Conservative Co-ops: privatisation by the back door
Article published: Thursday, May 6th 2010
To much fanfare in a speech in Manchester in 2007, David Cameron announced the launch of the “Conservative Co-operative Movement”, an organisation supposedly independent of the Conservative Party and designed to “campaign for the principles of local, democratic, voluntary, public ownership of public services and public facilities.”
Conservative co-ops - they could use the old co-op logo
Back in February this year during the unveiling of the unconvincing “I’ve never voted Conservative, but…” campaign, Cameron reaffirmed the plans, explaining to public sector workers: ‘here is your budget, deliver this service, and if you do it more efficiently and more effectively, you can keep some of the savings that you make.’
Now their public sector manifesto, “An Invitation to Public Sector Workers”, has outlined the plans further and made it a central part of their election pitch.
According to the manifesto, “Public sector co-ops will be paid through either outcomes-based contracts or according to their ability to attract users, like parents and patients. Benefits will include greater freedom to innovate and the chance to share in any financial surpluses created as a result of making improvements and efficiencies.”
In essence, public sector workers would operate independently of the government while using state funding, given to them in the same manner as contracts to private firms. Every year the workers will receive, alongside increased wages depending on how many “users” they attract, any savings they make on those contracts to be divided up among themselves. The theory behind this dividend-based system being that the incentive of an annual payout from such savings will encourage workers to work more efficiently and waste less state resources.
Changed?
The first sign that the Tory Party has reformed very little is the fact Cameron appointed the Conservative Co-operative Movement’s first chairman, which undermines somewhat their claims to be independent and democratic. Since then the Movement itself doesn’t appear to be moving anywhere, having not even had a single annual general meeting in the past three years.
They have changed chairman, however, with a former leader of the Campaign for Nuclear Disarmament now taking charge – but the surreal image on their website of the Conservative logo coupled with the phrase “Power to the People!” seems even more out of place considering this chairman was installed by Cameron as well. So it’s “Power to Dave”, then.
The second is the fact that these co-op members have no control over the incoming capital, since it is still firmly in the hands of the state, delivered through a “tariff system which gives fixed levels of payment in return for the achievement of national standards”. In an era when all three parties have made it clear that there will be enormous public sector cuts, these fixed levels of payment will inevitably decrease. After these budget cuts, workers would have to make a choice between their wages and the services they offer; nice guy Dave Cameron would in that case essentially be giving the co-operatives a revolver, and telling them to either put it to their own heads or the services they are trying to operate.
Corporate friendships
There is another option, however: putting the revolver down and cosying up to the private sector. In a brief section in their “Power to public sector workers” document, they claim they will give “co-ops freedom to go into joint-ventures with outside experts, buying in managerial and operational expertise where necessary”. This coded reference to the “outside” private sector suggests that the experts in a job centre, clinic or school will not be well-qualified, experienced staff who know how to provide public services, but the sort of people who know how to turn a profit.
On the frontline, it may see more and more temp workers recruited by workers who, by virtue of being in a co-operative and not a state run workplace, no longer benefit from levels of pay set nationally and simply cannot afford to bring in a new member to share dwindling profits. In short, the Tory promise to cut public services, and their proposal to make these co-op workers’ wages dependent entirely on dwindling budgets, would leave them with little choice but to accept a pay cut, fire people themselves, or bring in the private sector. Temp staff, redundancies and management consultancies all round!
The Tory plans make clear that if one of these “enterprises” begins to fail, there will be no state “bailout”, and the workers will be responsible for finding the funds to keep the services running. But the definition of failure is problematic and reveals how the Tory principles may be harmful. If a school is performing adequately but with a massive budget shortfall, the government would evidently not fill the gap but instead treat it as a failed contract and find someone else to take that contract. But in this case, would the school be expected to close? If it did close, who would have the “contract” to provide services for the users – surely another local school? It is therefore quite likely that a failed co-operative would produce a serious domino effect in the local area; schools may well be particularly affected since in the event of closure as much as several thousand children will have to be relocated.
In fact, such failures would be so catastrophic that public services would be forced to turn to the either the private sector for funding or rent their assets, or both. Although the Tory plans make it clear that an organisation cannot sell their land or buildings, since they are still owned by the state, it could lease them out to private firms. Therefore our school, which begins “failing” because of massive budget cuts handed down by the state, would have the usual option of firing staff. But it can also bring in private funding, who will only be interested in making a profit somehow; and that profit may well come from that company renting the school’s playing fields, or maybe a number of buildings, to another company.
Lack of Clarity
Given this ambiguity, Co-operatives UK have given a rather uneasy response to the plans, saying that: “Before we can decide whether these proposals really offer practical options for public service workers, Co-operatives UK would need to see more detail, but we certainly welcome increased debate about the importance of co-operatives to our economy.” This is hardly a ringing endorsement, which is unsurprising given that the Tories have put forward plans that at best seem confused and poorly thought through and at worst a direct attempt to encourage the privatisation of public services.
Perhaps the more bullish final word should be given to George Holyoake, an important member of the Co-operative Union, the predecessor of today’s Co-operatives UK, after whom Holyoake House in Manchester city centre is named. Involved in socialism and co-operation throughout the nineteenth century, back in 1892 he made this comment in his autobiography:
“Tories, by the law of their being, seek authority by which the majority of them intend the control of public affairs for their own advantage. They supply money for corruption, intending to refund themselves by place and profit when the resources of the State come under their manipulation.”
They won’t be putting that on their posters any time soon.
Tom Fox
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Nice article – I’d not come across much decent analysis of this issue yet. I haven’t read into it, but could ‘workers’ coops also be stretched to mean management buyout?
In which case a lot of money will be made by those best positioned, like with British Rail…
Comment by andy on May 9, 2010 at 5:07 pm
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