Public and Private Issues

As with a number of other articles on this site, this is meant to be in the spirit of an exploration, bringing together a number of different aspects of a broad topic and seeing if any sense can be made of it all.

At one level, it is a matter of simple semantics: whatever one understands words like ‘private’ and ‘public’ to mean – but language matters as words shape an understanding of things, even things as tenuous as ideas – and those understandings can have everyday impacts on how people operate in the world – which, themselves, if repeated, begin to act as structurings within which things become taken as normal.

There are a number of elements around which understandings of public/private can be organised:

  • People designing things or doing things – in public/ in private
  • Things belonging to; consumed by people – as individuals (private); as society (public)
  • Organisational structures – private company/ public company – private/in common
  • Management of services to people – arranged as privately-purchased/ arranged as publicly funded
  • Different political conceptions around privatisation and nationalisation – the amount of control attributed to State processes or to market processes

It is the last two of these that will be taken as the starting point, if only because political debates around public/private still occur with some vigour.

The railways, the daily delivery of letters and the national health service all continue to provoke strong feelings about the nature of their ownership and management. Historically there has been some resistance to the idea of private provision of what were seen as key services to the public – health, energy, water, postal services, safety and national security.

One democratic intention of the early Thatcher government was a desire to see the UK being more of a share-holding democracy where ordinary people exerted degrees of influence. This prompted the denationalisation of a number of publicly-regulated industries and services. It also saw government-initiated internal markets within the remaining public services (those for which there was not yet any public appetite for removal from state control) creating a split between purchasers and providers. New Labour expanded the idea of public-private finance initiatives ie the further commercialisation of services. Universal provisions were replaced by franchising or commissioning using a wider range of providers.

In the 1990s, a prevailing urge for the privatisation of public services was based on the political belief (dogma, if you like) that Private is always better than Public. Others made the alternate argument, sometimes with a touch of nostalgia for things always having been better in the days of eg British Rail. Popular opinion, reinforced in sections of the media, often came down on the side that Private services will always be efficient and customer-focused and that Public services will always be inefficient, with uncaring staff operating immutable rules around standard services.

The democratic intent did not work out as planned. Individual citizen empowerment was overcome by an increase in influence by corporate shareholders. The second intention was that competition would lead to falling costs and better services. The reality has been that privatised activity has sometimes proved more costly and inefficient than public sector comparators. The improvement-by-marketisation approach has been described (by Select Committee) as a costly failure. Despite this, the notion of the internal market was retained as a step towards a more fully external market in which large numbers of providers may be separately commissioned by various local commissioning groups.

The third argument for the privatisation of services (private=efficient and public=inefficient) may have had some truth in it half a century ago. The current position, however, is that private contract holders have too often been unable to deliver on basic contracts, have been investigated for making fraudulent financial claims for services not provided, and so on. In some cases, public money has had to be paid for private sector non-delivery of public services. Some of the failures are the result of providers over-reaching themselves in being good at winning contracts but less good at having the mechanisms to deliver. Some of the failure, however, has rested with the public-sector contractors who have not been clear enough about what was expected, or who lacked the skills in complex contract management. In the face of such evidence, and a string of costly failures, the approach is still maintained with some vigour.

As it turns out, it is not a simple matter of being either public or private. Take railways as the example: Currently, the infrastructure – stations, tracks etc – are publicly owned but the trains which run on that infrastructure are privately owned by a range of companies operating separately on a franchised basis. The track used to be privately owned but issues with its maintenance led to it being brought back under public control with large amounts of public money going in to ensure that the private train companies can operate as expected. Any increase in safety and efficiency has probably had more to do with that public investment rather than any superiority of private sector management.

Even where British services are run by private companies, it is increasingly the case that those companies are owned by overseas firms and that those firms may have their own levels of public finance from their home governments. Different energy supply, utility companies and rail services in UK are currently operated by organisations that are state-owned or state-controlled by Dutch, Italian, Chinese, German, French, Singapore and Hong Kong governments. Foreign governments are making hundreds of millions of pounds a year running British public services meaning that foreign Exchequers have increased their income whilst the UK government struggles with a budget deficit.

Some of this may have sound financial reasoning, with reports that French infrastructure costs can be around 30% lower than similar UK costs and that European publicly-run services are cheaper and more efficient than UK private ones. It is difficult to make direct comparisons in fragmented and different contexts and the same finances can be used to tell other stories. A 2013 report showed the state paying much more in public subsidies to railways than in the days of British Rail. Instead of investing in their own infrastructures, private rail companies turn to the state to invest. It may not simply be these financial aspects that concern some people. There is growing disquiet when it is pointed out that key public services are increasingly in the hands of foreign companies and foreign states – the precariousness of that situation becoming more obvious as issues about national security come to the fore.

