How private firms take unfair advantage over the public sector to get government contracts

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Open and transparent: Grahame Morris, who called for a ‘level playing field’ for both private companies and public organisations when bidding for government contracts.

Did you know that £1 in every £3 spent by the government goes to an independent or private-sector service provider?

If you also recall government ministers bemoaning the fact that £1 in every £4 spent by the government was borrowed, as they said very often during the first year or so of the Coalition, and you bear in mind the fact that all private companies must make a profit, you’ll come to a fairly damning conclusion.

Did you know, also, that private companies – while free to hide behind commercial confidentiality regarding the conditions under which billions of pounds of taxpayers’ money are awarded to them in government contracts – may use Freedom of Information requests to gain detailed information about public sector organisations and then use that knowledge to undercut or outbid those bodies when government contracts are tendered or put up for renewal?

FoI regulations give private providers an unfair competitive advantage when bidding for contracts, due to unequal disclosure requirements.

Both of these were made clear in Grahame Morris’s short speech in support of his 10-minute rule motion to bring in a Bill amending the Freedom of Information Act 2000 to apply to private healthcare companies, and for connected purposes.

He even pointed out that we are living in a society where freedom of information is routinely censored – stating that he attended a demonstration against NHS privatisation in Manchester at the start of the Conservative Party conference there, “but which was barely reported by our public sector broadcaster”.

He said the government should be chastened by recent events. “For example, the tagging scandal — involving Serco and G4S and uncovered by the Serious Fraud Office — showed that these companies had defrauded the taxpayer of more than £50 million.

“Perhaps we need a hard-hitting advertising campaign, with advertising hoardings on vans driven around the City of London, warning off corporate fraudsters from bidding for public contracts?

“The danger for our NHS is that we are inviting convicted fraudsters into our health system.”

He said HCA, the world’s biggest private healthcare company, recently won the contract to provide cancer treatment for NHS brain tumour patients, “stopping patients receiving world-class treatment at London’s University College Hospital”.

Mr Morris continued: “The Competition Commission has already caught HCA overcharging private patients in the United Kingdom. In the United States, HCA has had to pay fines and costs in excess of $2 billion for systematically defrauding federal healthcare programmes.

“The public are right to be concerned about these providers coming into the NHS. If that is to happen, it is essential that their operations and their contracts with the NHS should be open, transparent and subject to public scrutiny.”

Introducing his Freedom of Information (Private Healthcare Companies) Bill, he said its purpose was to strengthen FoI legislation and introduce vital safeguards, so members of the public can see how their money is being spent.

It seems he may even have read Vox Political‘s earlier article on his motion, as he said: “I hope that Members on both sides of the House will support fair competition, a level playing field and the duty of equal disclosure throughout the bidding process for NHS services.

“The public have a right to know the record of public and private providers before contracts are awarded. Those safeguards can work only if the Information Commissioner has the same rights to seek information and carry out investigations, and to make all providers of public services comply with freedom of information legislation.

“I understand that the Information Commissioner expressed concern to the Justice Select Committee that accountability would be undermined if FOI did not apply to private providers of public services.”

He said: “Freedom of information is one of the Labour Government’s greatest achievements, ensuring transparency and accountability in modern government and allowing the public access to information on what is being done in their name and how their money is being spent.

“In recent years, we have witnessed an acceleration in the number of public services being outsourced, and today roughly £1 in every £3 that the Government spend goes to independent or private sector providers.

“Owing to the Government’s policy of opening up public services to the private and voluntary sectors, billions of pounds of NHS contracts are now being made available to the private sector, following the implementation of the Health and Social Care Act 2012.

“Unfortunately, while more and more taxpayer money is being handed to the private sector, especially in the NHS, FOI responsibilities are not following the public pound.

“There is a big issue here about transparency, because the public should know what is happening in their name, as was brought home to me recently in a demonstration against NHS privatisation in Manchester that I attended, along with more than 50,000 other people, but which was barely reported on by our public sector broadcaster.

