Licence to operate


Back in the 1980s and ‘90s, it was common for uncomplimentary comparisons to be made between the efficiency and customer care of the private sector and the waste and poor service offered by the public sector.  The retort from the left tended to focus on the inherent problems of the profit motive, which it said leads companies to privilege the interests of owners and managers over customers and the public.

My own view has tended to be much more pragmatic. It goes without saying that many private sector innovations have made my life, and indeed the whole of society, better. When it comes to the provision of publicly funded services, generally, the way services are commissioned is more important to their quality than who owns the provider.

But if I were a champion of the private sector right now I would be increasingly worried about its image. On the one hand, there seems to be an ever growing list of companies and sectors which we view with much the same resigned hostility that was once directed to ailing nationalised corporations. Banks, energy providers and pay day loan companies are examples of whole sectors assumed to be acting against the public interest. And when it comes to individual large companies, the list of tax dodgers (Amazon, Starbucks, EBay, and Facebook) can be added to companies like Apple, Primark and now IKEA who have had difficulty justifying the sourcing of their goods and companies in areas like social care and security manipulating contracts so that staff effectively earn even less than the minimum wage.

While much of the critique of corporate practice is political in nature, I also find more and more examples of egregious failings in customer care. I have, for example, been trying for over a month to speak to Virgin about the repeated failure of my broadband service. But despite having been held in a queue for over 45 minutes on six occasions I have never got anyone to answer the phone. This is clearly a deliberate tactic to avoid having to provide a service (by the way, if you do want to get through, ignore the instructions and go for the ‘I am thinking of moving my broadband account to another provider’ option). Perhaps I have just become more sensitive, but from overpriced warranty deals to inflation busting price increases, hardly a day passes when I don’t experience one company or another nakedly trying to fleece me. None of this is new and the anti-capitalists among you will laugh at my naivety, but various opinion polls suggest I am not alone in becoming ever more cynical about how corporations view and treat me.

Going back to the 80s, most trade union leaders were either unaware of, or uninterested in, their movement’s declining support among the general public (and among many union members themselves). When Mrs Thatcher came for the unions there was very little public sympathy. I fear that business organisations like the CBI and IoD are in danger of committing a similar failure of leadership.

Some business leaders recognise this and some of them even occasionally talk about it, but generally the representatives of private enterprise seem to think their job is to complain about everyone else but themselves. Just this week for example the CBI published a sensible enough report on schools policy. It called for schools and businesses to work more closely together but stopped short of identifying the many ways in which responsible employers could and should help schools increase pupils’ employability and motivation.

As they deal with a more questioning and informed public and as they try to squeeze profits from cash strapped people in difficult economic times, large customer-facing companies face a growing crisis of legitimacy. Their friends are not those who defend them blindly but those who urge them to choose to change before they are forced to change.

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