have it: a rightwing Conservative government, with the thin disguise of a coalition partner, continues to pursue policies of austerity; it weeps crocodile tears about the problem of socially wasteful and dangerously high unemployment – especially among the under 25s – but persists with a policy of expansionary fiscal contraction (allegedly allowing the private sector to flourish by cutting public spending), which was discredited in the 1930s and is being discredited now.”

(Read the whole piece:

Keegan goes on to make many reasonable arguments for a dislocation of Labour policy from the failed and failing approach of the current government, not least for Labour to create a sufficiently credible basis on which to challenge the chronic state of the UK’s labour market and dire unemployment figures.

Two separate, but overlapping pieces of research have concentrated my mind recently on the degree of disadvantage we suffer in the absence of a coherent economic alternative from Labour, and in particular a means by which to underline the need to create a path to sustainable, skilled employment.

It is highly unlikely that the Coalition will pay anything other than lip service to the issues thrown up by the research, but I would personally expect the Labour Party to detach itself from its current economic position for sufficiently lengthy a period to acknowledge the need to address the deep faultlines discussed.
The reports (No snakes, but no ladders: Young people, employment, and the low skills trap at the bottom of the contemporary service economy - Stephen Roberts – March 2012 & The Skills Dilemma: Skills under-utilisation and low-wage work – Paul Sissons – January 2012).

The reports focus on the complementary issue of skill: first, that an historical supply-side approach to skills acquisition has created a situation where there is chronic under-investment by employers in the skills that they need. Second, and allied to this point, there is an over-concentration in poorly paid, poorly skilled workers, and in the contemporary labour market in direct competition for work with graduates.

The Sisson research introduces itself thus:

“There is a skills dilemma in the UK. Successive governments have focussed on supply-side measures to tackle the UK’s skills problems and to improve the nation’s international economic competitiveness. However, despite increased investment in skills and educational attainment, labour productivity in the UK lags behind other comparator countries.1 Lord Leitch’s review of skills found that the UK’s relatively poor skills base only accounts for around one fifth of the productivity gap with countries such as Germany and France;2 with the rest mostly attributable to our poor record of ‘investing in physical capital, R&D and infrastructure’, but commentators have also identified the importance of work organisation and job design in boosting productivity. This paper challenges the implicit assumption in much skills policy making that the skills problem lies solely on the supply-side”. ( )

Roberts’ provides this summary:

“In recent years, research and policy activity has primarily been concerned with the numbers, experiences and trajectories of apprentices and university students, or with the lives of ‘spectacular’, more obviously economically marginalised groups of young people who are entrenched in issues of social exclusion and deprivation. Many young people with level two and level three qualifications, however, directly enter the labour market. This sizeable but unspectacular group remains overlooked by policymakers as well as researchers. These young people undertake new forms of employment in an increasingly polarized job market, rely on on-the-job training rather than higher education to enhance their human capital and compete more and more with graduates who cannot find jobs to match their own newly acquired high skill levels”. (

The current policy terrain is, to put it mildly, a mess when it comes to a sound, prescriptive approach to the development of an approach to skills which places a strong emphasis on the role of employers to fund and address the shortages they bemoan, not least as a way to providing a ladder to the high numbers of young people currently unemployed. The tragedy for Labour however, is that has very little, actually nothing, to say in response.

In its coverage of the progress, or not, of the Coalition, the ESRC’s ‘Inhouse’ magazine focused its most recent edition on the issue of apprenticeships and youth unemployment. Its outcomes were not dissimilar to the reports cited above. And, if you read the latest magazine ( you will see that one of its conclusions is one which challenges not just the Coalition, but also Labour’s new position on cuts, which is that FE colleges should be given back the money taken from it to invest in providing good quality apprenticeships.

In bringing the two reports cited and the thrust of my post together Dr. Hilary Steedman writes in the ESRC magazine:

“The coalition needs to accept the fact, however, that not enough British employers have themselves experienced good quality training and technical education and that, as a result, their approach to workforce development continues to be inadequate. To date, however, there is little sign of real change. The starkest indication of that lies in the continued rush to expand apprenticeship numbers, but without improving the quality.”

Although I may not have constructed my argument particularly well in this post, it is essentially this: there is a failure on the part of the Coalition to address deepening levels of unemployment. An investment in skills is one way out. The Labour Party now occupies a tendentious economic territory and so too is part of the problem. If the Party wants to be seen as credible it needs to create an alternative solution.

I welcome any comments/thoughts/challenges on what has been written here.

In Solidarity