There was … a time when the public sector “delivered”. Now, there may have been issues with its balance sheet. In other words, the services we enjoyed in those days may have been provided below the rate at which the market would ordinarily have cleared the demand for and the supply of such services (were these to have been left in the hands of private sector providers). This difference between the rate at which the public sector provided its services and the putative private sector rate (the now-famous “subsidy”, which every public policy neophyte would want removed in today’s thinking) was not without its uses. It would have helped if all that time these costs were properly captured in the national accounts and the choices we made happened because we’d compared their implications for the budget with the intended gains.
Despite the current narrative, the haemorrhage from such “subsidies” did not lead to the subsequent incapacitation of the public sector as a service provider. Indeed, the emergence of millionaire civil servants belies this possibility. The services failed for less honourable reasons. The point was reached where public investment in new capacity tailed off, even as ill-focussed public policy choices drove a phenomenal growth in demand for these services. As the debate in the US over how to keep public spending within limits has shown, key parts of the services enjoyed there is the result of public provision. To some extent, therefore, the public sector is not as remiss as we want to depict it. Tony Blair, writing on his tenure as prime minister of the UK, put it most graphically: “The truth was that the whole distinction between public and private sector was bogus at all points other than one: a service you paid for; and one you got free. That point is obviously central – it defines public service. But it doesn’t define how it is run, managed and operated. In other words, that point is critical, but at all other points, the same rules apply for public and private sector alike, and those points matter enormously.”