All power to the private sector

Allowing private investors to get involved in hospitals and housing corporations is fine, as long as ministers don’t have any illusions about what will happen next, writes Robin Pascoe

Sometimes you have to ask if the bright sparks in the cabinet actually live in the real world.
Today we have justice minister Ernst Hirsch Ballin publishing proposals which will allow housing corporations, hospitals and schools to open their doors to private investors.
The reason, the minister says, is that many of these charitable foundations are now such professional organisations that they deserve this new kind of corporate structure – that of a ‘social enterprise’.
Hirsch Ballin says shareholders will not have much influence, even though the boards of these new enterprises will have to consult them, and shareholders can appoint their own supervisory board members.
And as for the dividends – these will only be paid if they do not threaten the survival of the social enterprise itself. That is the theory anyway.
In fact, all Hirsch Ballin is doing is formalising a process that has been under way for some time. Hospitals and housing corporations have already embraced much of the culture of private enterprise.
A number of hospitals have already demanded to be given access to private capital or to be taken over by health insurers. They’ve also been at the centre of various rows about tax dodging, skimping on essential services like cleaning, and overpaying senior staff.
Housing corporations too have proved their willingness to invest in all sorts of areas which having nothing to do with their core business of providing good, low cost housing. Indeed, they’ve been refurbishing cruise ships and buying marinas as well. And they too have dived in to bonus culture beloved of the private sector.
And schools? Well, doubtless there are head teachers out there who see the benefit of opening up to private investors. And why shouldn’t they be allowed to make a profit? Let the private sector fund a new chemistry lab or top notch teaching staff. The more straight A students, the higher the fees and the higher the return. That is sound business sense.
So Hirsch Ballin, by all means, go ahead and formalise situations which have been developing over the years.
If you think the private sector can provide essential services better than the state, then this is the way to go. And if as a government you don’t have the cash to make sure hospitals and schools are properly funded, then this is a way of getting in other people’s cash.
But don’t for one minute assume that codes of conducts and vague commitments to maintaining social functions will do anything to stop the march of private capital and shareholders once they get their feet in the door.

Robin Pascoe is a founder of

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