Select Committee on Public Administration Appendices to the Minutes of Evidence

Memorandum by Nabarro Nathanson Public Sector Department (PSR 9)


  With a view to establishing the yardstick and breadth of our experience we have in recent years closed 42 PFI projects and have over 25 currently under commission and have dealt with a wide range of Public Private Partnerships including outsourcings, joined up services, regeneration partnerships and advised on matters of governance, compliance and structures. One of our partners, Helen Randall, was instrumental in serving on the Byatt Report on Procurement in Local Government and Malcolm Iley is a past adviser to DETR on PPPs Advisory Panel as well as having over 20 years experience both in the public sector and 12 years advising both public and private sectors subsequent to that.

  We have currently 180 local authority clients. We have also advised central government as well as extensively to the private sector on PPP work both within the UK and abroad. We recently gave a series of papers and presentations to German banks, local authorities and regional government on PPPs and partnerships generally. We have also advised on Energy, Transport Infrastructure, Project finance, Best Value, Outsourcings, Education Partnerships and Procurement and Competition. All involving service delivery. We hope our comments reflect therefore substantial on the ground experience. Our replies are essentially short and to the point but we would be glad to expand upon those if of help.

  Our replies are as follows and in order of questions raised:

Principles and Strategy for Reforming Public Services

Question 1

    (i)   Partnership

    (ii)   Sensible risk management

    (iii)  Accelerated capital investment = better public services

    (iv)  Creating long term mature partnerships with a joint incentive to perform to specification and   encourage period service review and accelerated investment

Question 2

  There is a need for an outline guiding strategy that allows public bodies to develop innovative partnerships—the current approach is broadly OK—examples include Treasury Taskforce Guidance on PFI contracts, guidelines on New Deal for the Communities, Education Development Partnerships, linking the new "Well Being powers" for local government to Community strategies.

Question 3

  Only in certain sectors, eg transport—otherwise needs local and community service delivery dimension.

Question 4

  Market confidence in taking a long term view of investing in public private partnerships and policies will dip and could disappear, if there is policy uncertainty about public sector commitment to contract and invest, and could also cast doubt on the commercial and "political" covenants of the Public Sector generally. There has to be consistency in the application of policy.

Question 5

  By measuring outputs in terms of service delivery against not only contractual commitments but also against Best Value Review Plans; of more importance to establish an atmosphere within which service users have confidence in public revenue and tax used in public investment, representing value for money.


Question 6

  No. The public service ethos is not an anachronism.

Question 7

  There is no need to define the ethos as it is basically a question of stewardship, community leadership; if you define it you will constrain its application; but it should also involve the public sector acting more and more as a procurer of best practice. Dogma should be removed from the question as to who should deliver public services—see Best Value Principle (iv), DETR Circular.

Question 8

  The question is posed on a false premise. Public service ethos is not different or superior to the private or voluntary sector ethos. There is an implied arrogance in even posing the question!

  The standards of service should be exactly the same regardless of which sector is providing it. We should concentrate more on a partnership ethos rather than accentuating a perceived difference in approach. Service delivery, to agreed outputs, with the ability to enhance and refurbish and provide value for money is a common challenge to all sectors. Profit does not mean different or lower standards and conversely, a service review whether in contractual form or agreed within a wider partnership does not necessarily mean increased expenditure. There are other more important commercial and service-led motivations which should influence parties coming together whether they are from the public, private or voluntary sectors; those relationships can be applied in building longer term partnerships and enhancing stakeholder and customer involvement in service delivery terms.

Question 9

  If overstated or misinterpreted for dogmatic or narrow policy reasons, yes. Otherwise, no.

Question 10


Question 11

  Of course—see above. Especially in long term partnerships with the public sector based on clear obligations and joint incentives to succeed.

Question 12

  Workable and practical structures to ensure that public private partnerships succeed whether or not technically PPPs! Practical arrangements to ensure sound service delivery outputs. Less theory and more practicality in approach.

  Clear service output specifications—incentivise longer term contract relationships—eradication of the "CCT" mindset! Sensible dispute resolution procedures.

  Provisions to share refinancing and investment benefits:—be realistic in commercial expectations in this regard.

Question 13

  Probably, but from our recent experience other countries are increasingly turning to us to export and explain the perceived and the actual success of PPP/PFI and other similar joint venture delivery options.

Question 14

  We are not aware of any evidence of this. We have successfully seconded members of our firm into both local government and government departments. They have all been very successful. It is an insult to the public sector bodies concerned as well as to the individuals involved to suggest that those relationships were not managed within their normal standards or in any way undermined the public service ethos. The relationships were properly managed, targeted and were of mutual benefit. We find this a very odd and rather sad question!

