Issue 257 of SOCIALIST REVIEW Published November 2001 Copyright © Socialist Review
The City is spitting blood over the government's handling of Railtrack says The Walrus
What the government likes to think of as its lovely joined up thinking over privatisation policy seems to have turned a bit scribbly in recent weeks. At first it seemed most likely that the New Labour machine would take full advantage of Blair's miraculous escape at the TUC, on exactly the same day as the attacks on New York and the Pentagon, to put all its plans into action.
Within a couple of days of the bombings there were reports that one of the staunchest opponents of PFI--John Edmonds of the GMB--had decided that an open confrontation with Blair over PFI would not be appropriate with a war going on. A string of subsequent stories gave the strong impression that all the various government departments would not just be ploughing on regardless, but would now step it up a gear.
At the Department of Transport, Stephen Byers gave every sign that he was going to disregard universal disapproval of the plans for privatisation of London Underground and steamroller it through. At the Department of Trade and Industry, Patricia Hewitt looked as though she could barely restrain her enthusiasm for smashing up the Post Office (or Consignia, as they now call it). And at the Department of Health, Alan Milburn started to do his customary transformation from Man at C&A to Alsatian that is about to be let off the leash.
Long before Jo Moore's e-mail had come to light, Milburn had come out of the cover of darkness to let it be known that from now on no quarter would be given to 'under-achievers' in the NHS. In his new league tables for hospitals (which would have created an absolute furore if they had been released at any other time), the self styled Egon Ronay of Accident and Emergency deliberately set out to 'explode the myth' that social deprivation might affect performance. All very handy if you want to create your own myth that the problems of the NHS are not essentially to do with systematic underfunding over a very long period of time.
Elsewhere it came out that the group of airlines which only took over the running of Britain's air traffic control network in July--again despite widespread opposition--was already calling for massive job cuts. And this despite the fact that the system was already massively overstretched before the attacks in America, and that more staff, not less, are going to be needed for the new national control centre which opens next year.
And then--just when it appeared that the privatisation juggernaut might finally be moving into overdrive--along came Railtrack and its ignominious collapse! As Harry Hill would probably have said, 'What are the chances of that happening, eh?' In the case of Railtrack, the answer--true enough--is 'utterly predictable'. But the political fallout is certainly turning out to be much more damaging than Stephen Byers was hoping for when he made his announcement, on the very day that bombing of Afghanistan got under way.
For sheer entertainment value, there has not been a much better spectacle than the squealings of Railtrack's corporate shareholders since Imelda Marcos lost all her shoes. But Byers will be even more concerned that the rest of the population will draw a more obvious conclusion--privatisation doesn't work.
True to form, the government could have made things much easier for itself if it had simply renationalised the railway, as all the city wailers have accused it of doing. Instead it has come up with a cack-handed compromise, which looks like getting it into even more trouble, precisely because it is absolutely hell-bent on keeping the ideological damage to a bare minimum--Railtrack, after all, was the very embodiment of a Public-Private Partnership.
What has happened at Railtrack not only vindicates the campaign the rail unions have been running, it makes the decision to press on with privatisation of the London Underground look even more demented and, indeed, puts a giant question mark over all the other PFI projects still in the pipeline. That's the real reason the city is spitting blood over Railtrack--its catastrophic demise might have put the kibosh on much anticipated future bonanzas.
For all the firms with an eye on big juicy PFI contracts, the Railtrack fiasco could not have come at a worse time. In the last couple of months the leader of the Business Services Association, Norman Rose, has been involved in extensive talks with the government in an attempt to head off union opposition to PFI schemes. And Dave Prentis, the new leader of Unison, is reported to have spent so much time in Whitehall in parallel discussions that he might as well be living there.
The BSA represents the biggest suppliers of contracted out services in the country. Unison is now the largest union in the country, with the bulk of its membership working in the public sector. Although Unison voices opposition to privatisation in principle, it has also developed a (relatively forward) fallback position against the creation of a 'two-tier workforce', whereby some employees stay on the old terms and conditions but new starters end up on lower rates.
The position adopted by Unison, but still opposed by the GMB and other unions, was seized upon by the Labour leadership as providing a possible way out of their own difficulties at this year's conference. Stephen Byers promised to put an end to two-tier workforces, and was immediately denounced by Digby Jones, director general of the CBI. There has also been a fierce argument within the BSA--with some firms, such as Capita, opposed to making any concessions on what has become known as the 'fair wages' approach.
But, as the Financial Times pointed out, 'private companies see big business in Public-Private Partnerships', and to win them they may be prepared to compromise over terms and conditions. Which is why Norman Rose eventually came out with the statement that 'our members have changed their view over the last couple of months', and that they could find a way to live with the fair wages approach, albeit with the rather important proviso--'as long as the client pays'.
How this would work in practice is currently being discussed by the Treasury. More importantly, all of it shows that the battle over PFI is by no means over yet. A couple of days after Byers' speech on the two-tier workforce, John Edmonds warned that 'the symbolic battle over Clause Four is about to be rerun--this time with our nation's public services as the battleground'. The news about Railtrack came less than a week later, and cannot be underestimated as a really tremendous blow to the apologists for privatisation.