5 reasons why privatisation is bad for you
Private companies are good at doing lots of things. Running public services isn't one of them.
Privatisation includes selling off our public assets and outsourcing our services. (There is also PFI - private capital being used to fund public infrastructure.)
Here are five reasons why privatisation is bad for you.
1. Your services get worse
Private companies have a legal duty to reward their shareholders, so they have to prioritise making a profit. This means they may end up cutting corners, or underinvesting in your public services. Water companies ignore leaks instead of investing in infrastructure, while private company involvement in the NHS has been bad for patients. Private companies also have 'commercially confidential' contracts, so they don't share information with others; this makes it harder for them to work in partnership to make services better.
2. Your costs go up
You pay more, both as a taxpayer and directly when you pay for public services. Value for money goes down because private companies must make a profit for their shareholders and they also pay their top executives more money. This means either we the people, or the government, or both, end up paying more. Fares on our privatised railways and buses are the most expensive in Europe, while people are also being hit with high energy bills. 57% of 140 local authorities surveyed in 2011 said they had brought outsourced public services back in-house or were considering it, with 60% saying that the main reason was the need to cut costs.
3. You can't hold private companies accountable
If the local council runs a service, you know where to go to complain. But if a private company runs a service, they are not democratically accountable to you. That makes it harder for you to have a voice. Academy schools are less accountable to parents. Atos, the welfare provider, tried to silence disability campaigners instead of responding to their concerns. A report by the Institute of Government reveals problems in outsourcing public services, including a lack of transparency, manipulation of contracts by suppliers and a reluctance to sack underperforming providers.
4. Staff are undermined
If you work in public services, privatisation will make your life harder. A Europe-wide study found that privatisation has had ‘largely negative effects on employment and working conditions’. There are often job cuts and qualified staff are replaced with casual workers, who are paid less and have worse conditions. This has a knock-on effect on the service being provided – for example, in the cases of care workers or court interpreters.
5. It is risky and difficult to reverse
A review of outsourcing finds that the claims made about its benefits are unproven, but that potential risks are substantial. A Deloitte report finds that many large companies are bringing services in-house because of the costs, complexity and risks of outsourcing. Once our public services are privatised, it's often difficult for us to get them back. Not only that, we lose the pool of knowledge, skills and experience that public sector workers have acquired over many years. We also lose integration both within and across different public services.
Aren’t private companies supposed to be better than the public sector? Doesn’t competition reduce costs and improve quality and customer care? No, because there is often very little competition; public services tend to be natural monopolies so there isn't much choice for consumers. Instead, government (local or national) asks private companies to bid for contracts running our services - but there's no real opportunity for our voices to be heard.
Yes! I want public services for people not profit.
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