Competition or Monopoly

Unlike the market in consumer goods and services which are generally considered to be highly competitive, markets in which the government is the main or only customer, which happen to be some the most closed in the world with public procurement contracts often handed out on a preferential basis, to the Select Few.

Consider, for a moment, the market in defence equipment.

When it comes to procuring defence equipment for the Armed Forces, the government has no option but to rely on the Private Sector, because it no longer has the ability to produce military equipment – as it used to do.

This is because the means of defence production, distribution and exchange is now exclusively in the hands of private interests, that is to say, the State is entirely dependent on for-profit organisations for the design, development, manufacture and delivery of new military equipment to the Armed Forces. Consequently, the government has become reliant on the Private Sector for all its military equipment needs, including its subsequent upkeep, when in-service with the user. The harsh reality is that, no department of state in Whitehall is as dependent on the Private Sector, as is the Ministry of Defence. Likewise, these private interests are completely hooked on a steady flow of taxpayer funds for their very existence.

Consequently, as the only customer of defence equipment, the government is in a powerful position to dictate the terms of trade. But it has failed to leverage this enormous purchasing power to its advantage.

The main reason for this failure is that people in Whitehall have little or no understanding of the forces at work and commercial pressures that exist within for-profit organisations which are ready to be harnessed for the benefit of taxpayers – not least, because they have not spent a single day of their lives in the Private Sector – and yet, they have been put in charge of spending taxpayers’ money to the tune of £15 billion per year to buy defence equipment, outsourced services and labour from the Private Sector.

What’s more, the judgements made by these people, as it relates to the expenditure of public funds, are distorted by the fact that they will end up in the Private Sector to pursue a second career, later on. So, it comes as no surprise that MoD employees are, without exception, favourably disposed towards the defence industry because they are completely dependent on it for their subsequent career choices (via the revolving door), when their time in public service comes to an end, or their employment contract is terminated abruptly by political edict because they have been found wanting. Indeed, it is very hard to find anyone at MoD who will aggressively defend taxpayers’ interests, once they have enjoyed a cosy relationship with defence contractors.

This mass migration would explain why staff on defence contractors’ payroll is made-up entirely of people who were previously in the pay of the State.

So, how did this total lack of diversity in the workforce of publicly-quoted companies, right across the full spectrum of defence engineering businesses and government outsourcing contractors, large and small, come about? The answer is clear, through the interfering hand of the State – in the shape of the Defence Secretary, who has been actively encouraging these defence contractors to hire people who were most recently in the pay of the State – thereby discriminating against other, equally deserving groups.

Defence contractors may very well call themselves public companies and have their shares quoted on the stock market, but they really are Private Sector organisations in name only, not least, because they are ‘created in the image’ of public sector institutions like MoD Abbey Wood (warts ’n all) displaying all the tell-tale features of: a workforce made-up entirely of people who were previously in the pay of the State (where they developed an unhealthy penchant for rules, regulations and processes), who have succeeded in transplanting a work culture characterised by failed practices of management by committee & PowerPoint presentations and groupthink that disallows external challenge.

What’s more, instead doing the right thing and educating people in the pay of the State about the ways of the Private Sector, these new arrivals (in association with those who have gone before) then set about exploiting the ignorance of their former colleagues at the Ministry of Defence, for one purpose only – relieving them of taxpayers’ money – which has, in itself, left the public finances in pretty bad shape.

There is something very disturbing about people who have previously, as public servants sworn undying allegiance to Her Majesty Queen Elizabeth II, only to then engage in defrauding Her Majesty’s Government of taxpayers’ money on behalf of vested interests.