Social Policy and Privatisation

Mark Drakeford

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138467286
• eBook ISBN: 9781317880189
• Edition: 1
• Topic: Medicine
• Subtopic: Health Care Delivery

Privatisation and Social Policy follows this format while addressing one of the key issues of recent years, namely the covert but undeniable impact of growing privatisation on the development and implementation of social policy. As the text demonstrates, there is no area of policy which privatisation has not affected, resulting in the gradual transfer of responsibility from the public to the private sphere in areas such as education, housing, health, social security and social services.

PART ONE

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Chapter 1

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INTRODUCTION

This is a book concerned with one of the great debates of contemporary social policy, and one which is older than the discipline itself. Defining the boundary between public and private responsibility was a part of Plato’s debates about the nature of state and citizenship. It framed the Elizabethan resolution of parish provision for the poor and determined the founding instrument of the modern welfare state, the Poor Law Amendment Act of 1834. Even in periods when the balance between those responsibilities assumed by the state and those undertaken by individuals has appeared stable and decided, an undercurrent of dissent, disagreement and ambition for alternative arrangements lies closer to the surface than casual enquiry might suggest.

For almost two centuries, however, these changing balances have taken place within an overall pattern in which the collective organisations of societies and states have taken an increasing responsibility for the welfare of individuals. The achievement of a ‘welfare state’ – even where marked by reluctance rather than enthusiasm, and by self-interest rather than altruism – provides a deep current over which particular ebbs and flows of public and private provision have taken place. For a text concerned with privatisation this deep pattern is particularly important. It gives rise to the immediate question of whether the ambition of ‘rolling back the state’, which has characterised British social policy during the last quarter of the twentieth century, is another temporary disturbance upon the face of the ocean, or whether it amounts, really, to a sea-change in welfare thinking and organisation.

Within our own time, certainty regarding these basic issues of social policy has been largely overtaken, both by debate about the particular issue of public and private provision and by the general post-modernist emphasis upon uncertainty and risk. Among the political parties it has become common ground that change in the provision of welfare, its costs, the services it provides, the rights and obligations which it confers upon individual citizens and so on is inevitable. Here are two views, one expressed by the deputy leader of his Party, the other by the leader of his – ‘There is no escaping the need for structural reforms of the social security system’ and ‘We have reached the limits of the public’s willingness simply to fund an unreformed welfare state through ever higher taxes and spending.’ The first expresses the view of Peter Lilley, the second that of Tony Blair. The characterisation of welfare as a problem unites both views. The solution to that problem, of course, is a matter of contention and contradiction. Part of the purpose of this book will be to place present-day debates in the context of longer-term concerns, attempting to connect these dilemmas to the discussions from which they have sprung.

It will also be a purpose, however, to suggest a particular understanding of those currents which appear to be running most strongly in contemporary welfare and to consider their impact upon those by whom social welfare services are required. Even if disputing the dividing line between private and public provision turns out, on examination, to be a continuous thread in this area of policy, that continuity should not obscure the very real differences which boundary changes create for individuals and whole classes of individuals. Nor should the time-honoured nature of these debates prevent us from remaining alert to the possibility that even continuous spectrums could have paradigm shifts within them, in which the balance might shift – even temporarily – between significantly different elements.

For students of social policy, these questions lie at the core of their discipline. The ambition of this text is to provide some of the information and argument which allows debate around that core to be conducted. While I make no claim to neutrality in drawing conclusions in this ideologically contested terrain, my aim has been to remain as explicit as possible about my own interpretation, thus allowing readers to reach quite different conclusions, where these appear to them to be more convincing.

1.1 Structure of the book

The structure of the text may be summarised as follows. Part One places contemporary controversies concerning privatisation and marketisation in the longer-term context of such debates within social welfare. Chapter 2 aims to set out the case for increasing the scope of private provision and market organisation in terms which would be recognisable to those who espouse such views. Chapter 3 discusses the practical application of privatisation and marketisation policies in an area where promoters of such polices have made greatest claims – the privatised utilities. This chapter explores the social policy consequences of initiatives which were advanced primarily on industrial and economic grounds. A set of issues emerge as relevant to social policy services more widely and these are considered in the subject-by-subject chapters which make up Part Two of the book. This section deals with the period of Conservative government between 1979 and 1997, when such policies occupied an unambiguous place on the agenda of administration. Part Three turns to the emerging record of the New Labour government, elected in May 1997. The application of private and public solutions to social policy problems by the Blair administration will be recorded and assessed. The final part – Part Four – provides a series of key documents, setting out the ideological framework within which privatisation and marketisation policies are derived and disputed and setting out the claims made for and against such policies in their application to social welfare services.

