Letter: Private funding of the public sector

Sir: We need to hear more about Labour's ideas on private funding. We need to know how far it has identified and overcome the problems inherent in the private funding of public services.

There is nothing immoral about private funding as such: the funds are not polluted by their source. The key problems are those of profit and risk. Where there is no legitimate profit, there is no useful role for private funding. Where the state will not underwrite the risks, the required level of profit is correspondingly increased. When a public service is privately funded, it becomes necessary to include a profit margin, thereby increasing the cost of the service. Whether this disadvantage is outweighed by the access to additional investment is a question to be settled on a case-by-case basis.

If a profit margin can be found, it becomes necessary to consider whether those things which must be done to produce a profit are likely to conflict with the object of the service. Profit will, for example, normally conflict with the object of doing justice, while it may not conflict with the object of running a Ministry canteen.

If Labour has no workable solutions to these problems, Liberal Democrats may enjoy the pleasure of attacking Labour from the left.

Yours sincerely,

RUSSELL

House of Lords

London, SW1