“Private health care companies should not be permitted to hide behind a cloak of commercial confidentiality. Billions of pounds of taxpayers’ money is being awarded to private sector companies under barely transparent contracts.

“Meanwhile, private companies are free to benefit by gaining detailed knowledge of public sector bodies through their use and submission of FOI requests. The same information is then used by the private sector to undercut or outbid the very same public sector bodies when contracts are tendered or put up for renewal.”

Although no objection was raised to the Bill going forward, it seems the Coalition has performed an about-face on the issue. Mr Morris said: “I understand that in opposition the Prime Minister was convinced about this matter, having previously promised to increase the range of publicly funded bodies subject to scrutiny using section 5 of the Freedom of Information Act.

“The coalition agreement also promised to extend the scope of the Act to provide greater transparency, but unfortunately it would appear that nothing is being done to address the democratic deficit caused by the outsourcing of public services.”

Sadly, it seems likely that this Bill won’t get very far, for reasons this blog has already mentioned – the Government usually opposes Private Member’s Bills in the later stages and, given their low priority in the schedule, there is often insufficient time for the debate to be completed.

But this may not matter, as the information already provided by Mr Morris makes fascinating reading that is damning for the government.

Has the Coalition set Labour an impossible task – to rescue politics from corruption?

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Not a good egg: Ed Miliband was hit by an egg on his first campaign visit after returning from holiday abroad. The thrower, Dean Porter, said: “They do nothing. The government do nothing. The shadow government do nothing. I don’t believe him at all. If you are poor, you are considered a burden.”

Yesterday’s article, DWP denials: They would kill you and call it ‘help’ received an unprecedented reaction – considering it was only intended to prepare the way for a larger discussion.

In less than 12 hours the article went viral and galvanised many of you into vocal support, sharing your stories of government (and particularly DWP) ill-treatment and urging others to follow this blog – for which much gratitude is in order. Thanks to all concerned.

The aim was to show how low politics and politicians have fallen in public estimation. The general consensus is that our politicians aren’t interested in us. They make promise after promise before elections – and the party (or parties) in office often set up tax breaks for sections of society their focus groups have told them are needed to secure a win. After they’ve got what they want, they don’t give a damn.

Look at the Coalition. The consensus is that this is a failed government. That it has broken one promise after another. That its ministers are liars and its Prime Minister is the worst charlatan of the lot.

That its rallying-call, “We’re all in it together”, refers only to Conservative and Liberal Democrat Members of Parliament and their close friends in the most lucrative (and therefore richest) industries, along with the bankers (of course), and that they have all dug their noses deep into the trough and are (to mix metaphors) sucking us dry. Look at the way Mark Hoban employed his former employers to rubber-stamp the DWP’s new plans for the Work Capability Assessment.

In short: That the Coalition government is the most incompetent and corrupt administration to blight the United Kingdom in living memory, and possibly the worst that this land has ever endured.

We fear that these tin-pot tyrants are carrying out a eugenics programme to kill off people who have become sick or disabled; we fear that their economic policies are designed to put anyone less than upper-middle-class into the kind of debt that current wages will never permit them to pay off – a debt that can then be sold between fat-cat corporations who will hold the masses in actual – if not admitted – slavery; that they will dismantle this country’s institutions, handing over everything that is worth anything to their buddies in business, who will make us pay through the nose for services that our taxes ought to cover.

And yet a recent poll suggests that we would prefer this corrupt gang of asset-stripping bandits to run the economy of the country (into the ground) rather than give Her Majesty’s Opposition, the Labour Party, an opportunity to restore the country’s fortunes.

Are we all going schizoid? Are we really saying that, while we don’t believe the Conservatives and Liberal Democrats could organise a binge in a brewery without stealing the booze from us while we’re drinking it, we do believe them when they say the current economic nightmare was because Labour mismanaged the economy?

