Privatise the fire brigade!
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Tonight is Bonfire Night. That night of the year where some people celebrate Guy Fawkes’ failure to blow up the Houses of Parliament by almost burning down their own and where the government spends money on advertising that reminds us that fire is hot. However, the possibility of people’s houses burning down tonight was far more real until a few hours ago, with the London Fire Brigade threatening to go on strike. Whilst we should be thankful that the union has realised the ludicrousness of their position, if we are to make sure that one good thing should come out of this, it should be that a debate is (re-)opened as to how fire protection is provided.
The IEA released a discussion paper by Jennifer Anne Carlson entitled The Economics of Fire Protection: From the Great Fire of London to Rural/Metro in 2005 examining this issue. In it, she looks at a 200-year period of London’s history where it was the private sector that recognised the need and provided fire protection to London’s residents. The business models were often not adequate and consequently the correct incentives were not created, leading to the eventual bail-out of many firms in the mid-1800s by the government – the government continuing to provide the service to this day. However, until a few hours ago we were in the situation where London was not to be protected on the busiest night of the year. London’s residents had no option to shop around for competing services, but instead merely hope that they were not unfortunate (or, in some cases, reckless) enough to need the fire brigade’s services.
It is surely inconceivable that any employees of a private fire company would choose to go on strike on their busiest night of the year; fully aware that, were they to do so, their customer base and consequently their company and their jobs would soon be going up in smoke. However, because we have no ability to opt-out, London Fire Brigade and its workers could threaten to walk out safe in the knowledge that when they returned their customer base and their jobs would still be there, funded by the Greater London Authority through undisclosed proportions of our council tax money.
Different privatisation models exist successfully in other countries and there is no reason why they couldn’t work here. Rival companies offering yearly subscriptions for fire protection, for example, would allow for proper competition on price and for innovation and best-practice to be sought. The incentives to buy a subscription would be strong – not least because firms offering home insurance would most likely offer discounts to protected properties – and the public would crucially retain the option to shop around or opt-out entirely. If I had a subscription to the London Fire Brigade, for example, it’s unlikely I’d have been renewing it had the strike gone ahead; after they would have singularly failed to provide me with protection on the one night of the year when I could fully expect to see flaming missiles careering over the roof of my house.
As Carlson concludes, “Privatisation works when the business model employed provides the appropriate incentives”. The government should view this latest union standoff as an opportunity to reassess public sector fire protection, and open its mind to the idea of privatised alternatives. I’m sure the private sector wouldn’t see firms ceasing to provide fire protection on, of all nights, Bonfire Night.
8 thoughts on “Privatise the fire brigade!”
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Cabin crew for BA voted to strike over Christmas. Although a court decision stopped the strike from going ahead, the employees themselves would otherwise not have worked.
It may be be the same with fire-crews and bonfire night if there were resentment between the fire employees and their managers.
The problem is state monopoly. A non-governmental monopoly cannot be sure of excluding potential competitors. Wherever there is a state monopoly (sole seller) — or, as I now say, a state monoparechy (sole supplier)– we should ask two questions:
1. why is the state providing this service at all?
2. if there is a good reason for the state to be involved in provision, why should others try to compete?
(There may be a third question, even if the state is not providing a service: why should the state be financing this service?)
Where the state is concerned, our motto should be: no sacred cows.
Perhaps – but I considered the paragraph above which stated:
“It is surely inconceivable that any employees of a private fire company would choose to go on strike on their busiest night of the year; fully aware that, were they to do so, their customer base and consequently their company and their jobs would soon be going up in smoke.”
I am not sure that it is inconceivable. The cabin-crew of BA appear to negative the suggestion of it being inconceivable where it was said frequently that the possibility of a strike by BA could cause BA itself to collapse.
Nope.
The whole point of the fire brigade is not to prevent your house burning down because of your own stupidity – the point is to prevent your house burning down because of your neighbour’s stupidity.
Once a house is properly burning, it is pretty much a write off – all the fire brigade can do in most cases is to prevent the fire spreading to neighbouring houses.
The same logic applies to refuse collection. You don’t pay to have your own rubbish picked up, you pay so that your neighbour’s rubbish gets picked up rather than being left in his or her front garden to rot and stink.
Try not to confuse ‘public’ with ‘private’ goods
I fail to understand these points which appear to be demonstrably false on nothing other than practical grounds. It may be correct that I pay council tax in order to avoid the rubbish of my neighbour blowing into my garden and down the street. However, I am also sure that I pay it in order that my rubbish, too, is collected.
Similarly with a fire brigade. It may be that one effect is that my neighbour may benefit from their house not burning down due to my stupidity. However, I would also hope that I would benefit being rescued by a fireman were I unable to escape a burning building or a train. I cannot understand why only the former is the “whole” point of the fire service.
@Mark Wadsworth – it is you who has confused public and private goods. Clearly fire brigades are not public goods because they are both rivalrous and excludable to some degree. They may have large externalities involved, but only in certain instances (an isolated house may burn down with no effect on neighbours who are several miles away, for instance). So you’re quite incorrect – as Elboe also alludes to. However, Elboe’s point that a private firm’s emloyees may also strike is true – but it does not detract from the real point of the post. We have an alternative to BA, but not to the fire brigade, because of the state’s interference. No coincidence that BA is a former public sector employer
…and thus has many of the unionised and archaic working practices plus pension issues inherited from this period which it has struggled to rid itself of.
Mark – I agree with Whig. There may also a natural monopoly but that is not the same thing a public good. But, even then, there is competition between fire suppression and fire prevention and free fire suppression reduces the incentive for fire prevention and thus can raise the risks to one’s neighbours.