Review

Muddying the waters

PUBLIC SERVICES OR CORPORATE WELFARE: Rethinking the Nation State in the Global Economy
Dexter Whitfield
Pluto, 2001, £16.99

MAKING SENSE OF THE PRIVATE FINANCE INITIATIVE
Courtney A Smith
Radcliffe Medical Press, 1999, £27.50

PFI and privatisation are the most controversial aspects of the Labour government’s strategy for the NHS. I had hoped that after working my way through these volumes, which approach the topics from very different positions, I would feel a bit clearer about them.

Both books are full of figures and tables. Whitfield’s book is global in scope, while Smith’s is firmly rooted in the British health care system, and is effectively a practical guide on how to organise a PFI project. Whitfield regards PFI as a tool used by multinational companies to remodel the welfare state in their own interests; Smith considers it to be a relatively uncontroversial mechanism that should deliver significant benefits for the NHS.

The different points of view reflect major differences in perspective which are of considerable political significance. On the one hand, we have modern, reformist managerialism of which Tony Blair is the leading proponent, on the other, the alliance of trades unionists and academics who are still prepared to call themselves Socialists, who are abused as ideologically based.

Whitfield has been running the Centre for Public Services for a long time and obviously knows a great deal about them. But his book is disappointing because it lacks a coherent political ideology and contains little reasoning. It also makes a fundamental assumption – that governments are dominated by multinational capitalism and follow a global corporate agenda that involves demolishing the welfare state.

He repeatedly warns that things could get worse. He also devotes three chapters to explaining why public service management would deliver major benefits. But he offers no explanation of how this enlightened approach could be achieved in the face of what we must assume would be opposition from the powerful global forces whose activities are the subject of the other seven chapters. In earlier years there might have been a call for revolution. Without one, it seems we are condemned to live in a mixed economy.

Smith’s analysis finds that PFI – as introduced initially – had major flaws, mostly that the schemes were not sufficiently attractive to banks. But he considers those were overcome by the changes initiated by Labour in 1997-98, which now enable the public service to harness the creative managerial skills of the private sector.

Whitfield, and Allyson Pollock, would say that the changes enable the private sector to unravel the structure of public services. Each side points to expensive disasters in the construction of new projects and puts the blame for poor design, failure to meet population needs and excessive costs on the methods of financing. However, neither side offers any evidence of causation.

The most illuminating part of Smith’s book is an account by the chief executive of Calderdale NHS Trust of the process of setting up the PFI for the new hospital in Halifax. He deals extensively with the process of transferring risk to the private sector, a process with which Whitfield profoundly disagrees. There is also an interesting discussion on owning assets, as opposed to contracting for services.

After reading both volumes, I find it hard to discern any genuine political principles at stake. The issue is pragmatic: does PFI provide better value for money in the long run than conventional financing? This must include questions to do with the transfer of risk, which can only be assessed over a long period. All four of my local hospitals – and street lighting – are subject to big PFI projects. I hope they don’t turn out to be disasters.