Andrew Laird is a founder and Director of Mutual Ventures.
Until recently, you would have been forgiven for assuming that the debate on the role the market should play in public services had been largely settled in favour of the principles of choice and competition. All the major political parties accepted (to varying degrees) that choice for consumers and a mix of public and independent providers were good things.
The debate had moved onto exactly what shape the various markets should take. For example, there were interesting debates developing around how open the schools market should be and also around how the public and private sectors could work better together in health and social care.
There is no doubt Theresa May is a fan of a mixed market place. In her Conservative Home speech back in 2013 she argued that we should allow “thousands of organisations to provide public services”. For the Prime Minister (and for Philip Hammond, the Chancellor of the Exchequer) it will be about quality and value for money rather than a dogmatic preference for either the public or private sectors.
Under Tony Blair, the Labour party did a significant amount to open up the public service marketplace. Post Blair, there has been an increasingly sceptical trend with Gordon Brown (who was less enthusiastic than Blair) and then Ed Miliband (who often struggled to conceal his anti-market views). However far the Labour party’s view of markets had shifted, it never felt that the public service marketplace was facing a serious or existential threat.
This has all changed with the rise of Jeremy Corbyn. Corbyn has been accused of allowing/encouraging radical left-wingers to infiltrate the Labour Party – but it’s pretty clear that he (and John McDonnell) believe that Tony Blair and his acolytes were the real entryists. In agreement with this, Bruce Anderson has described the Blair era as “ultimately unviable transplant surgery”.
So what does this mean for the public service market place?
Corbyn has already set out plans to renationalise the railways if he wins power. His leadership challenger Owen Smith is in lock step (BTW – anyone interested in the shape of the rail market should read this analysis from CPS’s Tony Lodge). Corbyn has also pledged to renationalise the NHS to entirely remove the independent sector’s role. Presumably he also means to shut down the social enterprises and charities who do such important health and social care work? Owen Smith agrees and was actually ahead of Corbyn in warning of a “secret Tory plot” to privatise the NHS based on an increase in independent sector spend (now at eight per cent of total NHS spend). It’s difficult to see how this modest stat is either shocking or indeed secret.
Setting all of this aside, what’s actually most worrying is that no candidate from the pro-market modernising wing of the Labour Party felt there was any point in participating in this leadership election. This is indicative of how the mood and composition of the Labour party membership has shifted since the Blair days.
The public are supportive of markets, with research suggesting people are relaxed about who provides their services. The Reform think tank has shown that 62 per cent of people are supportive of the private sector providing NHS services with only 17 per cent against. People are more concerned with quality and access. They do not tend to be dogmatic about who provides their services.
This, coupled with the fact it is currently unlikely that Jeremy Corbyn will win a general election means markets are safe, right? Not quite I’m afraid. The threat to the public service marketplace will not disappear with Jeremy Corbyn (or Owen Smith) failing to win a General Election.
The government has enthusiastically (and rightly in my view) put the country on a devolution course with increasing powers going to local areas. In many places, such as Manchester and Liverpool, devolution deals are tied to an elected mayor who will wield significant powers.
In Manchester, Andy Burnham is the Labour candidate and favourite to win. One hopes Burnham will be sensible but he has shifted significantly to the Left in recent times. It can also be no coincidence that Owen Smith’s speech about the Tory secret plan to privatise the NHS was made at Trafford General Hospital in Manchester. Burnham has been talking up increased collaboration with Liverpool where the Labour candidate and favourite to win is Jeremy Corbyn’s former PPS Steve Rotherham.
Whilst it is unclear exactly what power these mayors will wield, it doesn’t take much analysis to identify a potential risk to the public service market place in these areas. This is particularly worrying as many of the best and most innovative public service mutuals and social enterprises are in the North West. Could they face having their services taken back into the public sector for ideological rather than evidence based reasons?
So it may not be time to panic just yet – but the government must be vigilant as it settles these devolution deals and be wary of the unintended consequences of devolving power to mayors who will be under pressure from their current leadership to adopt anti-market policies and practices.