6 Create the next generation of PPPs
Since the first public private partnerships (PPPs) began to emerge in the 1990s, providers and government have together improved outcomes in a range of ways. Partnership is simply a recognition that to achieve the aims we all share for public services - quality, efficiency, personalisation - the best of all sectors has to be harnessed. None of this should be seen as privatisation. Partnerships can be innovative joint ventures - like the school support vehicle in Surrey that has led to 91% school satisfaction with services - using providers who can improve the end-to-end service, and capital and service programmes like the Private Finance Initiative (PFI).
New models are still developing. Consortia between private and voluntary sector providers are forming in many areas to unite the strengths of the two sectors. New PFI contracts are designed to be more flexible, so that facilities like the three-school learning community, built and managed by one provider in Telford, become real hubs for the community. A lot of experience has been built up among suppliers and commissioners, and many teething problems ironed out. The model can continue to develop, to better share risks and deliver more joined-up services. This a UK success story and the CBI believes:
Wide-ranging PPP models are bringing innovation to the delivery of public services. New models of PPP are being developed - such as incremental partnering, or private-voluntary partnerships. Co-operation between different sectors brings together skills and ideas in designing services and developing better services for the end-user. One company is part of a private-voluntary consortium providing support to local authorities in developing children's centres. The children's centre programme is designed to be delivered in a way that takes advantage of the public, private and voluntary sec tors' collective expertise. Another private provider has been working with a charity to deliver a door-to-door recycling programme in Northern Ireland. The partnership has been successful in expanding the scheme across the region, and now covers up to 170,000 homes - one third of the Northern Ireland housing stock.
Contracting for complexity needs to evolve. Many lessons have been learnt from the initial wave of PPPs. One is the management of risk for the most effective service outcome - in future this will mean developing PPP models that are more tolerant of uncertainty. The PFI contract for the West Middlesex Hospital includes a clause allowing for up to six additional wards to be provided or bed numbers to be reduced, to deal with the uncertainties of providing a health service over the 35-year period of the contract.
The success of PFI should be built on. The PFI model has achieved large improvements in the delivery of capital projects, generating efficiency, value for money and better services. Traditional procurement of major projects has been the subject of cost overruns of up to 300-400%, whereas 89% of PFI projects have been delivered on time or early. PFI prisons were completed on time and on budget, saving the taxpayer up to £260m between 1991 and 2002.19 HMP Bridgend and HMP Altcourse are good examples of this. For the Bridgend contract, the private consortium's bid cost £50m less than that of a similar public sector scheme.20 Quality of service was also considered in the bidding phase. In the case of Altcourse, the contract went to the bidder which came first in quality evaluations - a private sector consortium. It opened five months ahead of schedule, reducing the need to house prisoners in police cells. There are currently more than 500 PFI projects operational of the 794 deals signed so far. PFI is delivering 185 new or refurbished health facilities, 230 new and refurbished schools and 43 new transport projects.