Privatisation has made a Dad’s Army of the state

Hudson was discussing the mistaken release from prison of Hadush Kebatu, the asylum seeker who had committed sexual assault while housed in the Bell Hotel in Epping. His comment would have been equally apt in response to any of the myriad woes that have embroiled the government in recent weeks, from the collapse of the Chinese spying court case to the furious resignation of victims from the national grooming gang inquiry.

In each case, catastrophic failures were shaped by specific circumstances, such as the chaotic prison system behind the accidental release of Kebatu. The failures, though, reflect also a broader problem of statecraft, one that began long before Keir Starmer entered No 10. It stems from the way the state has been reshaped in recent decades, transformed, in the fashionable jargon of political science, from a “command and control” structure to a “regulatory state”.

“Command and control” was exemplified in the immediate postwar decades in Britain with successive governments undertaking detailed economic planning, nationalising many industries, establishing institutions such as the NHS, and frequently intervening to pursue specific social and economic objectives.

From the 1980s, this system gave way to a more market-oriented approach, with the privatisation of state assets and the outsourcing of many services to the private sector. Central government now largely shied away from direct planning or intervention and instead set guidelines for public institutions, such as the Bank of England, and private corporations to steer society and the economy in particular directions.

It is a system that has generated vast profits for private corporations while undermining the decision-making capacity of the state and leaving unheeded the aspirations of ordinary people. The home affairs select committee last week published a scathing report on asylum housing. The use of hotels, a policy about which there has been considerable public anger, has moved, the report noted, “from a temporary stop-gap to the go-to solution”. One major reason is that the private firms now responsible for housing asylum seekers “can reap greater profits by prioritising the use of hotels over procuring other, more suitable forms of accommodation”.

The three main companies involved – Serco, Mears and Clearsprings – have so far made £383m in profits through their government contracts. Yet asylum seekers often live in appalling conditions, many in rooms “infested with cockroaches or with severe damp and mould issues”. And local communities have become enraged and fearful, leading to protests outside hotels. The Home Office has effectively sanctioned the greed of private corporations to shape asylum housing policy while also allowing migrants, rather than those making millions from their misfortune, to bear the blame.

Neither the obscene profits nor the calamitous failure of policy is unique to the Home Office or the migrant issue. “Roll up, roll up – get your free money here.” That was how an internal presentation last year to executives of Avanti West Coast, one of the worst train operators in the country, described its government contract.

Running train companies (or failing to do so) is one thing. The outsourcing of complex services, involving some of the most vulnerable people in society, such as social care or prisons, is quite another. “It is an astonishing indictment of the British state,” analyst Sam Freedman has observed of privatised children’s care homes, “that it no longer has the ability to provide care for those who need it most, and instead allows blatantly ill-qualified people to charge exorbitant fees to provide unacceptable levels of care.”

Privatised services often fail, yet companies responsible for such failure, and even for committing fraud, continue to win government contracts because, as former chancellor George Osborne put it in a Treasury discussion, according to David Laws, a Liberal Democrat minister in the coalition government: “It would be incredibly damaging for government outsourcing and for the engagement of the government in the private sector if we stopped giving contracts to these types of companies.” Ideology, in other words, had to trump reality. So Serco, fined £19.2m in 2019 for fraud and false accounting, remains one of the government’s main outsourcing partners, including for housing asylum seekers.

It’s not just the services that have been outsourced but also much of the knowledge and expertise that the state once possessed. This, together with funding cuts, makes it much more difficult to restore decent provision when companies fail and the government has to pick up the pieces, as with the disastrous part-privatisation of the probation service. It also makes it much more difficult for the “regulatory state” to regulate, leaving ministers to “behave like political commentators” because they have tossed away some of the most effective levers for prompting change.

What we are left with is a state that is both overwhelmed and overbearing. Governments appear too stretched and incompetent to formulate coherent strategies to address the big problems, whether economic growth or social care. Instead, they have become fixated by petty and often illusory problems, from the countless and often pointless reorganisations of public institutions, whether they’re the NHS or local councils, to the micropolicing of social media and imposition of fines for acts such as pouring coffee down the drain.

It is almost as if the British state is becoming the embodiment of Captain Mainwaring from Dad’s Army – all bluster but no competence. Unlike with Dad’s Army, though, there is little to laugh about.

Photograph by Chris J Ratcliffe/Getty