(In case anyone hasn’t really thought it through, the current lie is that the international credit crunch that has cost the world trillions of pounds was caused, not by bankers (who have never been punished for it) but by the UK Labour Party giving too much money away to scrounging benefit cheats. In fact, only 0.7 per cent of benefit claims are fraudulent and, while they cost the taxpayer £1.2 billion a year, that does not justify the £19 billion the Coalition has given to its private, for-profit friends to make a pretence of dealing with it.)

Are we really saying that even though we all now know that George Osborne’s economic policy is nonsense, based on a theory that has been comprehensively rubbished, we’re all happy to give him and his miserable boss David Cameron the credit for the slight improvement in the UK’s economic fortunes that we have seen in recent months? It was always going to improve at some point, and the current upturn is more likely to be part of that kind of cycle than anything Osborne has done.

If we really are saying that, then we all need to put in claims for Employment and Support Allowance, on grounds of mental instability!

That’s not what’s going on, though.

It seems far more likely that the general public is having a crisis of confidence. As a nation, we know what we’ve got is bad; we just don’t have confidence that we’ll get better if we put our support behind the Opposition.

This is the Coalition’s one great success: It has damaged the reputation of politics and politicians so badly that nobody involved in that occupation can escape being labelled as corrupt, or liars, or worse.

And Labour is doing far too little to fight that.

A BBC article on the problems facing Labour states that the Coalition has sharpened up its messages on, among other things, welfare and immigration. The message is still the usual hogwash; the problem is that Labour has made no meaningful response. Her Majesty’s Opposition appears to have given up Opposing.

Is this because the main political parties are now so similar that Labour is now supporting Coalition policies? That would make sense in the context of statements made before the summer recess by Ed Miliband and Ed Balls, in which Labour appeared to capitulate over welfare and the economy, even though the Coalition had lost all the major arguments.

When they did that damned stupid thing in that damned stupid way, Vox Political was the first to say “watch their poll lead disappear” – and it has more than halved from 11 percentage points to five, according to The Guardian.

This lackadaisical attitude from the Labour leadership has not gone unnoticed among the backbenchers and the grass roots, and the last few weeks has been notable for the rising chorus of dissent against Ed Miliband’s leadership. Some have described the Labour front bench as “Plastic Tories”.

Even Shadow Health Secretary Andy Burnham took a pop, saying Labour needed to “shout louder” and produce attention-grabbing policies by next spring – or lose any chance of winning the 2015 election.

Miliband’s response to that was to claim that Burnham was really saying the Labour Party was “setting out how we would change the country”. This is nonsense. He was saying that was what Labour needed to do, and Miliband rendered himself untrustworthy by suggesting otherwise.

It is very hard to put your support – and your vote – behind somebody you don’t trust, who seems completely unable (or unwilling) to fight your oppressor on your behalf; in short, someone who seems just as corrupt as the government in power. At the moment, Ed Miliband doesn’t stand for anything – so there’s no reason you should stand up for him.

What, then, should Labour do?

Easy. The party needs a clear, simple message that everybody can understand and get behind; one that members can support because it reflects Labour beliefs rather than whatever Coalition policy currently seems popular, and above all, one that comes from verifiable truth.

He could take a leaf from Paul O’Grady’s book. In a clip on YouTube, the entertainer says: “We should be vocal in our fight against oppression. We should let them know that we are not taking these draconian cuts lightly!

“We should fight for the rights of the elderly! Of the poor! Of the sick! And of the children!”

Rapturous applause.

Labour needs more than that – but a commitment to protect those who have been most harmed by the Conservative and Liberal Democrat doomsday spree would at least be a start.

From the DWP to the economy – the Coalition’s growing credibility chasm

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All the wrong choices for all the wrong reasons: The evidence fails to support George Osborne’s economic austerity policies – the only likely explanation seems to be an intention to rob this nation of everything possible before 2015.