At the end of the day, though, do the internal mechanisms of ownership and investment really matter to the general public, so long as water flows out of taps, electricity comes when a switch is thrown, and the trains run on time? How are the differences experienced by people in their everyday lives?

Privatisation by competition had led to a fragmentation of the public experience of rail travel with multiple ticketing costs – often with a complexity that can be hard for passengers to follow. One consequence of responsibility for the track having been separated off from responsibility for rolling stock is that there is no one organisation having overall accountability. It is easy to see how things might go wrong in this kind of arrangement, with one body blaming another and the public losing trust in the service.

The situation is not irreversible. Renationalisation is not difficult. It may be as simple as waiting for existing contracts to expire and then re-issue them internally. Where this is not possible, then public finance could be used to purchase back control of the activity. In at least one case a private rail franchise has been brought back into state management, with reports of improved services to the public as well as reduced costs. Nationalisation may be an emotive term; so when Network Rail spending was brought was back under control of Parliament this was not promoted as renationalisation, but was defined as reclassification: a shifting of responsibility to a central government body (which on paper immediately added £30bn to Britain’s national debt). In other cases it may be necessary for the state to purchase the shares underpinning the privatised business  and then demonstrate that it an be run in ways where the savings on non-payment of dividends covers the costs of that outlay.

A key financial driver to increased private sector involvement has been the belief that the market will always operate in ways that bring about savings to the public purse. In the case of the Royal Mail, however, a public value was attributed to the service which was well below the value that emerged as corporate organisations purchased a share in the activity. Some of those corporate finance organisations immediately sold their share for a large profit. For the public, the debates were seen as being about the money not about the service.

Some of these debates do not get much publicity but one very public example of the old ‘public bad/private good’ rhetoric failing to hold true in practice was that of a private company’s inability to provide contacted security at the high-profile 2012 London Olympics, requiring the state to step in at the last minute.

Even when things do not work out, there have not always been high levels of risk for private sector providers of public-funded contracts. In the situation where a small number of providers have the capacity to win government contracts (and are the only ones able to be offered the chance to bid for such contracts) then, even where firms put contracts at risk, or are alleged to be open to fraudulent activity around a particular contract, they might still be relied on to bid for further work.

The ‘private=best’ image is at least tarnished, if not wholesale damaged. Despite this, privatisation continues to be a multibillion activity as state assets are sold off to private organisations to run. After the initial disposal of telecoms, energy supplies, public housing and rail services, the list moved on to Royal Mail, school buildings, public libraries and swimming pools, TV stations, Air Traffic Control, Royal Mint, Ordnance Survey mapping and more. Some of these activities stemmed from Victorian civic-duty efforts to put decent public servicers in place, and some were established for good public security reasons.

The proposal to put the national forensic testing service (that underpins much of the reliability of police/court evidence) under the control of a private organisation – a move strongly opposed by many groups – caused quite a bit of concern. One valued public service that brought finance into the Exchequer was the national Land Registry, yet it was deemed a necessity to sell this off out of government control.

Since the bulk of such activity is still a public service, specified by the government or local authority and paid for with public/state money then it may be that it can better be described as having been commercialised rather than privatised. What sits behind many of the changes is the belief/ideology that everything can be monetised in order to make a profit for certain groups of people. The recent drive in UK economic politics towards Austerity has been promoted as being about deficit reduction; reduced borrowing; balanced levels of tax, spending and welfare. It may, however, have deeper intentions around increasing the levels of privatisation of former state-funded activity; and be about the shifting of the financial balance away from those with less money towards those with more money.

Whilst slogans such as Shrinking the State may have broad appeal there are ambiguities. If there is money to be made from public activity, why would private firms want an overall reduction of government funding? Private sector success has, recently, relied to a degree upon public sector agencies being pushed into ever-more neoliberal models of operating. Services that once were directly delivered by local or central government are increasingly contracted out at a price that allows dividends to be paid to shareholders – sometimes simply for being a managing agent and subcontracting to social enterprises and voluntary organisations to do the day-to-day delivery. This still relies on there being sufficient state funding to support such contracting. Slices of modern capitalist activity rely on a big enough state with sufficient freedom with public money to make that capitalism operationally worthwhile.

