The political opportunism of the Scottish Government’s sudden championing of nationalisation is best shown by examining its own practice.
Under persistent questioning in a recent interview with Bernard Ponsonby, the First Minster eventually revealed that the Scottish Government has spent ‘about £10 Billion on private sector contracts for NHS Scotland, which is wholly under its statutory control.
But before that, in the late spring of 2012, the Scottish government announced that it had awarded the contract for the Northern Isles ferry services to Serco, a giant international private sector company specialising in ‘outsourcing’.
The implementation of the contract award was delayed by legal action until July of that year but the Scottish government still faces related legal challenges on the matter.
This was a privatisation of designated lifeline ferry services to Scotland’s most remote islands in the far north.
Awarding the contract to Serco was at the expense of the Scottish governments state owned – nationalised – NorthLink Ferries, part of the state owned shipping services group, David MacBrayne Limited.
NorthLink Ferries became no more than an empty file gathering dust while Serco took the routes and the name – a ready-branded gift from the Scottish government.
The ‘best value’ award of the contract was quickly seen for what it was, a cost cutting exercise licensed by the government. When the MV Hamnavoe broke a crank shaft to her starboard engine on 26th April 2013, eight months into Serco’s service – and was out of service for almost a month, with no replacement vessel provided.
The contract awarded required the winning bidder to provide replacement vessels in the event of major breakdown. The Scottish Government laid no requirement upon Serco to fulfil this obligation.
Instead he government and paid a subsidy to the private sector ferry service, Pentland Ferries, to run additional services in its regular route between Gill’s Bay in Caithness and St Margeret’s Hope in South Ronaldsay in Orkney.
This solution saw the west side of Orkney disadvantaged since the Hamnavoe sailed into Stromness on the northwest of Scapa Flow, where the Pentland Ferries route is into the southeast of this magnificent natural harbour.
Serco NorthLink, as the Serco subsidiary operating the contract was named, also changed both the fare levels and the fare structures, disadvantaging traditional travel of youth and special interest groups in making visits to the Scottish mainland.
There are arguments for privation and for nationalisation and there is an argument about the reform of the restrictive practices imposed by Trades Unions on nationalised services – an argument never openly aired.
But the issue here is that of a government hypocritically making political capital out of the emotive issue of privatisation where, in its own evidenced practice, it has been an energetic promoter of privatising core services.
Serco has been shamed by exposure and a consequent formal investigation over 2013-14 by the United Kingdom Serious Fraud Office for defrauding the government in another public service contract where it was shown to have been making claims for having tagged prisoners who were dead, had already served their sentences – and other equally indefensible but profitable ‘errors’.
For this conduct, Serco was banned for a period from competing for state contracts. That ban is now lifted and the buccaneering privateer is back in action.
It has just benefited from yet another Scottish public sector contract.
NHS Dumfries and Galloway has recently appointed the High Wood Health consortium as the preferred bidder for its new £200 Million district general hospital.
This consortium, led by Laing O’Rourke, includes Serco as the provider of estate management services.
Serco, as a provider of services to the NHS in England, was proven, in September 2012, by The Guardian newspaper to have submitted falsified date no fewer than 252 times, making it appear that it was delivering on its contract to provide out of hours doctor service to NHS Cornwall Primary Care Trust. The reality was that it was doing no such thing and that the safety resulting from the level of out of hours coverage provided could not guaranteed.
Following the announcement of the Serious Fraud Office investigation on 4th November 2013 and Serco’s ban on competing for government contracts during that investigation, the company’s share price took a steep plummet, its CEO fell on his sword and was replaced by an aristocratic trusty, Rupert Soames, with a reassuring track record and a determination to turn around the fortunes and the perception of this pragmatic profit-taker.
A test of the Scottish Government’s new found fondness for nationalisation will come soon enough with the tender negotiations to start later this year for the major contract to provide Clyde and Hebridean Ferry Services, all of them ‘lifeline’ category services.
These – a highly complex interwoven cluster of services – are currently provided by the experienced state-owned Calmac, the biggest of the state owned David MacBrayne Limited group of companies. Serco will be a bidder.