The more we learn of the Tory-led Coalition’s policies, the wider the gap grows between what it is doing and what it should be doing.

Look at the sham psychometric tests, exposed by fellow blogger Steve Walker in a series of articles on his Skwawkbox site. It is now firmly established that the DWP – aided by the Cabinet office ‘nudge unit’ – set out to pressgang put-upon benefit claimants into taking part in a crude piece of neuro-linguistic programming – no matter what answers you provided, the test always pushed out a ridiculously upbeat appraisal of your character and then tried to get you to act according to this verdict in your jobsearching activities. The theory is that this will make a jobseeker more confident and finding a job easier. The problem is that it’s quite utterly ludicrous.

If you haven’t already, you can read the Skwawkbox exposure of this particular caper on that site – there are plenty of links to it from this one. The reason it is mentioned here is that it provides a useful set of questions with which to analyse any government activity: First, is the theory behind this activity sound? Second, if that theory is being used to support a particular course of action, is that action justifiable?

So let’s turn once again to George Osborne’s reasons for pursuing economic austerity, as described in the letter Vox Political received from the UK Treasury last month.

Firstly, the letter warns against the perils of losing market confidence. By this, we can see that it means we should fear any downward revision of our credit rating by the credit agencies, as “a one percentage point increase in government bond yields would add around £8.1 billion to annual debt interest payments by 2017-18”.

What’s being said is that a drop in our credit rating would mean the people and organisations that have invested in UK government debt (by buying our bonds) might move their funds to others, meaning the government could be faced with an interest rate rise, leading to increased difficulty in borrowing.

But we know that this isn’t true. The UK’s credit rating was downgraded only a few months ago. Did interest rates rise? Was our ability to borrow hindered at all? No. There’s a reason for that.

As Professor Malcolm Sawyer notes in Fiscal Austerity: The ‘cure’ which makes the patient worse (Centre for Labour and Social Studies, May 2012), “It is well-known that a government can always service debt provided that it is denominated in its own currency. At the limit the UK government can ‘print the money’ in order to service the debt: this would not take form of literally ‘printing money’ but rather the Central Bank being a willing purchaser of government debt in exchange for money.” This is what is happening at the moment. Our debt is in UK pounds, and we can always service it. Our creditors know that, so they remain happy to continue financing it.

This means that the Treasury’s next point, that “any loss of investor confidence in the UK’s fiscal position would not only affect the UK, but also the global economy” is also meaningless. There won’t be a loss of investor confidence, so there won’t be an effect on the global economy.

We move on – to the Chancellor’s claim that fiscal austerity is required to prevent the slowing of economic growth that happens when the national debt hits 90 per cent of gross domestic product (or thereabouts).

You’ll recall that my letter to the Chancellor was prompted by the revelation that the academic paper on which he relied most often, by Reinhart and Rogoff, had been proved to be mistaken. The Treasury’s response pulled out a series of references to other academic works suggesting a fiscal cliff similar to the Reinhart-Rogoff model, off which we would drop if the national debt passed an arbitrary level around 85-90 per cent of GDP. These were published by the International Monetary Fund, which we know isn’t quite as keen on austerity as it used to be; the Organisation for Economic Co-operation and Development, which this blog marked out as “schizoid” only a few days ago; and others.

Obviously I haven’t had time to look up eight academic works to support any opposing theory I may wish to create – and I think I would be foolish to try. I don’t have any grounding in economics beyond what I’ve been able to pick up by following the national and international debates.

But, then, according to Dean Baker of the Center (yes, it’s American) for Economic and Policy Research: “As a general rule economists are not very good at economics.”

He writes: “Most economists are unable to conceptualize anything that someone with more standing in the profession did not already write about. This is the only reason that the Reinhart-Rogoff 90 per cent debt-to-GDP threshold was ever taken seriously to begin with.”

