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FEATURE

_ Privatization: cutting Britis

Continued from page 1

n fact, according to a number
of researchers, trade unionists
and journalists that the Trib-
une interviewed over the past
few weeks, the legacy of Thatcher’s poli-
cies, particularly privatization, has been
a divided Britain, a country in which
nearly one in three lives in poverty.

Of all Britain’s neo-conservative
policies — including social service spend-
ing cuts, high interest rates and tax cuts
for corporations and the top income
earners — the massive privatization pro-
gram has exemplified more than any
other the Thatcher government’s out-
spoken promotion of the corporate sec-
tor. More than £20 billion in public
assets have been sold to private interests,
accompanied by huge stock commissions
for the banks and quick share premiums:
for investors.

The six-million-member Trades Union
Congress has called Thatcher’s privatiza-
tion program “an act of economic mad-
_ ness.” The dimensions of that in job
losses, in reductions in levels and quality
of services and in the alienation of the
country’s public assets are becoming
more apparent every year.

In Bnitain, as elsewhere, the policy of
privatization has come against a back-
ground of growing unemployment, the
result of the 1980-83 economic crisis,
coupled_with high interest rates and
near-zero investment in British manufac-
turing industry.

The policy of selling off the state’s

6 e PACIFIC TRIBUNE, OCTOBER 14, 1987

assets was pushed by such neo-
conservative think tanks as the Adam
Smith Institute as an important means of
restoring a declining rate of corporate
profit.

Opening up the wallets of middle-class
Britons and highly-paid skilled workers
through share sales has helped to widen
the pool of investment capital beyond
the usual corporate and institutional
investment groups. At the same time, sel-
ling off the state’s assets has provided a
range of new acquisition possibilities for
corporate investors looking for a place
to put their money.

The policy has also fitted closely with
Thatcher’s fiscal policy, according to
Financial Times reporter Charles Lead-
beater.

“When the government came into
office, it was committed to cutting
spending as a percentage.of Gross
National Product,” he told the Tribune
in an interview. “But it found that it
could not cut spending as much as it
thought. Even though services were
reduced, spending was still rising. But
Thatcher had to keep borrowing down
as part of her election pledge to the City
(financial community).

“So there’s little likelihood that the
government will change its policies on
privatization” he said. “It’s the only way
it can paper over the cracks.”

Significantly, although Thatcher has
seen a six-fold increase in oil
revenues — reaching £12 billion, or 10
per cent of the budget, in 1985 — and
has brought in more than £20 billion
over five years in revenue from privatiza-

Stories by Sean Griffin/First in a series

tion, most of the benefits of that have
gone to the wealthy.

According to the Child Poverty
Action Group in a report entitled The
Growing Divide published in June of
this year, more than half of the total £12
billion reduction in taxation has gone to
the top 10 per cent of income earners.
Only three per cent of the reduction
went to the bottom 15 per cent.

“Contrary to the propaganda, the
higher incomes of the new entrepreneurs
have been derived in part from the lower
incomes of the poor,” the report, edited
by Sheffield University professor Alan
Walker, stated. “High salaries have been
linked to profits, whilst low wages have
been stimulated by privatization and the
abolition of wages councils as a means
of increasing profitability.”

More than any other policy, privatiza-
tion has contributed directly to job losses
and a decline in wages, particularly those
in public services.

British Telecom, the national phone
company, separated from the British
Post' Office in 1981 and privatized in
November, 1984, has typified the pro-
cess.

“There has been a continuing cutting
of the work force,” said Terry Wild, a
national executive member of the

~ 156,000-member National Communica-

tions Union, the largest of the unions at
BT. “We've lost approximately 25,000
jobs since 1983. By 1992, there is to be a
one-third cut in the work force.”

Figures gathered from annual reports
by the London-based Labour’ Research’
Department back up Wild’s statements.
Researcher Richard Pond told the Trib-
une that the number of employees at BT
fell from 253,000 in March, 1983 to
230,200 in March, 1986.

