Friday, September 12, 2014

Protecting privatisation

Privatisation has a problem: democracy. Contracts written by one government can be cancelled by the next. This is obviously bad for the profits of government cronies. But in the UK, they've hit upon a solution: poison pill "penalty payments" for cancellation:

Taxpayers will face a £300m-£400m penalty if controversial probation privatisation contracts are cancelled after next May's general election under an "unprecedented" clause that guarantees bidders their expected profits over the 10-year life of the contract.

Labour is already committed to unpicking the justice ministry contracts to outsource probation services but will not now be able to do so without incurring the multimillion pound bill because of "poison pill" clauses written in by Chris Grayling's department.

The Ministry of Justice say they are only following Treasury guidance by including the clause, which raises the prospect that similar clauses are being included in other politically controversial contracts across Whitehall that are to be signed before next May's general election.

This is an obscene attempt to undermine the democratic process, and it exposes these contracts for what they are: a means to hand out money to government cronies. But fortunately there's a solution to them: legislation. The question is whether UK Labour has the spine to do that, or whether it will continue to collaborate in the privatisation agenda. And sadly, I think we all know what the answer will be...