Britain needs privatisation more than ever One of the great breakthroughs in modern business is the idea that companies should focus on what they are supposed to be good at, and leave the rest to other specialists. All organisations now outsource to varying degrees. So whole new sectors have developed, carrying out what used to be back office functions such as payroll, IT, catering and, yes, security. This revolution has in turn driven huge increases in productivity, innovation, jobs, standards of service and growth. What we think of as one of the world's most successful companies, Apple, is in truth just a design and marketing organisation. Virtually everything else, including manufacturing, is done by someone else. Yet manufacturers also outsource, sometimes to an extreme degree. Mercedes doesn't produce a single part of some its models: it contracts their production to more specialist manufacturers. To believe that the public sector should somehow be made immune to these developments is as daft as thinking that the state should go back to making its own paper clips. That's the way it's done in Cuba and North Korea, and pretty punishing on general levels of prosperity it has proved, too. In Britain, the immediate pressures for outsourcing in the public sector come from austerity and the need to save money. But it's not just about cost-cutting. The privatisation of jobs and functions is driven as much by a sense of despair and frustration as by necessity. As attempts to reform the National Health Service demonstrate, it is extremely difficult to push through meaningful change in large public sector organisations. Insulated from the disciplines of the marketplace, entitlement and entrenched vested interest win every time. Obviously, the same thing can happen when private sector monopolies - or oligopolies such as the banks - are allowed to hold sway. Some might say that this was the problem with G4S. There are so few firms capable of providing security on such a scale that it had Locog over a barrel. As it turned out, G4S proved far from capable, and it may be the case that bringing in the Army to provide security would have been a better and safer solution all along. It might also be thought a rather better use of military time and money than overseas adventuring in Afghanistan and Iraq, but that's a different issue. The point is that privatisation can, when appropriately applied and properly managed, provide the innovation, economies of scale, productivity gain and flexibility that the public services so desperately need. That is simply because different jobs and functions require different skills, incentives and management expertise. Now, if the private sector cannot deliver more bang for our bucks, then it shouldn't be used. But please don't tell me that bringing it in destroys jobs and lowers rates of pay. The surest way of doing that is to leave the public sector unreformed and therefore uncompetitive. All jobs command a market rate; but is there any sound reason why the taxpayer should be expected to pay more for the same service just because it is provided through the public sector? Those who oppose privatisation are in essence advocating a form of labour protectionism that deprives the young and unemployed of their rightful place on the jobs ladder. Yes, G4S has fouled up. I'm not going to say that it doesn't matter. But let's not use it as an excuse for turning back the clock.