Local Councils are having their central government financial support reduced in real terms. This is requiring a shift of responsibility for activity from the council as direct service-provider to a council role in commissioning of delivery by communities or by private contractors: or to continue to operate the same services but upon a very different financial model than before. To some this has been seen as a reduction in local democratic influence on people’s lives. To others it simply equates to modernising old-fashioned ways of approaching problems and becoming much more business-like. Local Authorities may look at selling expertise to others as a way of generating income; or selling promotion rights to some public areas and amenities; or using reserves (and even debt – in the form of cheap Treasury loans) to purchase property that is expected to increase in value. This ‘acting more privately’ comes with risks that many Local Authorities are not equipped to manage well.

This is a new set of scenarios with new sets of ambiguities. Web-based services are currently seen as operating the ultimate individualised, private economic model but this being proposed in some places as an aid to public services eg e-booked taxis supporting an overall transport plan by filling niches as publicly-supported privately-run alternatives.

This is all part of a larger picture of technology firms making proposals to local municipal authorities – to save costs, or improve services. Firms with data-capabilities can offer real-time matching of parking spaces with those wanting to park on busy city streets – thereby maximising parking income for the city. Others may provide internet connectivity where it might be financially difficult to do so, on the basis of recouping costs via future paid-for activity via that infrastructure.

The difficulty is that such provisions are ultimately profit-based not need-based, even for services such as local child welfare or care of the elderly. Those contracted expect to deliver a reasonable bonus to shareholders. This has to come from somewhere, usually through savings on contract-management costs by cutting the basic unit delivery costs. If the profit margin gets too small then service is removed – but that is happening anyway as public money availability gets squeezed, so services need to wither or be changed to a lower-cost model or a more productive model.

A sub-text in all of this is the theme of deregulation. There are constant calls, from some quarters, for large reductions in what are seen as costly regulations. These were introduced, in the first place, because of public concerns about safety. There are good reasons to have various health regulations, building regulations, workplace regulations, food regulations, and so on. Removing these – all in the name of savings in public expenditure, or out of a desire to maximise profits – may lead to far higher public expenditure in the longer term.

‘Public Expenditure’ is a term belonging to a political vocabulary that comes with layers of meaning. It raises the question of what constitutes public-sector support. Some public expenditure, quite rightly, goes on maintaining the road, rail, energy and other bits of infrastructure that allow the private sector to work. Public expenditure also includes private pension tax relief; supports to employers, home ownership subsidies, housing benefit subsidies to landlords, the cost of Parliament and government itself. Little of these latter expenditures come to mind for the general public when talking of public costs to society. For various reasons, this has most often been equated with aspects of individual welfare payments (unemployment support, child benefit and housing benefit), and with a corresponding view that such payments are often unnecessarily generous.

Public-sector finance support to the corporate sector comes in the form of tax credit additions to top up low wages paid by employers, tax breaks for certain commercial activity, housing benefit paid to tenants unable to afford the high rents set by landlords, bailing out the losses made by banks overstretching their riskier investment activities, high dividends built into public contracts. Such support receives much less publicity and fewer demands for it being curtailed.

Government expenditure has also been used to pay for innovations, for experiments in progress, or for fixing some market failures. It can be argued that, over the years, governments have lost the ability to be so innovative because of an assumption that only the private sector can be inventive. One line of argument against letting the State wither, as opposed to letting the State dominate, has promoted the State’s role as being an engine of entrepreneurial dynamism

So, if private control of public services is to continue to push ahead, whatever the degree of publicly-funded support, is there anything that is not open to private-control? Universities… schooling ….. security (to an extent) …. Probation service … prisons …. Health services …. Housing … welfare testing …. protection of vulnerable children and adults … border control? All the basic necessities of life, and more, are already open to privatisation. Why stop there? What about the Armed Forces? Courts? Parliament? The Monarchy? The coastline? The air above a certain height?

Things that are ordinarily regarded as public, eg the words we use, are being increasingly incorporated into the corporate world as trademarks – ‘Windows’, ‘Apple’, ‘Sky’, but also particular uses of the ordinary single word “probably” (Carlsberg) or “should’ve” (Specsavers).

Switching tracks once more: A different current strand of the public/private debate centres around data. The services being provided by large private companies such as the search capacity enabled by Google, can easily be viewed as a public good since they are not directly-paid-for activity. Not financially, at least. The payment is made in the form of data handed over, which can be added to other data to provide broader intelligence. The system behind Google’s searches (or Amazon’s purchasing support; of Facebook’s posted Updates) then begins to anticipate what else you may wish to engage with, and when, with whom and how.

As we go about our normal activity in public (or in private) there is the demand for data from us – either directly, or taking it by proxy via ‘loyalty/bonus/reward’ offer schemes. It has almost reached a stage where you can’t simply buy an item in a shop without first being required to hand over an email address or a phone number, or some other piece of private data about yourself. This is particularly so when that shop is publicly and prominently online. This data capture can increasingly be done by stealth as more and more transactions become electronic and repetitive.