In as complex an area as privatisation and marketisation of social welfare services, it will not be possible to provide equal attention to all the possible techniques, approaches and claims made for them in the case of each policy area. Instead, the plan adopted in this book has been to provide a particular emphasis within each service chapter, illustrating and exploring the application of particular techniques and evaluating the outcomes. Of course, this does not preclude each chapter considering other relevant applications; nor does it prevent an aspect which has received concentrated consideration in one area from appearing again in another. It does provide a means, however, by which the most important elements in the application of privatisation in social welfare can receive the attention required.

It is in the nature of the social policy issues considered in this book that individual chapters must deal with the application of macro-level policies created by governments at the meso-level of particular services. The impact of privatisation and marketisation, however, is not simply felt at a service level. Users of particular forms of social policy provision are directly affected by the changes outlined. As Papadakis and Taylor-Gooby (1987: 32) put it, ‘reduction in state involvement in any service to meet need involves the expansion of the private sector, because people are compelled to meet their needs privately, if they can’. Each chapter, therefore, also includes an investigation of change at an individual level, providing most attention to the impact of privatisation upon those most in need of services. Moran (1998: 30) suggests that, ‘market ideology simultaneously holds out prospects of empowerment and of subordination’. The case made by privatisers and marketeers concentrates heavily upon the former, and this book will provide a series of examples where empowerment has taken place – patients able to buy access to medical care; parents able to obtain a school place of choice; and so on. However, the sharpest test of a policy has to be among the hardest cases and it will be in this area, which Moran characterises as subordination, that each chapter will deal at its conclusion.

This introductory chapter aims to trace some of the boundary shifts which have taken place in the five core social policy areas with which this text is primarily concerned. Individual chapters will later consider the impact of privatisation and marketisation upon these services from 1979 onwards. Here I aim to present the balance between private and public provision in housing, education, social security, social services and health at the end of the 1970s, providing the context within which later changes can be understood. The end of this chapter will return to the more general question of what is meant by the term ‘privatisation’ in this book, leading into an account of its modern policy development and its application.

Housing

Chapter 4, dealing with housing policy, places particular emphasis upon the privatisation of property in social welfare, tracing the direct transfer of material goods and assets -primarily council housing – from the public to the private spheres. While state acceptance of responsibility for housing has never, as in the case of education or health, been undertaken on a universal basis, the flow of policy during the first eighty years of this century was almost always in that direction. Immediately after the First World War the pressure to provide homes for returning heroes resulted in government subsidy to private house builders in order to encourage production. Government thus used its financial power to buy services -in this case house building – provided by others. In this way, the system represented an early example of the provider/purchaser division which was to be a central technique of the 1980s free marketeers. Nor, as Hendry (1998: 15) notes, were these the first attempts at such a policy. Unsuccessful attempts to provide local authorities with financial assistance to build working-class homes had been introduced in Parliament in 1912, 1913 and again in 1914. While the Addison Act of 1919 established the effectiveness of government subsidy in stimulating private production of housing, it also allowed for the direct provision of housing by local government where the need for this could be demonstrated. While only 75,900 local authority houses were built under the Addison arrangements, as opposed to 362,000 by the private sector (Hendry 1998: 18), the principle of direct state provision had been established. The Wheatley Act of the 1924 Labour government led to the construction of half a million local authority dwellings in less than a decade. Thereafter, while the scale of subsidy and construction varied at different periods, the fact of state intervention and provision had been achieved, albeit within a market in which most people would remain housed within the private sectors of renting and house purchase.

