Public Sector Rides to the Rescue - Again

Hats off to Philip Hammond. He has done that unfashionable thing and admitted he has changed his mind. And happily, this being August, he has not been set upon by a seething mob shouting "U-turn, u-turn!"
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Hats off to Philip Hammond. He has done that unfashionable thing and admitted he has changed his mind. And happily, this being August, he has not been set upon by a seething mob shouting "U-turn, u-turn!"

In an interview with The Independent yesterday, Mr Hammond conceded he had been forced to rethink some of his views about the public sector after his recent experiences as a minister. The secretary of state for defence said: "I came into the MoD with a prejudice that we have to look at the way the private sector does things to know how we should do things in government. But the story of G4S and the military rescue is quite informative."

Waddya know? It turns out that the public sector can and will do things that the private sector will not. The accident and emergency or intensive care units at your nearest hospital, most forms of social care, and the "final mile" from the mail sorting office to your door - these are some of the areas where the private sector fears to tread. Amusingly, I remember a leading opposition spokesman on Any Questions a few years back - his name was Philip Hammond - dismissing the idea of using the Royal Mail to deliver anything important. Maybe he has changed his mind about this too.

Over the past 30 years Britain was a pioneer of privatisation. The state had to get out of running gas or electricity companies because, well, private enterprise was bound to produce better results. Mrs Thatcher is supposed to have declared to a group of British Rail managers that if any of them were any good they would be working in the private sector. A botched rail privatisation followed soon after.

This "public bad, private good" orthodoxy shaped policy for years. But the defence secretary is not the only Conservative to start expressing doubts about that dodgy formula. Sir Merrick Cockell, head of the Local Government Association, told the FT last week that the public sector could boast many examples of good practice that the private sector could learn from.

The public sector is under pressure, still to undergo the overwhelming bulk of cuts set out by the coalition government. And yet the success of the Olympics - including the military's late-breaking role in it - has confirmed that public spending is both necessary and effective. Yes, a (non-combatant) army of volunteers made a vital contribution. But this "big society" effort succeeded on a state-supported platform.

The private sector can be good at offering us things that we want. The public sector is there to give us what we need. It is a distinction that got lost over the past three decades of market triumphalism. Truly "responsible capitalism" will involve a mixed economy with complementary public and private sectors. There should be rejoicing in heaven that at least one cabinet minister recognises this.