Q81 Mr Williams: How can it involve competing when there is a guarantee?
Mr Byles: Because it is providing it to a consortium which may or may not be led by a construction person. The Local Education Partnership provides the building, the ICT, facilities management and future project development for the local authority through a partnering vehicle and it will engage a supply chain to deliver it which will be a series of constructors.
Q82 Mr Williams: What happens if the authority is not satisfied?
Mr Byles: If the authority is not satisfied objectively, ie the Local Education Partnership does not meet its targets for delivery or for cost improvement, then that exclusive arrangement is lost.
Q83 Mr Williams: Does it affect the future commitment over the ten years?
Mr Byles: Absolutely, it takes it away completely.
Q84 Mr Williams: It takes it away completely?
Mr Byles: Yes. If there is a failure to perform then the contract falls.
Q85 Mr Williams: In that case, why is it, according to figure 19, that only a quarter of local authorities think that the Partnership is a good approach? That is a very small proportion, is it not?
Mr Byles: Yes. I mentioned earlier on it does involve a different approach for local authorities and many of them have taken some time to appreciate its full value. A number who have been sceptics at the beginning are now coming back wanting to have them because they do recognise it makes good sense. It does involve working differently from an historic contractual type relationship with a provider for a local authority as we see in other areas of facilities management, computing and management services.
Q86 Mr Williams: So are you saying that the 75% who have reservations are being perverse or have they got reasons for that?
Mr Byles: It is fully understandable and as a local authority chief executive myself I would have shared those views at the outset. What I am saying is if you talk to people once they become engaged in the project and in this way of delivery they tend to change their view very considerably.
Q87 Mr Williams: Paragraph 14 tells us that it is too early for local authorities to be able to tell if the expected benefits will be realised.
Mr Bell: I think if I could just come in on this.
Q88 Mr Williams: You signed up to that, did you not?
Mr Bell: As Mr Byles said, there are people finding their way and in some ways that is a thread that has gone through this conversation this afternoon, that the way in which local authorities used to deal with capital projects was on a one-by-one basis because they were not able to manage their arrangements across a local authority area. That does require you to behave in a different sort of way because you are working together with others in the Partnership over an extended period of time. I do not think it is surprising that people are still finding their way. We are seeing more senior involvement in Local Education Partnerships. In one area, the elected mayor of the council is involved as the local authority representative. There is greater recognition that we are in this at a local level for the long-term and, therefore, I do not think we should be too surprised. The general mood from the NAO Report, both on the private and the public sector sides, was they could anticipate benefits accruing in due course but at the moment in a sense they are waiting to see, and I think that is an entirely reasonable and rational position.
Q89 Mr Williams: My final point is on the sharing of risks and the allocation of costs of risks. If we look at paragraph 4.15, we are told: "Paying PUK to adopt some of the programme risks, however, costs the Department more than just paying for the services PUK provides and does not significantly reduce the amount of risk to which the Department is exposed." How on earth does that come about and why have you got yourselves in that situation?
Mr Bell: As we said earlier, the arrangement with Partnerships UK is to bind them in given the kind of expertise that they can bring to this kind of project. As paragraph 4.17 points out, they are bound in in such a way that if they do not achieve the milestones, projects being delayed, not delivering against the KPIs, they do not get the rate of return. The whole point of binding them in together with the Department was to access for PfS the kind of expertise that I think the private sector can produce through this vehicle.
Q90 Mr Williams: You signed up to the bit I quoted which says: "Paying PUK to adopt some of the programme risks, however, costs the Department more than just paying for the services PUK provides and does not significantly reduce the amount of risk . .. "That does not sound like a good bargain to me.
Mr Bell: This is about binding PUK into the process which we actually thought was far more likely to be the case if we had them involved in this joint venture arrangement rather than, as it were, just procuring the services directly for them. I think as paragraph 4.16 then goes on to say, the advantage of the Partnership is that you get that stronger senior level attention given at PUK. We know that from experience, the chief executive and the chairman are really heavily involved in Partnerships for Schools with their board membership and also are providing-Mr Byles may wish to comment on this-very substantial active support drawing upon the very experience of partnership arrangements in other parts of the public sector.
Mr Byles: If I could endorse that, they are involved not as consultants but as people who are helping manage, challenge and support the programme and we find that a very beneficial relationship at a technical and professional level.
Mr Williams: I said that was the last question but- No, I will leave it there.
Chairman: Well, I have never heard that before! I believe Dr Pugh does have a last question.