For the greater part of the twentieth century, involvement of the state in housing policy rested essentially upon twin foundations. On the one hand, housing was, as Linneman and Megbolugbe (1994: 641) suggest, ‘always regarded as a “merit” good. The provision of a decent home for every family was generally considered part of the basic responsibility of government.’ The case for assuming such a responsibility drew on the intrinsic importance of decent accommodation – the fact that, as Balchin and Rhoden (1998: xvii) put it, ‘apart from nourishment, shelter is humankind’s most essential material need’. Less altruistically, state interest also rested upon the ‘externalities’ of housing – that is to say, the way in which the consequences of failure to provide decent housing might impact upon those indirectly, as well as directly, affected through, for example, the spread of disease. Direct involvement of government in achieving such an end, however, was relatively constrained. Smith et al.(1996: 288) set this in the context of other social policy areas: ‘Unlike education or health service provision there has never been a commitment on the part of any government, of whatever political persuasion, to support a near universal housing service designed to meet the needs of all households.’ Rather, state intervention was confined to a redistribution of housing resources towards poorer citizens, bringing decent and affordable accommodation within the reach of those who would otherwise be unable to obtain access to it. Regulation of the private rented market and direct provision of council housing have been the primary means through which this outcome has been sought. While local authority housing, as a proportion of the total housing stock, reached its peak in 1978 (Hills 1991), Forrest (1993: 40) argues that, in most localities, ‘it was the private sector which was the dominant provider either through mortgaged owner-occupation or private renting’. The importance of the private sector, moreover, was common currency between the political parties by the end of the 1970s. Williams (1992: 161), for example, notes that the Housing Review undertaken by the Labour government between 1975 and 1977,

‘asserted the importance of home ownership and proposed no changes to MIRAS … In 1978 the Labour government introduced its new Housing Bill. This included … measures to extend home ownership and improve the allocation of council housing … much of this was taken up by the Conservatives when they returned to power in 1979 and introduced their own Housing Bill.’

It is in response to such evidence that Malpass (1998: 186) concludes that, ‘the changes imposed in the 1980s and those planned in the 1990sare rooted in trends that were well established before 1979’.

At the same time, the impetus for privatisation and marketisation from 1979 onwards was, in many ways, driven by financial as well as ideological considerations. The welfare state of the post-war period was, in many ways, a local state. Of the great services considered in this book, three – education, housing, social services – remained the province of local councils, while two – the health service and social security – were organised on a national basis. The growth in local government spending on welfare services fuelled this concern. Butcher (1995: 92–3) shows that local authority expenditure, as a proportion of total public spending, had risen from about one-quarter at the end of the 1940s to nearly one-third by 1976.

Within that picture, spending on education, housing and the personal social services had risen from 24 per cent of local government spending in 1945to nearly 62 per cent in 1976. The arrival of the oil crisis and the consequent economic recession of the mid-1970s brought that era of expansion to an end. The Conservative Party analysis of the economic crisis of the mid and late 1970s was one which identified public spending as a cause of national difficulty, rather than a solution to problems of the state. It thus prepared the ground for privatisation as a key part of the general attack on the scope of state activity. It was against this general background, therefore, that the 1979 Conservative Government entered office with a more developed approach in relation to housing than in almost all other social policy areas. It intended to privatise property in the hands of the state, through the sale of local authority houses to council tenants. In doing so, however, it was operating within a field in which pluralism and the co-existence of public and private had long been characteristic.

Social security

Chapter 5, devoted to social security, will look in detail at the phenomenon known as ‘privatising from within’ (Young 1986: 243), in which private sector techniques – or ‘new public management’ doctrines – are applied to public sector services. Market-testing and the creation of government agencies will form the focus of re-delineating the boundary between public and private provision. The relief or prevention of poverty through income maintenance policies is one of the most fundamental parts of the contract between the citizen and the state. Chapter 5 considers the changing balance of rights and responsibilities within that relationship inherent in the application of privatisation and marketisation to social security policy.

The particular concerns of Chapter 5 thus have to be understood in the wider context of the development of British social security policy. The distinction between responsibilities to be accepted by the state, and those to be undertaken by the individual, has been more sharply felt in relation to the provision of income than in any other social policy area considered in this text. A minimal system, consistent with the prevention of social unrest, has been a recurring theme here, together with a consistent preoccupation to make the lives of those dependent upon a state-provided income no more comfortable than those of the least well off in employment. This latter principle of ‘less-eligibility’ found its most powerful expression in the Poor Law Amendment Act of 1834 which set the framework ...

Table of contents

• Cover
• Half Title
• Longman Social Policy in Britain series
• Title Page
• Copyright Page
• Table of Contents
• Preface
• List of Abbreviations
• Acknowledgements
• Part One
• Part Two
• Part Three
• Part Four
• References
• Name Index
• General Index