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The government is to set up a new partnerships body as part of its review of the private finance initiative in a bi...
The government is to set up a new partnerships body as part of its review of the private finance initiative in a bid to arm councils and other public sector organisations with key procurement skills and advice.

In their response to Sir Malcolm Bates' second report on PFI, ministers announced their intention to create Partnerships UK, which will employ City experts to help the public sector achieve the best deals from PFI and other public/private partnerships.

Partnerships UK will act as a project manager for PFI deals, providing organisations across the public sector with advisory and implementation skills.

The body itself will be formed as a partnership, with the private sector taking a majority stake in a joint venture with central government and with a board chairman drawn from business.

Partnerships UK will not operate as a bank, but will provide development funding to get PFI deals off the ground where existing forms of private finance are not available. This will see it able to offer a range of financial products.

In tandem, the government will create a new Office of Government Commerce, overseen by Treasury chief secretary Alan Milburn, to maximise government buying power and bring professional expertise to bear on major capital projects.

Mr Milburn said the OGC would deliver more than£1 billion in efficiency savings over the next three years. He also revealed ministers wanted to avoid a repeat of some of the problems in large IT deals, where a lack of expertise in the public sector had led to contracts being signed without a proper risk assessment.

Peter Fanning, chief executive of 4Ps, the body helping to promote PFI in local government, said: 'Sir Malcolm Bates' second review of PFI confirms PFI is working in local government. I am particularly pleased he has given 4Ps a clean bill of health and that we have a continuing and important role to play in supporting local authorities develop public/private partnerships.'

Mr Fanning said he looked forward to working with Partnerships UK and the OGC.

Confederation of British Industry director-general Adair Turner said: 'The procurement reforms outlined by Alan Milburn should help the government get best value from the private sector in everything from building and running hospitals to buying paperclips . . . The government has clearly heard some of the key concerns voiced by business.'

Business Services Association director-general Norman Rose welcomed the creation of Partnerships UK but warned: 'Real concerns must still exist over the operational role of Partnerships UK and the potential for conflict of interest between its financial and project management roles. The final business plan will need to be carefully constructed with this in mind.'

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