Alternative, Terrible Models of Ownership

Following Dan Davies’ tracers here. The guy who the care-home industry pushed out to pick a row with the prime minister this week, hoping it would divert attention from their atrocious labour practices and how they helped their customers catch COVID-19, turns out to be the very same whose £100m-big operation got caught perpetrating £20k of what the Americans more resonantly call “wage theft”. The interesting thing here is that “Community Integrated Care”, rather than either a monster private-equity fund or else a small town property shark, is technically a charity and specifically a Community Interest Company, an experimental ownership form the Blair/Brown government invented.

There’s an interesting line of continuity here. In the 2000s there was a lot of interest from the centre in moving public services into autonomous organizations of some sort. This marked an important difference from either Thatcher/Major privatisation, which wanted them explicitly put in the commercial sector, or the older QUANGOS. Those are usually either regulatory or advisory bodies, while the new ones were more often operational, providing social care, managing hospitals, or maintaining social housing stock. At the same time there was quite a lot of interest from the left in using CICs, Industrial and Provident Societies, and the rest of the emerging toolkit of what were known as social enterprises either as a way of democratising major public services or of incrementally rolling back privatisation. In parallel, there was also a boom in government contracting with charities for operational tasks.

The daddy of them all, and certainly the most successful, was Network Rail, the curious nonprofit company established to renationalize the railway infrastructure without letting on that was what the government had just done.

From 2010, there was a further surge of interest in social enterprises, this time from the right via David Cameron’s libertarian phase and the so-called Big Society. In practice, what happened was that some of the rhetoric from the left-wing strand, about employee ownership, was adopted while implementation mostly happened via the contracting channel, with organizations like the now-disgraced A4e swelling to startling size as they took on the administration of the Coalition’s social policy. The problem, as Baldrick says about the balance of power, was that it was bollocks.

First of all, the big charities that became major middle-class employers in the 1990s and 2000s were already notorious as terrible employers by the time this all started. If you both employ people, and also expect people to volunteer for you out of the goodness of their hearts, the temptation to blur the line between the categories is always going to be present.

Secondly, and I think this is crucial, the absence of shareholders with a vote and a residual claim on the organization’s cash – in a legal sense, the defining distinction between a social enterprise and either a state-owned firm or a commercial company – doesn’t tell you much about how an organization will treat either service users or employees. The absence of the regulatory state, worker representation, public scrutiny, ministerial line management, or even just adequate capital to deliver on its promises, though, very much does.

I would argue that the role of the CICs has been much more to put stretches of the welfare state into a so-called Chinese box that isn’t really subject to either proper market forces, classical ministerial and parliamentary political accountability, or new-style service-user accountability, while permitting their executives to carry on very much as if they were the bosses of a profit-making firm. It’s probably worth noting that Network Rail, which unquestionably managed to stop murdering the passengers, has evolved since its deprivatisation towards something much more like full renationalisation, closely integrated with the Department for Transport and consolidated in central government for accounting purposes.

So, how about some conclusions? First up, if it’s worker representation or ownership you want, you need those things and not something else. The same goes for accountability, whether to service users or to the political nation. Secondly, and this is definitely a lesson from Network Rail, nothing is quite like capital investment. Thirdly, organisational forms in and of themselves have limited impact in providing any of these things, and relying on them to do so is dangerous.

As a result I am warming to the idea of a national care service. I was sceptical on the grounds mostly that it seemed to be driven by the kind of NHS worship Tories manage to fake far too easily. But I’m now convinced that the answer is to address the funding issue – rip off the plaster – and replace the overborrowed chancers, charity grifters, and faceless private-equity funds at the same time.

4 Comments on "Alternative, Terrible Models of Ownership"

  1. Put me down for an NCS as well, for similar reasons – but also because Care needs to be centralised and big enough that we can have meaningful discussions about the balance between NCS and NHS re: discharge policies, ongoing care of conditions etc.


  2. Back in the 60s the Situtationists (and Castoriadis & Socialisme ou Barbarie shortly before them) argued that the fundamental division in society was no longer between capital and workers but between order-givers and order-takers; their vision of the future was essentially a middle-manager stamping on a human face and then giving the human face low marks for commitment, forever. Looks like they had a point – strip out the capital accumulation and leave everything else the same, and everything else… stays the same.

    The Network Rail story also reminds me of Victim Support. A few years ago I used to talk in lectures about how VS was no longer really independent or in some lights really a charity – it had this long-term funding stream from the Home Office and a semi-detached role influencing policy development… Then the Coalition took on the Home Office and its associated Blob (see also ACPO), and when the dust settled it turned out that VS wasn’t semi-detached any more and didn’t have guaranteed long-term funding from anyone. Under the new regime victim services were commissioned by individual Crime and Justice Commissioners, and for Greater Manchester the winning bidder was the Citizens’ Advice Bureau. We no longer have a C&JC, and VS has got the gig back (perhaps coincidentally; there may just have been another bidding round).

    From this angle, it looks as if the dear old Third Sector is, in practice, no such thing – there are only really two games in town; you’re either part of government, with whatever small guarantees and limited accountability that brings, or you’re out in the cold scrapping with all the other SMEs for the next contract, with bugger-all in the way of assurances for either employees or clients.


  3. If you really want to see employee-crushing Victorian labour practices, look no further than the big housing associations or trade unions.


    1. I’ll see your housing associations/trade unions and raise you the Labour Party. Whose treatment of ‘uppity’ volunteers seeking to apply what it says on the tin in terms of democratic input/values/processes are a mixture of Kafka and pure Feudalism.


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