Government must make private sector stand on its own two feet

The privatised sector should accept responsibility for its services rather than expect the Government to shoulder any blame. George Pitcher is chief executive of issue management consultancy Luther Pendragon

Politicians sell products and services. The products are the parties they represent and, more specifically, the constituency MPs that the parties offer. The services are the policies that they would have us believe improve the quality of our lives, our prosperity and our prospects. It follows that the ability of the political parties to sell us these products and services is prescribed by their strength of marketing during this election campaign.

Last week, their brochures appeared – though politicians prefer to call them manifestos. In marketing terms, these are not good documents. There are no strong “invitations to read”, they are unduly long-winded and there are no clear usps.

It is the topic of business that concerns me here and, as one would expect, there is little differentiation between, and few surprises from, the main parties on the commercial agenda. There is much talk of skills, infrastructure and new markets (Labour); enterprise, small businesses and lowered burdens (Conservative); and primacy of education, independent reserve banks and early payments of debts (Liberal Democrats).

But in competition policy, an important opportunity for genuine differentiation has been missed by the incumbent Government (though for understandable reasons), while New Labour shows no signs of capitalising on the issue.

Labour promises reformed and tougher competition law “to deter anti-competitive practices and abuses of market power”, while the Tories major on our competitive advantage coming from “the lower costs facing our businesses” and the threats to the British cost-base posed by the Social Chapter and the national minimum wage.

I can find no imaginative development in the differences between the public and private sectors that have developed over the past 18 years of Conservative government, nor any indication as to how that distinction could be exploited to the advantage of a government in power, on behalf of the people that such industries serve.

Many services – particularly privatised utility services – remain strongly associated in the public mind with a responsibility of government. If our lights go out, or the water dries in the tap, or even if our phone fails to make a connection, we remain far more likely to blame government than the companies that deliver these services. It may be that the companies collect some brickbats, but they are invariably delivered in the context of “so much for privatisation”.

The Government has created a terrible dilemma for itself during the past decade in the time when privatisation really developed its radical momentum. On the one hand, it wants very much to be able to say that the private sector must look after itself and that market forces are not for governments to meddle in. On the other hand, it is keenly aware that, as the Government of privatisation, it cannot wash its hands entirely of the private sector. All too often the reply to a government that claims no responsibility for the standards of private-sector services would be: “Yes, but you privatised it.”

This has led to corporate liberation in the capital markets, but simultaneous imprisonment in a heavy-handed regime of regulation. British Gas, privatised as a monopoly, has been regulated into a break-up and may, by the millennium, have proved to have been regulated into being taken over by other corporations. BT has been constrained from exploiting its infrastructure in free markets in the UK to the extent that it has been driven to seek its global fortune in collaboration with a US corporation.

The same contradiction between liberation and constraint has led to some odd psychology, too. Michael Heseltine, as Trade Secretary in a supposedly free-enterprise economy, spoke of intervening in industry as necessary before any meal of the day.

I well remember another vivid example of the Government’s inability to let go of the state-owned hand. Just after the Lockerbie air disaster, Sir Norman Payne, then chairman of BAA (the privatised British Airports Authority), was summoned airily to the Department of Transport, for all the world as though he was a nationalised industry lackey.

The challenge has always been for this Government to fulfil its avowed intention and not to meddle in the private sector. But so long as customers and consumers continue to blame politicians, rather than company directors, for the failure of household services or the failure of trains to run on time, then meddle it must.

Yet the experience of other countries proves it must be possible to transfer the perception of responsibility from government to private enterprise. The Americans expect companies, not politicians, to run their lives. And there is some indication that progress in this regard is being made in the UK – in telecoms, for example, we should increasingly see a choice of private providers and networks shouldering the responsibility of supply.

It would be a rich irony indeed if it were to be a Labour government that was the first to have the balls to say: “Nothing to do with us – it’s a private-sector company” (it might add that it didn’t privatise it in the first place). But there was little to presage that in last week’s brochures, full of promises of firmer and fairer regulation.

British industry doesn’t need more regulation, it needs a better private sector – that is the real challenge of the next government.


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