That prodded my curiosity to check some of the papers listed by the Treasury in support of its stance, and the three that I checked (The Real Effects of Debt, Public Debt and Growth, and How Costly Are Debt Crises?) all listed the Reinhart-Rogoff paper in their supporting references. So Mr Baker is right.

“Debt is an arbitrary number,” he continues. “The value of long-term debt fluctuates with the interest rate… The value of our debt will plummet if interest rates rise… This means that we could buy back long-term debt issued today at interest rates of less than 2.0 percent for discounts of 30-40 percent. This would sharply reduce our debt-to-GDP ratio at zero cost.

“Bonds carry a face value, meaning the amount that will be paid off when they reach maturity. This is what gets entered in our debt figure. However bonds also carry a market price, which fluctuates inversely with interest rates. The longer the term of the bond, the more its price will vary with interest rates.

“If interest rates rise, as just about everyone expects over the next three-to-five years, then the market price of the bonds we have issued in the current low interest rate environment will fall sharply. Since we count our debt at the face value of the bonds, not their market price, we could take advantage of the drop in bond prices to buy up… bonds at sharp discounts to their face value.

“The question is why would we do this, we would still pay the same interest? The answer is that the policy would make no sense for exactly this reason.

“However, if we accept the Reinhart-Rogoff 90 per cent curse, then reducing our debt in this way could make a great deal of sense. Suppose we can buy back debt with a face value of 60 per cent of GDP at two-thirds its face value, or 40 per cent of GDP. In our debt accounting we would have reduced our debt-to-GDP ratio by 20 percentage points. If this gets us below the 90 per cent threshold then suddenly we can have normal growth again.

“Yes, this is really stupid, but if you believed the Reinhart-Rogoff 90 per cent debt cliff, then you believe that we can sharply raise growth rates by buying back long-term bonds at a discount. It’s logic folks, it’s not a debatable point — think it through until you understand it.”

I found Mr Baker’s piece after asking Jonathan Portes of the National Institute for Economic and Social Research (NIESR) for his opinion on the Treasury letter. He described it as “Predictable and largely irrelevant”.

So despite my lack of economic education, we have a working theory that suggests the Treasury has built its economic castle on the sand; that its justification for austerity is unsound. What about the austerity measures themselves? Are they justifiable on any level at all?

Evidence suggests not.

Let’s go back to our other friend in this matter, Prof Malcolm Sawyer. “Fiscal austerity and cuts in public expenditure do not work – there is a limited, if any, effect on reducing the budget deficit, and any return to prosperity is severely undermined.” We can see that this is true, using the government’s own figures. It managed to cut the deficit from £150 billion to £120 billion in 2011-12, mostly by axing large projects that invested in the UK economy. How much did it cut from the deficit in 2012-13? Less than £1 billion. The benefit cuts that created much of the fuel for this blog have not helped to cut the deficit at all.

“The reduction of the budget deficit can only come from a revival of private demand which is harmed by an austerity programme,” Prof Sawyer continues. Again, we can see that this is true. Austerity measures such as benefit cuts and the axing of infrastructure investment projects means there is less money available to the people who are most likely to spend it – the working- and middle-classes, and those who are unemployed. People with less money have to spend just about everything they receive in order to cover their costs. That money passes into circulation and the economy grows, through the fiscal multiplier effect. An attempt to explain this effect appeared on this blog within the last few days. The point is that demand increases when the people who earn the least have more to spend.

Therefore we see that Prof Sawyer’s next statement, “Deficit reduction requires investment programmes and reduction of inequality to stimulate demand”, is already proved.

So the answer is to reduce the unemployment rate by creating more jobs and closing the jobs deficit, as highlighted in this blog only a few days ago; to raise incomes by significantly increasing the minimum wage and adopting the proposed ‘living wage’, as promoted in this blog frequently; and investment in infrastructure projects.

What has Osborne done, along with his economically-illiterate chums?

He has created high unemployment.

He has depressed wages.

He has cut infrastructure projects.

He has, therefore, sucked all the demand out of the economy. What effect has this had?