Question 15

  In principle, if social and ethical issues are shared it will enhance the capacity for partnership. However, the presentation of an apparent concern for social and ethical issues can sometimes amount to "froth" or an excuse not to engage in meaningful relationships between sectors. What matters is the capacity to deliver a service in accordance with contractual and partnership obligations, service specifications, time scales and financial parameters.

Question 16

  In some cases, yes. There are excellent workers in both the public and private sectors. From our experience, and most of our department were in the public sector and have now worked in the private sector also, the commitment and resource support for those in the private sector within their organisations is often at a higher level. This comment is not intended to reflect on the public sector workers' personal commitment but merely that those in the private sector are generally better resourced. That can have an effect on motivation of public sector colleagues and a consequent effect on the delivery of public services. We observe from one or two successful outsourcings and joint ventures with the private sector that when workers in the public sector are transferred and released from unnecessary constraints and red tape bureaucracy they thrive and achieve a higher level of motivation which must affect their capacity to achieve a better and higher level of public service delivery.

Question 17

  The public response appears to us to be at least in part based on high profile press coverage which creates a negative effect, eg London tube. It depends therefore on the questions asked. If the questions included information on the wide range of successful PPPs, different answers may emerge. As mentioned above, we recently presented and shared views with German banks, local and regional authority colleagues. Some very high level commercial representatives saw the British PPP experience solely through the myopic view as presented by the British press on the London Underground and Railtrack! When the range of successful PPPs/PFIs was outlined and explained in some detail the views changed considerably. We suggest that it is a matter of perception and accurate presentation.

Question 18

  Yes; no.


Question 19

    (i)   Clear contractual and partnership obligations;

    (ii)   Avoid "fudges";

    (iii)  Set out clear protocols both within contractual relationships and partnership joint ventures as to how accountability will be measured (eg governance, consultation and open book accounting protocols).

Question 20

  We are not aware of any prescribed "arrangements". There are, however, a clear range of mechanisms which can be used to achieve accountability, some of which are quoted above. The public sector has for years been contracting and partnering with the private sector and we have not noticed a significant lack of accountability.

Question 21

  We believe this is a non-question as the basic requirements can be dealt with (see above).

Question 22

  Probably not, there is a need however to base accountability on best practice models. As far as local government is concerned there is a raft of new governance arrangements in the Local Government Act 2000. The Audit Commission, NAO and others also regulate accountability through a number of other tests and mechanisms. We have not encountered this as a major "deal breaker" or issue that has frustrated an otherwise potentially successful PPP or joint venture provision of services.

Question 23

  This is really a question on constitutional matters but we would say as above—see details of our responses. Parliament legislates, guidance is issued, there are scrutiny and select committee arrangements to review programmes and the implementation of policy, do we really need any more!

Question 24

  Not applicable.

Question 25

  No—the proposition which lies behind the question is preposterous. There has been private sector involvement in the public sector in terms of service delivery for many years and as stated above public accountability has not significantly suffered. There may be a need to strengthen the public sector's capacity to manage and properly account for change management, but that is another matter.

Question 26

  No, confidentiality provisions both in contractual structures and in partnership arrangements can be managed within a number of agreed and well established protocols and provisions. We have not encountered a problem in this direction. If something is genuinely "commercially confidential" because of, for example, tax, legal process or other means there are ways and means of dealing with this without threatening the core relationship of a longer term partnership.


Question 27

  Generally yes, but the programme has been very poor in communicating the structure and the range of new and emerging PPP relationships, and the role of stakeholders.

Question 28

  By explaining certain basic facts (for example a PFI project is not a privatisation ie:—the public sector already retains responsibility for services in most PPP/PFIs). Government has recently improved the consultation requirements on TUPE and jobs consultation (eg the statement on fair treatment for employees etc, pension protection) as well as requiring in various sectors consultation with stakeholders. It is interesting that commercial funders and private sector partners are equally concerned to ensure there has been proper consultation and stakeholder participation as a matter of commercial due diligence, particularly if otherwise it would threaten the commercial success of a proposed joint venture. This is a matter which can be dealt with commercially between the parties but any proposed PPP which ignores the views of consumers and users will eventually run into trouble!

Question 29

  We are not quite sure what "user rights" means. The right for customers to be consulted on annual improvement service plans, best value plans, variations to services is often built into contracts and is in certain circumstances a statutory requirement in local government.

  You need for the purposes of the question to explain what "user rights" actually mean in practice here, but we will with the benefit of your explanation be happy to expand upon our response if helpful.

Question 30

  For discussion, see above.

Question 31

  Citizen's Charter—no—Service First—possibly.

Question 32

  These can be more than adequately accommodated within PPP contractual forms and partnership arrangements. We have been instructed by clients to include consultation protocols, specific contractual obligations on the private sector to consult and take into account in service plan review, and on communication/consultation strategy. We do not believe this is a commercial or service delivery problem in practice.

Malcolm Iley

Partner, Head of Public Sector Group, Projects Department

November 2001

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