Padraig Colman

Rambling ruminations of an Irishman in Sri Lanka

Tag: Private Finance Initiative

The Blair Years Part Three

This article appeared in Ceylon Today on Thursday, November 3 2016. The title given was Privatisation’s Disastrous Route.

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We have seen in previous articles how Blair failed to put in place structures that would make a practical reality out of the grand visions he hoped would be his legacy. New Labour did nothing to reverse the disruption caused by Tory privatisation of public utilities and transport. Blair’s own lack of attention to detail led to failures in the areas of energy policy, transport and agriculture.

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Transport

The New Labour manifesto for the 1997 election promised “an effective and integrated transport policy at national, regional and local level …” However, According to Cabinet Secretary Andrew Turnbull, “no-one ever really looked after transport. It was a very low priority in the first term.”

John Major is remembered fondly by some, but I will always remember him for doing to the British rail network what he did to Edwina Currie. Conscious of being in the shadow of Thatcher, he wanted his share of the privatisation glory. Rail was the only major area left so Major was determined to privatise it, even though it led to fragmentation, chaos and death. Operations were broken up and sold off, with regulatory functions transferred to the Rail Regulator. Railtrack took over the infrastructure and track maintenance became the responsibility of 13 different companies. Three rolling stock operating companies (ROSCOs) took over passenger trains with the stock being leased out to passenger train operating companies (TOCs) which were awarded contracts through rail franchising.

Nobody wanted rail privatisation except Tory ideologues and those who stood to make a fat profit at the taxpayers’ expense. After a series of rail disasters with many fatalities, there was a growing consensus that maintenance work was not being done properly and splitting of the railways into 25 different companies was a horrendous mistake. After the Paddington rail crash, in October 1999, a Guardian/ICM poll found that 73% of all voters would support re-nationalizing Railtrack. Blair did not accede to the people’s wishes.

Privatisation was meant to bring business savvy into public utilities, but, in reality, it allowed foreign governments and their state-owned operators to make vast profits out of the UK. In one two-year period, Dutch company Abellio took dividends of £20 million from their UK operations; French company Keolis made £37.9 million; German company Arriva made £15 million.

Hatfield, the morning after the train crash. Investigators and Police at the scene of the crash. The remains of the crash. New parts of the track waiting to be put on the tracy which was used by the Kings Cross to Leeds train yesterday which crashed. October 20, 2012. Photo by Andrew Parsons/i-Images.

Hatfield, the morning after the train crash. 

The Hatfield rail crash in 2000 led to severe financial difficulties for Railtrack which was put into a special kind of insolvency by the British High Court. On October 17 2000, four passengers died and dozens were injured because a faulty rail hadn’t been replaced: the rail crumbled under the friction of the 12.10 from King’s Cross to Leeds and threw the train from the tracks. Blair did not take the opportunity to re-nationalise the railways but nevertheless pumped in taxpayers’ money. In 2002 a new organisation, Network Rail, bought Railtrack PLC. Network Rail had no shareholders but was nominally in the private sector but its borrowing was guaranteed by the government. In 2004, Network Rail took back direct control of the maintenance of the track, signalling and overhead lines.

Instead of sorting out the chaos in the national rail network, the Blair government went ahead with plans to mess up the Tube. Although chancellor Gordon Brown was resolutely opposed to any hint of privatisation in the NHS (except in building hospitals) and banned use of the word ‘choice’, he was obsessed with using PFI (Private Finance Initiative) to revitalise the underground network. In practice, PFI is a bad deal for taxpayers and involves a hidden privatisation of public services. The UK Accounting Standards Board called PFI an “an off-balance-sheet fiddle” because the government can move the cost of public works out of the public sector borrowing requirement and by sleight of hand reduce the deficit. PFI can only be implemented through an anti-competitive process which inevitably leads to corruption. The big corporations would not be interested if it were otherwise. For a small investment, companies can be sure of long-term profit guaranteed by the taxpayer.

The government announced in February 2002 that it was going ahead with plans for part-privatisation of the London Underground despite wide-spread opposition. Opponents insisted that the plan was fundamentally flawed on both financial and safety grounds. Brown and Blair left the detail to deputy prime minister John Prescott who soon lost control to a group of businessmen, lawyers and consultants whose fees reached £1 billion. The final bill for the project was about £30 billion. Blair supported his chancellor’s hubristic scheme “as the only way to get massive investment into the ailing network”.

Energy and Fuel

Energy provides another example of Blair’s inability to maintain a consistent position and to trust his ministers to implement a policy. As a means of reducing energy costs and the incidence of fuel poverty, a new programme of grants for cavity wall and loft insulation and for draught proofing was quickly launched, with some 670,000 homes taking up the scheme. This scheme was later abandoned and the number of those suffering from the cold increased. Steep price rises and possible power blackouts, that we are so familiar with in Sri Lanka, were a grim possibility.

