Headlines: June 25th, 2001

Far reaching reform of public private partnerships is required if the Government is to succeed in improving the quality of the UK’s publicly funded services. This the main finding of the Commission on Public Private Partnerships published today by the Institute for Public Policy Research.The report reveals that the Public Finance Initiative has had limited success. It has secured value-for-money gains in roads and prisons but not in hospitals and schools. The argument that using private finance to pay for capital investment allows government to undertake more projects than would otherwise be the case is found to be spurious. All PFI projects are publicly funded and incur future liabilities for the Treasury and they don’t lead to ‘extra’ schools or hospitals being built.’

The report argues that public private partnerships should not be used as a backdoor way of cutting terms and conditions of staff because a motivated workforce is absolutely critical to high quality services. Partnerships should not lead to the ‘two-tier workforce’ where new employees being offered less generous terms and conditions than those workers who were originally transferred from the public sector. This recommendation has already been picked up by Health Secretary Alan Millburn who has offered a guarantee to new NHS recruits in ancillary services working for contactors .The work of the Commission is likely to lead to a re-assessment of the traditional boundaries between the types of services that the private and public sectors are allowed to deliver. Although it is recognized that the principle of partnership has much to offer, the practice has often been disappointing. Getting improved services out of partnership deals will mean allowing public managers more discretion to design PPP deals that incorporate the package of services that best meet the needs of local service users. This would mean an end to central government dictating where the private sector will or will not become involved. This principle has already been put into effect in the decision to allow all schools, not just those that fail, to set up partnerships with the private sector.