Spending cuts & the private sector – feast or famine?‏

Two reports highlight the complex and contradictory nature of the capitalist economic system and the differential impact of Con Dem cuts.

The excellent East Midlands UNISON blog draws attention to the negative impact of spending cuts on an ever increasing number of private firms who rely on public sector contracts particularly for capital/infrastructure works:

“The private sector relies upon publicly maintained roads to transport goods, on workers who have been educated by the public sector and perhaps just as importantly the public sector buys goods and services from the private sector.”
http://unisoneastmids.blogspot.com/2010/07/public-spending-cuts-hit-private-sector_12.html

In contrast, yesterday’s Morning Star lead story highlighted the outsourcing bonanza for contractors providing facilities management and other services to the public sector:
http://www.morningstaronline.co.uk/news/content/view/full/94541

“Outsourcing giant Serco revealed a staggering 22 per cent rise in pre-tax profits to £101.4 million over the six months to July. Serco's profits are the first firm evidence that private companies are raking in huge sums thanks to the government's public spending squeeze. The company has won a series of public-sector contracts that includes processing benefits in Hertfordshire and a £415m deal to run Belmarsh West prison in Greenwich. Another £650m waste management contract for the West Midlands council of Sandwell will see the firm collect and recycle rubbish in the area for the next 25 years.”

Left Economics Advisory Panel chairman Andrew Fisher was quoted saying: "Companies such as Serco make profits by cutting jobs, reducing workers' pay and pension rights and by delivering a service on the cheap. As this coalition government prepares to make deep cuts in public services, it is clear that privateers will be standing by to deliver their cut-price model of public services and this government will be only too willing to divert taxpayers' cash into the pockets of their shareholders."

So for private sector companies, public spending cuts are a two way street.
Capital investment projects in education, health, highways etc are being run down at the same time that outsourcing is being imposed across all parts of the public sector.

How voices of business such as the CBI and the IOD respond to the differential impact of Con Dem spending cuts will be something to watch in coming months.

For background information read:
http://unisonactive.blogspot.com/2010/08/con-dem-cuts-starting-to-bite-in.html