The New Contractualism, the Privatization of the Welfare State, and the Barriers to Open Source Planning

Abstract

This paper argues that the UK government's Open Source Planning reforms are founded on a caricatured vision of state–society relationships. Simple binaries are deployed that present political power as a zero-sum game with ‘communities’ on the one side and state ‘bureaucracies’ on the other. There has been little recognition of the complex public–private sector entanglements left by the previous Labour government and the power of the ‘new contractualism’ in shaping the provision and ownership of welfare services and assets. The paper assesses the legacies of privatization under Labour and the structural limits that contracts and private financing now put on the governance and management of the welfare state and the planning system. It contends that the principle sources of state power and accountability that underpinned the post-war settlement are being eroded. Paradoxically, this will not devolve power to local communities and citizens but create new forms of distancing and disempowerment.

Acknowledgements

The author would like to acknowledge the constructive and insightful comments on an earlier draft of this paper by Graham Haughton, Phil Allmendinger, Vincent Nadin, James Evans, members of the Cities Group at King's College London, and two anonymous referees. Thanks also to audiences who commented on presentations relating to the paper at Sciences-Po (Paris) and the University of Manchester. Responsibility for the final draft is, of course, the author's alone.

Notes

The Coalition government was formed after the General Election of May 2010. It is a formal coalition between the Conservative and Liberal Democrat parties and its core policy proposals are summarised in a Coalition Agreement (Cabinet Office, 2010). Under a Localism Bill and set of proposals to create an Open Source Planning System the Coalition has outlined a set of proposals to radically change the planning system, as discussed elsewhere in this Special Issue.

Under Treasury rules PFI liabilities do not officially count as public borrowing. Gordon Brown, first as Chancellor of the Exchequer, then as Prime Minister, staked his reputation for fiscal management on limiting public borrowing. The PFI, therefore, served an important political function in helping the Labour government to both deliver new infrastructure, whilst limiting the official public sector debt.

Edwards (2009) notes that in the case of a PFI contract for hospitals in Norwich taxpayers would have to find over £300 million to buy out the contract from private investors. Remarkably this would actually save money in the longer term by cutting saving £217m in repayments.

In July 2010 it published a radical White Paper, Equity and Excellence: Liberating the NHS (HMSO, 2010), and its proposals provide an insight into the government's broader vision for how a so-called Big Society agenda might function. As Price and Pollock (2010) note, it proposes to introduce a full health care market that will, in effect, lead to the break-up of the national risk-pool system in which all citizens are currently entitled to health care provision wherever they live and whatever their health concerns. This founding principle of the NHS will, the authors contend, be undermined by a forced localism in which individual doctors will be given the responsibility to manage their own budgets and ‘for deciding how best to use these resources to meet the healthcare needs of the patients for whom they are responsible’ (p. 6). However, these proposals have generated much debate and controversy and as of summer 2011 they were still up for negotiation.

In addition to service cuts, the quality of the new hospitals is also poor, with one being labelled as one of the dirtiest hospitals in Britain (see BBC, 2008). Such a situation is not uncommon as across the NHS hospitals have been built under PFI projects that are much smaller than the ones they replaced in order to make the PFI look like better value for money (see Edwards, 2009; Pollock, 2006 for a thorough discussion).

Two companies were established to run the infrastructure contracts – Metronet and Tube Lines. In both instances, the contracts collapsed with Metronet folding in July 2007 and Tube Lines reneging on its contract in 2010. Metronet's parent companies consisted of a consortium of multi-national companies, including Atkins, Balfour Beatty, Bombardier, EDF, and Thames Water. The House of Commons Transport Committee (2008) reported that 60% of the sub-contracts awarded by Metronet for capital projects were made to its parent companies, thus creating tied supply chains through investors made a double benefit. Remarkably even though it was Metronet that reneged on the public-private contract, it was the public sector bodies that picked up the majority of the costs, with some estimates that the total bill for public authorities was over £500 million.

It is interesting to note that Tony Blair's (2010b) memoirs are critical of the Freedom of Information legislation introduced by his government on the grounds that the decision-making processes surrounding some decisions of government should be kept confidential to improve the quality of legislation.