Outsourcing is here to stay and it’s getting better – so buy in
“The first signs of long-term problems appeared under the New Labour government”
It seems absurd now that in the second half of the 20th century the main business of government – apart from the military and emergency services – was to own and operate businesses. Yet this was the legacy of total government control during World War II, allied to a subsequent explosion of the state’s role in social security, health and education (still the three largest areas of government expenditure today).
Hence it largely owned and operated almost all public transport, trains, planes and buses, coal mines, steel mills, the docks and harbours, telephony, radio and most TV. It controlled over 95% of all electricity, gas and water production, became (briefly) the largest car manufacturer, the largest shipbuilder and the dominant housebuilder. At the local level councils were big business, in home and office building, utilities, recreation, rubbish collection and sewage. Some even owned pubs, breweries and theatres.
The problem was simple. Central and local governments are incompetent when it comes to running businesses. As a result, between the mid-1960s and early 1980s a common moniker for Britain was “the sick man of Europe”. Something had to give.
A Conservative government was elected in 1979 after a wave of high inflation, low growth and