Economic growth has, in the single word of Shadow Chancellor Ed Balls, “flatlined”, borrowing has remained high and the national debt is continuing to rise.

In other words, this part-time Chancellor’s strategy – a plan on which we have all been asked to judge the entire Coalition government, let’s not forget – has failed. Hopelessly.

I return you to Prof Sawyer, one last time [bolding mine]: “The austerity programme is economically irrational, socially irresponsible, and lacks credibility that it can reduce the budget deficit and secure any return to prosperity. The time has come to rebuild through investment and through a major assault on inequality.”

You will not benefit from Britain leaving Europe

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Run, David, run: UK Crime – sorry, Prime – Minister David Cameron has found a reason to be in America while his party tears itself apart over Europe. Nice one, David! We all thought the Tories were turning their Lib Dem Coalition partners blue but in fact, they’ve turned you yellow!

Look at all this political theatre over Europe. It’s for the entertainment of you, the voter – even though you won’t actually gain a thing from staying in or leaving the Brussels-based bureaucracy.

The Conservative Party is going into meltdown about it, certainly – but that’s because individual Tory MPs fear losing votes to UKIP at the next election, making it possible for their party to lose the only thing that matters to them: Power.

UKIP wants out because it is composed – or was, back when it began – of businesspeople who believe that they are being over-regulated by the European Union. They want the freedom to sell inferior products to you, without being penalised for it.

The Tory amendment to the Queen’s speech is nothing but a performance, put on for the benefit of the plebs. It’s a pantomime, with the British public urged to shout “Look out behind you!” at David Cameron’s Widow Twanky, whenever we see the Eurosceptics creeping up out of the shadows.

Note that, in this scenario, Education dunce Michael Gove and damp squib Defence sec Philip Hammond play the ugly sisters; they say they want out of Europe, but they won’t actually do anything about it. Straw men.

The amendment, which condemns the Queen’s speech for failing to include a bill preparing the way for a referendum on whether we stay in the EU, is not only pointless but dangerous. As mentioned previously on this blog, amendments to the Queen’s speech are traditionally taken as confidence votes. The fact that this is a Conservative Party amendment suggests that the government no longer has confidence in itself. If the amendment succeeds, the Prime Minister should resign and the government should fall.

Perhaps I am mistaken. This is not pantomime – it’s farce.

And the amendment is certain to be defeated, according to the pundits, because all the Liberal Democrats, most of Labour and a significant proportion of the Conservatives will vote against it. This means that even the question of confidence in the government can be avoided because nobody will be able to raise it as an issue.

That’s why I said, elsewhere on the internet, that Labour should abstain.

On the Huffington Post site, I wrote: “Labour’s best move is to abstain, let the Tories defeat their own government with the amendment, and then see if Cameron follows Parliamentary convention and resigns. It’s possible he’ll say that a vote on the Queen’s speech is no longer a confidence issue because of his Fixed-Terms Parliaments Act, which defined a ‘no confidence’ vote for the first time, but this may be countered by saying that, if Parliament does not support the planned legislative programme, then it does not support the government or the Prime Minister who leads it.

“If the PM ignores the resignation issue, then we can all say he is running an outlaw government and nothing he does from now on should be considered legal; if he resigns, then the amendment won’t matter because it won’t go forward.

“And let’s face it, if Labour can abstain on the Jobseekers (Back to Work Schemes) Bill, there’s no reason not to abstain on this!”

If the amendment succeeds, we can have a proper debate on whether this government is fit for purpose – at a time when people are still coming to terms with the first death directly attributed to the imposition of the Conservative Bedroom Tax, which itself follows the deaths of thousands due to the Conservative-employed Atos firm’s mismanagement of Employment and Support Allowance assessments.

It won’t, and we’ll be denied our chance to have that debate.

But just remember – despite all the swagger and show – you’re being denied the chance to have a proper debate on Europe as well.