No one can accuse Jeremy Corbyn of always going for the obvious topic at Prime Minister’s Questions – he has made some distinctly odd choices in the past – but yesterday, to nobody’s surprise, Carillion’s demise was top of his list.
The spectacular capitulation of a private sector contractor, with its corporate tendrils spread wide and thin across the whole milieu of public service delivery, is clearly comfortable ground for an ideological left-winger. However, while presenting the issue in such a stark ideological light might have played well for the cameras at PMQs, it allowed Theresa May to respond in kind. And here the Prime Minister is also on home territory. The resulting debate was rich in dogmatic soundbites from both sides, but ultimately did not treat Carillion’s collapse with the level of detail and nuance it deserves.
Clearly, the government does have a lot to answer for after continuing to hand out contracts to the overstretched corporation in spite of tumbling share prices and multiple profit warnings. May’s argument that the government is a ‘customer, not a manager’ was not at all convincing as an excuse. Firstly, the government was a customer, but it was a customer with the power of choice – that is surely the whole point of the competitive tender process associated with big government contracts and one of the main arguments in favour of outsourcing. The government never had to buy from Carillion, they could have gone elsewhere. More importantly though, the idea that the government is a customer and not a manager seems to be an attempt to absolve the government of responsibility for the crisis. In the context of a democratic system, surely one would want the government to be ultimately accountable for the delivery of hospitals, major infrastructure, and crucial public support services? Unfortunately, Jeremy Corbyn’s inability to think on his feet meant that he was unable to communicate these two points.
Corbyn and McDonnell’s insistence that the whole issue can be reduced to the idea that the public sector is automatically better also vastly oversimplifies the root causes of the government’s ongoing problems with public sector delivery. The government does have an ideological bias towards outsourcing where possible, but this does not explain by itself why the contracts it arranges are so systematically bad. Due to the government’s ideological drive to reduce the deficit as fast as possible, government ministers are encouraged to make savings wherever possible. This leads to the government being seduced by private sector pitches that are too good to be true. The high turnover of ministers and senior civil servants also produces a culture of short term thinking: it is all about short term savings and not about long term vision. Without these two drivers in place, government outsourcing does not automatically have to lead to disaster.
The government is not innocent of Carillion’s collapse because it is just a ‘customer’. It is complicit through the poor exercise of its custom. Carillion’s collapse is not an argument solely about public versus private; it is an argument about good governance. Carillion’s collapse was abetted and magnified by poor choices in government, which were promoted by a system of perverse incentives that the government has been incubating for a while now – chiefly the desire to keep spending off the balance sheet. There is a moral imperative for the government to take full responsibility for public sector projects. This may mean a greater level of public sector involvement, from overall project management to initial financing, but it cannot wholly rule out the private sector. In practice, that is where a great deal of where the UK’s skills and expertise reside.
If Corbyn is serious about governing the country, he needs to be ideological about outcomes, not ideological about process. He needs to be ideological about getting world-class hospitals, schools, infrastructure built, not about building them in an ideological way. There is a genuine moral argument for greater public sector involvement in public sector projects, but it is important that Corbyn is not puritanical. Ultimately, the most important thing is good governance, clear strategic thought originating at the top of government, and meaningful accountability backed by strong incentives. Finding the right balance of public and private is secondary to all of that.