MYTH  1  During the economic downturn, the best way to save money is to privatise public services

REALITY During the downturn, public money is best kept within the public sector

As the public sector faces pressure to squeeze spending, politicians, commentators and contractors have called for more public services to be transferred to the private and voluntary sectors in the belief that this would save money.

As recent global economic developments have severely questioned the credibility of free-market economics, it is surely time to reconsider the view that the private sector has all the answers. The push to transfer services and assets to the private sector is rarely done as a result of evidence-based policy, but driven more by political will. Indeed, a report by private insurers Zurich says that ‘government policy has moved from encouraging partnerships towards mandating them”. A more worrying development is the increasing influence the private sector has on decisions affecting public services. A spokesman from investment managers, Brewin Dolphin recently stated that outsourcing is now such a part of the political culture that there is little chance of the process being reversed. “Consultants and outsourcers are so entrenched in the system that they’re actually the ones sitting there and making the decisions for the government.”1

It is also time to give full consideration to the role that public spending plays in local economies. A recent TUC Touchstone pamphlet highlighted research which shows that for every pound of public spending in a local area, this generates an additional 64p.2 Outsourcing and PPPs – often undertaken with large multinational companies – takes money out of areas at a time when local economies and communities most need to be supported. Public spending has a stabilising effect, particularly during a recession; privatisation and outsourcing would only undermine this.

1 Moneyweek, Profit from the fiscal crisis with outsourcing, 4 September 2009
2 TUC, Speaking up for Public Services, 2009

Index – Media myths about civil and public services.

2 Comments CherryPie on Apr 8th 2010

2 Responses to “Exploding Public Sector Privatisation Myths – Part 3”

  1. jameshigham says:

    Keep at it, Cherie. One day, people might listen.