Let’s get real: co-ops need capital too – and I suspect they won’t get it

Posted on

The government is saying people who work for the public sector should establish coops to provide these services — whether they be probation, tax collection or local authority run activity.

I am a big fan of coops — and worker ownership, but this idea is, to be very polite, bonkers unless some serious conditions are attached.

First, and most important, running any business requires capital. The vast majority of people in this country have very little or no capital, and have never presumed they would need to put it aside to undertake their work when they always (wholly reasonably and justifiably) presumed that they would undertake it in the public sector. In that case the number of such coops that will be created will be very limited unless there is someone who is going to provide that source of capital. Logically that will have to be the government itself. But will they? And if they don't, will other potential providers of capital, such as banks, believe that they will pay on time, and so provide the security of income stream that is necessary for anyone to borrow? Candidly, I doubt it. In that case, this model is in considerable trouble from the outset.

Second, we are already seeing one model of so-called mutualisation of public services up and running, even though as yet absolutely no guidelines have been issued on how the the system will work and no legislation to enact it is yet published. This is NHS reform where GPs are being told they have to put shadow budgets in place for their areas fro January 2011 even though as yet they have no idea what this means and who is actually going to do the work or fund it. One thing they do know though: the cost of running services will be cut from £30 a patient to £10 a patient. In other words, the cost of coordinating services will be cut dramatically. The impact on patient care will be considerable because the burden of management will be shifted to GPs. But GHPs, contrary to the idea the government has, tend to work 11 hour days already, and aren’t able to do more. So front line services by GPs will have to be cut to make up the difference. Or they’ll have to outsource — as the government no doubt wants. But then have no mistake, that will also mean a cut in front line services. That not only takes out £20 a patient but a profit margin too, and someone is going to pay for that.

I suspect the same will be true in other services: the contract fro supply will be so tight that a co-op could not run it. So privatisation will follow — unless there are clauses which forbid this. But I can’t see that happening, somehow.

Then a long term contract will be issued (look for 15 years, I suspect — maybe longer if PFI is a precedent) that will seek to tie government services to private suppliers for the life of several parliaments. And that is the end of the exercise of choice by parliament.

That, I think, is exactly what Osborne is planning.

And those who oppose these ideas have to say now that a future government will not be bound by such contracts and make clear it means it. Unless they do the right of the people of this country to choose by electing a new government with the power to effect change will be emaciated. Of course the ConDems want that. But democrats believe in the power of choice — something the ConDems want to deny to us. And that means opposition to this process is essential.