There are few mechanisms to control these new sorts of data-intelligence activities. There may be an initial irritation and yet, because of its real conveniences, we may be happy to hand over large amounts of data about ourselves. For some, this strays into the area of surveillance and intrusion into privacy. Only when such invasions are done without consent, or done on an unreasonable scale, or put to purposes we may not agree with – only then are voices raised against it in volume.

At the other extreme, there are those with little sense of needing to protect an identity. At the social level, what was once of no real concern to others is out there open for public comment on social media. The value put on having a private life is increasingly outweighed by the value of being publicly out-there. The whole point of things is to become more and more public – to achieve many Followers and gain many Likes – to border on celebrity status, or at least the hope of being positively noticed.

Whatever our relationship with social media and its mechanisms, it is certain that our publicly-lived lives are becoming increasingly open to use as private property and our privately-lived lives are becoming more open to public scrutiny.

A different track again: The very spatial environment we occupy has similar processes operating around it. The debates around the boundaries between Public Spaces and Private Spaces go right back to the history of Enclosures, the removal of Commons, and the restriction of any Right to Roam. In the Victorian era there was an appetite for civic amenities to offset the working and living conditions of the poor. Part of this was the establishment of managed public green spaces – woodlands, parks etc. This tradition is kept alive in the National Parks concept and practice. This is not without its contradictions. One of the original intentions was to protect such areas against development – to preserve a natural state. Others argue that these areas have become unnatural, managed for looks and should be allowed to revert to nature, however unsightly that may be to some. Sitting beneath such debates there are the notions of who has the power to decide whether or not a space should be accessible, and by whom.

An extension of this determination of space by regulation is the growth of Privately Owned Public Spaces. Within urban redevelopments, private companies are being used to develop space that was once in the public realm. The previously public nature of the space becomes re-designated as ‘privately public’. The gain is that the space gets maintained on behalf of the broader public. The downside is that developers may only want certain kinds of people to use the space and, even then, in restricted ways. Members of the public still have access to the space but on terms set, not by publicly determined by-laws, but by private decision-makers: No sitting, no lying down, no gathering in numbers, no roller blades, no shouting or playing of radios, no eating, no making music – no being members of the public out enjoying their lives.

This is definition-by-regulation. There are other examples where the public/private permissibilities are less laid down in statute and are more in people’s minds. A positive variant on this is the recent interest in psychogeography and the idea of Wandering – walking in cities, rediscovering the hidden parts of urban areas (rivers under London; abandoned industrial or social sites) – walking so as to engage with what the city has to present at that leisurely pace, peering into places, investigating hidden corners, looking at its little secrets. Some of this has been a reinvention of the (male) flaneur roaming at will; some has been a rediscovery of the female/feminist flaneuse wandering (brazenly) in areas where she was seen as having no right to swagger: be that Virginia Woolf writing about Street Haunting, leaving domesticity at home and deliberately tramping around; or Sophie Calle secretly and arbitrarily following people around the streets – trailing them for no other artistic reason than it was possible to do so (and taking this to a level that would these days be considered as stalking.

In similar vein, but talked about more negatively: Children used to play out – in the street or the neighbourhood with other children they knew, in areas they felt were theirs, freely and openly. Increasing, and for varied reasons, play moved indoors – often alone – or outdoors on recognised play areas that had pre-shaped equipment to use – sometimes at supervised Adventure Playgrounds trying to recapture some of the old wildness and risk-taking. Most recently the trend, as budget constraints bite, has been for play areas to be handed over to private companies so that equipment can be improved and maintained, and so that supervision can be aligned with safety requirements. These managed play areas are then not free to use but come with a set of charges and restrictions. This is all part of the same wider privatisation of public spaces.

Sometimes the private intrusions into the public arena may not be immediately noticeable. It is still the norm for people to just walk around seeing what is there. With Augmented Reality this usually-visible is overlaid with things that are only there in appearance: adverts, bits of information – private commercialisms embedded in the experience of the public – the blurring of realities as to what is and isn’t real; what is and isn’t ‘public’ and what is and isn’t ‘private’.

All in all, there seem to be drifts away from ‘public’ towards ‘private’ in terms of who controls what; but with uncertain and ambiguous relationships back to the public sphere, the public purse, the public realm, and so on. There also seems to be blurrings of boundaries so that it is increasingly difficult to talk solely in terms of ‘public’ or of ‘private’.

At one level, none of this may matter – until it matters, and by then it may be too late.

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