Gaming the system

Under Jeremy Corbyn's leadership, Labour's front-bench speakers are predominantly state socialists. They tend to believe in the old Clause 4*, and certainly more firmly that there should be no private companies involved in the public sector at all. (There are of course counterparts on the other side of the Commons who believe that public service is intrinsically wasteful and where it cannot be abolished can always be rendered more efficient by handing it over to a commercial company.)

There was a good example of this "Four legs good, two legs bad" approach in the House yesterday. Leeds East  MP Stephen Burgon took advantage of an Urgent Question granted by Speaker Bercow. The premise for the UQ was the completion of the legal process by which Serco was fined £19.2m (with costs) by the Serious Fraud Office for offences connected with electronic tagging committed between 2010 and 2013. (Conservatives loathe Bercow for his readiness to grant UQs to the opposition and indeed he may well have stretched the meaning of the word "urgent" here.) Burgon immediately widened the question from the particular to the general by condemning not only the Serco contract but also the employment of Carillion and the privatisation of prisons.

Carillion was a clear case of bad management. Only the most hardened communist would claim that the state should act as its own builder. However, there is a selection of construction firms out there even after the monopolistic march of Carillion. The client/provider model in the case of construction is straightforward. There is a clearly specified contract. When the builder fulfils it, he gets paid - albeit in stages on bigger contracts. There is no political philosophy involved. All the government department has to do is ensure that the firms on a short-list of tenderers are capable - and financially sound.

The picture on prisons is less clear. As the then minister responsible Rory Stewart pointed out, although there were private prisons which performed badly but also some still in the public sector which did so; conversely, there are private prisons which are ranked as satisfactory.

But trying to monetise purely social functions like the probation service is, in the words of the late Paddy Ashdown, a mug's game.

The point is that there is no one simple solution for every case. There should, though, never be a scenario where private providers are expected to make moral decisions. The onus is on ministers and especially their civil service advisers to ensure that involving private enterprise in a public service is appropriate and, if so, that contracts are drawn up so that a successful bidder is not able to game the system.

*"To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service."