Germany was driving the EU to increase the proportion of energy supplied by renewables to 20%. Only 1.6 of Britain’s energy needs was being generated by renewables and Merkel’s policy would cost Britain’s consumers £7.9 billion extra every year and would wreck its energy market. Industry representatives doubted whether the prime minister and his advisers understood either the costs or the complications. When Alistair Darling told Blair that he was mad to agree to Merkel’s plans, Blair said “I got confused”.  In Broken Vows, Tom Bower writes: “As so often, although their conversation lasted only a few seconds, his eyes wandered.”  William Rickett, an energy expert working in the Cabinet Office, commented: “That’s not the sort of behaviour you expect from a prime minister. He’s wasted eighteen months of work and it’s delayed anything happening on the ground while we go back to the drawing board”.

 

Petrol Revolt

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An avoidable crisis brought the UK to the brink of anarchy and almost toppled the government. “The great petrol revolt of 2000” led to hospitals cancelling non-vital surgery and funeral directors warned that they would not be able to bury the dead. It reminded me of James Callaghan’s winter of discontent when I sat in a Manchester cinema with rats running over my feet because the local authority could not collect the garbage. By 2000, fuel prices in the UK had risen from being amongst the cheapest in Europe to being the most expensive. By 2000, tax accounted for 81.5% of the total cost of petrol, up from 72.8% in 1993.  Because of demonstrations against increased fuel tax, a stage was reached where nine out of ten petrol stations had no fuel to sell. There was panic buying and supermarket shelves were empty. One minister warned: “There would be no food. The health service was going to collapse. We were twenty-four hours away from meltdown”.

 

After being initially slow to focus on the problem, Blair went energetically into action, working the phones to influential people in the oil and haulage businesses. He was not successful and shouted “For f***’s sake, they gave me assurances”. One of the oil executives resented Blair’s attitude.  “We are not nationalised industries. We are globalised companies with, on the whole, more influence around the world than the British Government”. Blair said, “I have to show I am leading”. Sending in the army was considered but the generals were reluctant. Polls showed that as many as 94% supported the protesters. As Andrew Rawnsley put it: “The petrol shortages might be a pain, but the people seemed ready to endure them so long as the torture inflicted on the Prime Minister was greater”.

 

Foot in Mouth

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The army was called upon to help in another crisis which Blair mishandled – the outbreak of foot and mouth disease in 2001. With up to 93,000 animals per week being slaughtered, Agriculture Ministry officials were assisted by units from the British Army. The bureaucracy failed abysmally, politicians were unfocused, then panicked and scientists and self-interested farmers issued confused predictions. Thousands of farmers faced financial devastation because the Rural Payments Agency had collapsed. The Secretary of State, Margaret Beckett, would be officially criticised for contributing to a blunder that cost over £1 billion in compensation but was rewarded with promotion to the Foreign Office. Blair admitted: “We were mired by scandal and controversy and then I did a reshuffle which was the worst of all worlds”.

 

Next week, Blair goes to war – in Kosovo, Sierra Leone, Afghanistan, Iraq – and with the Treasury.

 

The Blair Years Part One

This article appeared in Ceylon Today on Thursday October 20 2016 where it was given the title Saviour or Serpent.

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Tony Blair has announced that he may return to British politics. This is somewhat surprising considering the universal loathing that is today felt for the man following the repercussions of the ill-advised invasion of Iraq in 2003 and his more recent sordid quest for riches, a quest which has led him to consort with many dodgy dictators.

An examination of Blair’s rule may be enlightening for those masochistic Sri Lankans who believe that this island nation’s polity is supreme in its incompetence, inefficiency and corruption and its politicians unrivalled in their practice of the dark arts of Machiavellian manipulation.

Euphoria

I for one have not forgotten the euphoria which greeted Blair’s election. On the bright morning of 2 May 1997, I wandered down to the Imperial War Museum. A complete stranger, a very tall man conducting a poll for MORI, embraced me, shouting “Isn’t it great”. I was as enthralled as he was. I even got a job with MORI. This was like a new dawn after 18 years of Tory rule. Blair introduced the longest-lasting non-Tory government since 1762.

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Dysphoria

In 2006, when Blair made his final speech to a Labour Party conference, a MORI poll put the public’s ‘satisfaction’ rating of Blair at 20 per cent, lower than Thatcher on the eve of her fall. There had been a time during Blair’s premiership when approval ratings surged to levels of surpassing those conjured up in totalitarian regimes.

I voted for Labour in that 1997 election and felt that I had personally achieved something. Many of us were drunk with joy. It was a sobering experience to walk around the Imperial War Museum and to see the remembrance of so many lost lives. My grandfather had fought in the First World War. I wonder if my father’s experience in the Second World War had truncated his life so cruelly. Little did I suspect on that morning at the museum that Blair would be complicit in so many needless deaths.

Dawn and Disillusion

 

Professor Anthony King described the Labour landslide, as being akin to “an asteroid hitting the planet and destroying practically all life on Earth”. Blair entered Downing Street on a wave of optimism and good will, promising to restore trust in politics and breathe new life into Britain’s tired institutions.

