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Labour's contract culture

Dexter Whitfield ponders the mantra of choice and personalisation eroding the welfare state

Recent developments in New Labour's transformation strategy for public sector reform, the Freud review of welfare to work and legislation in education, health and probation mark an intensification in creating a neoliberal welfare state.

Personalisation and choice is the mantra. This requires making public services more responsive to the needs and preferences of citizens and 'empowering them to shape services'. The claims to empower citizens and service users are fraudulent – the plan is not to increase organisational power but to increase individual voice in exercising choice in the marketplace. However, the inevitable fracturing of services and workplaces will dis-empower community organisations and trade unions. Personalisation also means direct payments and giving individual users their own budgets. This approach ultimately concludes with vouchers.

Market choice requires the mainstreaming of commissioning, competition and contestability across the welfare state. This is not a return to 1990s market testing but a fundamental and comprehensive assault on public provision. Local government, health and other public bodies are to become commissioners of services, strategic bodies with bold 'community leadership'. And they must '‘make markets' where they do not exist. Choice-based reforms, it is claimed, will improve equity. In reality social justice is marginalised.

Even the commissioners could be outsourced - “contestability could be extended to commissioning bodies as well as those providing services” claims Blair's Policy Review. For example, Oxford and Hillingdon PCTs are just the start. The state is intended to become the provider of last resort.

The marketisation of public services is gaining pace through a five-part process of commodifying or commercialising public services and the welfare state infrastructure; reorganising labour; market mechanisms introduced to spur competition with services hived off to arms length companies and quangos; users are treated as consumers; and business interests further embedded in public policy making.

A contracting culture will dominate and systematically replace public service principles and values. Recent statements by a government Minister that work “is the only way out of poverty” is indicative and a clear message to the 300,000 lone parents and one million people on incapacity benefit in the government's target.

But the consequences are even wider. The modernisation documents constantly refer to ‘local accountability' such as Foundation Hospitals. They rarely refer to democratic accountability because New Labour's vision is a commercial form of accountability dictated and proscribed by market forces. Not surprisingly, public service reform and shared services policies make little or no reference to the quality of employment, pensions and trade union organisation.

Although the third sector will continue to have an important role in some service provision, it is being used as a diversion from the multi-billion market in public services being opened up to business.

New Labour's claim of maintaining “...collectively funded public service provision, free at the point of use” is vacuous. Under their plans, all welfare state and public services could be provided by private contractors and the third sector without invalidating this statement. Of course, only an increasingly narrow element of service would actually be free because business would have exploited the opportunity to impose fees and charges for ‘added value'. New Labour's transformation will ensure that many services would cease to be public.


Dexter Whitfield is the author of New Labour's Attack on Public Services: How the commissioning, choice, competition and contestability agenda threatens public services and the welfare state (2006)