Abstracts: February 18th, 2008

This report from the Audit Commission looks at partnerships lasting 10 or 15 years designed to deliver services such as council tax collection, IT and property management, back office services or specialist services such as highways or building and design services.

More than half of all councils are already engaged in, or seriously considering, some form of service partnership. Councils with strategic partnerships often gain capital investment and meet or surpass their performance targets. The anticipated cost savings are between 1 and 15 per cent over the life of a partnership.

Long-term partnerships with the private sector can succeed, but they’re far from easy. If managed robustly, these agreements become true partnerships that deliver benefits for users and council tax payers alike. But all partnerships are risky and two out of every three fail.

The Commission’s review focused on 14 contracts with values ranging from 50 million to 425 million pounds. Three of the earliest councils to adopt partnerships have terminated their agreements early, incurring additional costs. Most of the remaining contracts have not yet generated all the expected benefits of partnerships with the private sector, such as greater flexibility, economies of scale, innovation and risk and profit sharing.

Local authorities are advised not to be seduced by the warm language of partnerships. Robust option appraisal before being committed, designing flexibility into the arrangements and strong contract management from the start, are the vital ingredients for success.

The Audit Commission concludes that councils should enter into these complex partnerships only if they have the high level of expertise needed to get good value for public money as circumstances change over a long time. The Commission has produced a framework to help councils get better value for money by managing their existing partnerships more effectively, or by weighing up the pros and cons of entering one.

The report is available from the Audit Commission. www.audit-commission.gov.uk/strategicpartnering