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Much of the reason for the voters’ distaste for the Major administration was because of what became known as the “sleaze factor”. There was what seemed like an endless succession of sex scandals. It was later revealed that boring old Major himself had had a four-year affair with health minister Edwina Currie. During Blair’s stewardship sleaze continued and the tired institutions continued to languish.

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“Our mission will be the renewal of our public services. There is nothing more important to making Britain a fairer and stronger country.” Did he succeed?

Health

I was working as a management consultant in the NHS when Conservative Health Secretary Kenneth Clarke introduced his “reforms”. The “internal market” introduced in 1991 split health authorities (which commission care for their local population) from hospital trusts (which compete to provide care). GP fundholding gave some family doctors budgets to buy care on their patients’ behalf.

Critics saw this as creeping privatisation but Clarke claimed that his reforms prevented Margaret Thatcher from abandoning the NHS. Nevertheless, he brought in many people from the business world and the giant accountancy firms. My boss was the redoubtable Sheila Masters (now Baroness Noakes), a foul-mouthed gorgon imported from Peat-Marwick. Trade journal Accountancy Age described her as “the country’s most high profile accountant”. I had a report published by HM Stationery Office which showed that the reforms seemed to require an army of accountants and managers to implement them. Doctors and nurses felt that money that should be going towards patient care was being wasted on management.

Old Structures, New Labour Words

The Labour victory encouraged hope that the internal market would be abandoned. However, the key element, the purchaser/provider split – was retained, but, typical of New Labour, words were spun: purchasing became commissioning; contracts became service agreements. GP Fundholders became Primary Care Trusts. Hospital Trusts were allowed to continue.

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The public and NHS staff had high expectations that things would improve quickly. When that did not happen there was anger and despair. Blair’s first Health Secretary was Frank Dobson (his successors were Alan Milburn, John Reid, Patricia Hewitt and Alan Johnson). Dobson was allowed to stay in such a high profile job, for which he was poorly qualified, as a sop to old Labour. In those early days, the spin meisters were careful to avoid words like “competition” and “choice”. which might alienate any socialists still lurking in the party, preferring to stick with the vague concept of “modernisation”.

Dobson was eventually forced to become Labour’s candidate for Mayor of London and was replaced at Health by Alan Milburn, an old Trot who became converted to the market in health and today makes a good living from private health care. Initially, Milburn called for extra money to resolve the NHS crisis, but rejected using the private sector. “That”, Milburn declared, “would be a Trojan horse for privatisation.” Later, he resurrected competition and advocated reintroducing the Tories’ internal market. Blair did not understand Milburn’s reorganisation.

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The government persisted with PFI (Private Finance Initiative) as a method of financing building in the NHS and other public services despite repeated demonstrations of its costliness and other disadvantages.

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Civil servants did not dare mention their foreboding. Milburn’s successor Patricia Hewitt knew that Blair “did not do detail”, but she was unprepared for quite how patchy his knowledge was.

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Nigel Crisp was appointed as Chief Executive of the NHS and Permanent Secretary at the Department of Health on 1 November 2000. He was the only person so far to combine these posts. Blair was described as “muddleheaded” –  he could not describe a coherent and complete model of what he wanted to achieve. So he could not explicitly tell Nigel Crisp what to do.

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Expensive Poor Outcomes

By 2005, the NHS was costing £43 billion a year more than in 1997. The country’s health had improved but, in terms of the number of doctors, the use of technical equipment, the number of patients being treated and the cure rates for cancer and heart disease, Britain still ranked near the bottom of the international league tables. Compared to other European countries, Britain’s premature death rates were higher and clinical outcomes worse. The government was embarrassed when Robert Winston, IVF pioneer, medical doctor, scientist, television presenter, said: “We gave categorical promises that we would abolish the internal market. We have not done that. Our reorganisation of the health service was . . . very bad. We have made medical care deeply unsatisfactory for a lot of people.” Funding, he said, was “not as good as Poland’s”. Note that he said “we”. Winston was a staunch believer in New Labour, a Labour peer and the chair of the Lords’ select committee on science and technology. His This Is Your Life on TV had featured a guest of honour appearance by Tony Blair. At the 2006 BMA conference, not only the nurses but also the doctors damned Labour for causing “a real and imminent danger to the NHS”.

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Hyperactive Lack of Substance

The incoming government had made a pledge to stick with Conservative spending plans and not raise income tax levels. Even when large amounts of money were promised, Chancellor Gordon Brown refused to release them because of his feud with Blair. There is no space here to go into the detail of the new government’s twists and turns and changes of mind about what to do about the NHS. There was a plethora of new initiatives, the government appearing hyperactive, unable to allow one new scheme to settle down and produce some results before introducing a new one.

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The triumph of style over substance, lack of concentration, poor management of human resources and avoidance of confrontation is common to Blair’s approach to all the major issues that he had intended to tackle. The war between Blair and Brown cast a gloomy cloud over the entire Blair premiership. More on that next week.

Dawn and Disillusion: the Bathetic Blair and Brown Era

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