The decline of jobs has been repeated
in the national airline British Airways,
also a victim of privatization. Over a
five-year period between 1981 and 1986,
the company trimmed its work force
from 53,600 to 38,900, said Pond.

In many cases, the job cuts began long
before privatization as a means of mak-
ing the company more profitable and
therefore more attractive to potential
investors. Mass unemployment and
Thatcher’s brutal anti-trade union legis-
lation combined to hamper the effective
ness of any trade unionists‘who
considered job action to prevent job
cuts.

The job losses have been much more
severe in the public service sector where
privatization has taken the form of con-
tracting out work in the health sector as
well.as services provided by local
government authorities.

According to the Joint National
Health Services Privatization Research
Unit, a project of the four unions with
certifications in the NHS, some 79,000
jobs have been lost in health services
since 1982.

Most of them are the result ofa __
government edict in 1983 forcing health
authorities to “test the cost effective-
ness,” as Thatcher’s ministers have put
it, of providing health services by putting
the work out to tender, with private con-
tractors allowed to compete with hospi-
tal staff.

Basing themselves on minimum wage
levels and cut-to-the-bone service levels,
private contractors bid excessively low,
forcing ‘the health care facility to pare its
own in-house bid, including staff cuts
and reduced service to bring costs down.
As a result, one of two things
happens — if the in-house bid is success-
ful, it is only at the cost of reduced jobs

and services; if the job goes to the pri-
vate contractor, he brings in non-union
staff and cuts services.

The Joint NHS Privatization Resear
Unit has produced numerous booklets
with figures to show the results of so-
called “cost effective tendering.” One
contractor cut staff at a hospital in Hil-
lingdon by 17 per cent, another cut
cleaning staff by 33 per cent at a hospit
in Hammersmith. At another hospital,
the in house bid was successful but
resulted in a 30 per cent cut in working
hours — and a corresponding cut in se
vices. The unions’ list goes on for pages
reciting case after case.

Their conclusion is blunt: “Privatiza-
tion and competitive tendering have no
made the NHS more efficient, more
accountable or more appropriate; the
main result has been to cut wages and
conditions, cut jobs and cut the level of
service.’

The record of private contractors in
the field is even more damning than the
damage they have wrought on public
services. According to the research unit
between September, 1983 and May,
1987, one in five of the 300-odd private
contracts was in default of contract con
ditions. Some of those defaults resulted
in dismissal of the contractor, fines or
abandonment of the contract but in
many cases, contractors were allowed
repeated violations without penalty —:
clear indication of the value placed by
the government on “efficiency.”

ompetition is. similarly ~
‘frrelevant — a recent epate: of
am takeovers in the contract clean
ing industry has resulted in
two giants, British Electric Traction
(BET) and Hawley’s emerging as the
dominant companies, between them con
trolling more than half of the contracts
for hospital cleaning, catering and
laundry.

Significantly, the two companies, -
together with their subsidiaries “have
given nearly £90,000 to the Tories since:
1983,” the NHS Privatization Research’
Unit reported.

Both those factors — growing mono-
polization and political dorations to the
Tories from the companies winning
contracts — have also figured promi-
nently in the privatization of local
government services.

But although there are dozens of Tor}
councils among the 450 local govern-
ment authorities in England and Wales,
only a relatively few councils have so fat
chosen to privatize services they provide,
including street cleaning, garbage collec-
tion and school meal catering. The dra-
matic decline in service levels and steady
increases in costs following the initial
low bid that have typified private con-
tractors have deterred many councils
from contracting out the work.

In the face of that reluctance, the
Thatcher government has moved to
compulsion. The Local Government Bill
introduced into the House of Commons
earlier this year and now at the commit
tee stage, would force all local authori-
ties to put five of the basic services they
provide, including street cleaning and
garbage collection, out to private tendet-

Under the provisions of the bill, the
secretary of state would have the right t©
add to the services that should be put
out to tender and to order re-opened aby
contract which the government thought
had been unfairly won in-house, Coun-
cils would also be prohibited from
imposing any terms or conditions on ma)
contractor such as fair wages. ‘

The bill has epitomized the roliticalll