Brown's record hand-outs to the bosses

26 November 2007

One can only gasp in disbelief when a central public administrative department manages to "loose" the personal and banking details of nearly half of the country's households.

But, on second thoughts, is that so surprising given the government's policies? After all, this is only the latest in a long series of scandals which are all, one way or another, consequences of Labour's drive to use public funds to line the capitalists' pockets. And such a policy comes, inevitably, at a huge cost for the majority of the population.

The exorbitant cost of subcontracting

Under the veil of secrecy which still covers the lost records, two factors emerge. One is Brown's drive to cut costs and jobs at the Inland Revenue, which means that it is short of competent staff. The other factor is that, in its privatisation frenzy, Labour has contracted out the government's own internal mail to TNT (to cut civil service jobs), together with its external mail (thereby allowing yet more jobs to be cut at the still state-owned Royal Mail).

As a result, instead of sending the required data, stripped of personal and banking details, via a secure internet connection, which would have taken just a little programming and a few minutes to send the data, the entire database was copied onto CDs and handed to TNT - only to get lost. Is that surprising? As if profit sharks really cared about mail security, so long as their profits keep flowing in!

This is not the only recent subcontracting scandal. For instance, it would only make sense for organisations like the NHS or the Inland Revenue to have their own in-house computer programming departments, capable of designing, maintaining and operating the computer programs they need. But, of course, this would deprive private IT companies of a bounty.

So, in both cases, design and maintenance have been contracted out to companies which knew nothing about the particular tasks required. As a result, billions of pounds have been wasted on the new NHS computer system, without any results, to date. Likewise at the Inland Revenue, as last year's tax credit overpayment scandal showed.

More recently, another contracted out slice of the public sector ended up with a £2bn overrun, forcing Livingstone to take it back into the public fold: the Metronet consortium, in charge of signals and track renewal and maintenance for 2/3 of the London Underground. This did not prevent Metronet's private partners from walking away with the billions they had already received.

Where public money flows

In all these cases, ministers are quick to claim that they acted in good faith - which is an obvious lie. But sometimes, the government cannot disguise the fact that it colluded with the profiteers to boost their profits. Such is the case of the privatisation of two companies, Actis and Qinetiq.

Actis' function is to invest and manage the state's "aid" to poor countries and its only source of funding is the state. Privatising Actis was offering capitalists the possibility of making profits with state money, while bleeding the poor countries they were supposed to "help"!

In 2004, Brown, then Chancellor of the Exchequer, sold a 60% stake in Actis for £373,000. However, last year, its shareholders had £3.7m profits to share between themselves, or 10 times their investment in just one year! Today, the company's value is estimated to be over £200m - a capital gain of over 32,000%! As if ministers could not have worked that one out for themselves!

Much the same happened at Qinetiq, which used to be the army's research lab. When it was privatised in 2003, its was valued at £125m. Part of it was bought by Carlyle, a US private equity fund, for £42m, while ten of Qinetiq's managers invested £0.5m. In 2006, the company was floated in the City for £1.3bn, or ten times the original price set by Brown! Carlyle made a net 787% profit and the 10 managers pocketed a hefty £107m between them, due to the way they had designed the deal themselves!

More recently, we saw how willingly Brown bailed out Northern Rock and handed over £40bn of public money to the banking system - the equivalent of one year's government spending on transport, housing and the environment - without any guarantee of getting it back.

Ironically, however, the most vociferous critics of these scandals among mainstream politicians are all strong supporters of the pro-business policies which cause them!

This is yet more proof that the working class needs a party of its own, able to help us, workers, to make our voices heard against such corrupt policies, without making any concessions to the profiteers - a party that we need to build soon, if we are to stop the profit sharks from bleeding this society dry.