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PSMI PARTNERSHIPS SUPPLEMENT - FLOWING REFERENCE

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Tapping into private finance is the watertight way to win government approval for innovative projects. David Locke ...
Tapping into private finance is the watertight way to win government approval for innovative projects. David Locke considers benefits and looks ahead

Private finance initiative schemes in councils in England have been supported by£12bn, with some£7bn of this committed to over 200 projects. 4ps has been instrumental in securing these allocations through the spending review and in paving the way for councils to use PFI in the delivery of their services.

This support for councils to develop public private partnerships through PFI is resulting in new schools, light rail schemes, street lighting, new and refurbished social housing, social services facilities, waste management facilities, police and fire stations and magistrates' courts. In addition to the the council PFI schemes supported financially by central government, a number of councils have developed PFI schemes for new schools, police stations and information technology provision without central government support.

The successes of the operational schemes is often lost in the wider debates about the role of the PFI in the delivery of public services, but it is the operational outputs that should at the core when considering public private partnerships and the PFI as a form of service delivery.

To help inform this debate, 4ps is undertaking a review of a number of the 73 operational projects and will be publishing the results of this work early in the New Year. It is important that the experience and lessons learned from the operational schemes is used in the development of new projects, and into departmental strategies on the role of public private partnerships and the PFI.

The Byatt and Audit Commission reviews of procurement in local government included proposals to improve councils' procurement capacity. With some£5bn available for council PFI schemes over the next three years it is important that the procurement of these schemes is completed as effectively as possible.

As part of this process, 4ps has been asked by the ODPM and the Local Government Association to lead the development of a gateway process for council major procurements. The gateway process consists of a structured review at six key stages of the developmental and procurement process for a project, and will provide quality assurance to senior officers on the progress being made with a project.

4ps has also developed, as part of the LGA skills delivery programme, a partnerships procurement workshop that is available to councils developing and procuring PPP and PFI schemes.

On the financial side there are a number of other developments. The Treasury recently consulted on changes to the green book - Appraisal and evaluation in central government. These changes will affect council projects seeking central government support towards the costs of schemes.

The consultation paper included proposals for changes to the discount rate used in the evaluation of projects, proposals for the use of 'optimism bias' as part of the risk management assessment, proposals for a new approach for the treatment of taxation receipts and proposals for widening the use of cost-benefit appraisal in the development of major projects. The results of the consultation exercise are expected to be published early in the new year, and will become effective from 1 April 2003.

The Local Government Bill 2003 includes proposals for changes to the capital financing arrangements in local government, and the introduction of prudential borrowing limits may provide councils with further opportunities for the development of major investment projects.

An important aspect of any new arrangements will inevitably be the consideration of best value, and it is important that the various procurement options for service delivery are fully explored as part of the development of a council's strategic plan for each service area.

A number of new initiatives are being developed and made available to councils for the delivery of their services. These include the development of the local improvement finance trust arrangements, the proposals for a schools joint venture, and the new powers available to councils to introduce road user charging and workplace parking levies. Each of these initiatives will provide further opportunities for councils to develop service provision, for example at the present time there is much interest from councils developing

joint service centres to see how the proposals for LIFT can be used to facilitate the procurement of these joint use centres.

How else is the 4ps helping councils? 4ps was set up by the LGA to assist councils in England and Wales to develop, procure and deliver PPP and PFI schemes. 4ps has worked closely with a large number of those projects now in operation, and we are using that experience to develop new products to ensure that future partnership schemes can be developed and procured as speedily and efficiently as possible.

These new products include the development of the procurement skills workshops, operational projects report and gateway process noted above, the development of comprehensive procurement packs in key service areas, targeted procurement support to selected projects, the management of network groups to facilitate the sharing of experience between local authorities, and new guidance material on specific aspects of the process for delivering public private partnerships and PFI schemes, such as funding schemes and revenue support.

www.4ps.gov.uk

David Locke

Executive, 4ps

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