William Eichler 16 November 2018

Report calls for 'reset' of Public Private Partnerships

Report calls for reset of Public Private Partnerships image

A strong leadership role from local government is essential for ensuring the success of regeneration schemes involving the public and private sector, a new report has argued.

The private sector must also, according to one critic, stop practices that alienate the public, such as excessive pay for executives and reneging on social housing commitments.

Launched yesterday by the specialist regeneration developer U+I, the report calls for a ‘reset’ of our understanding of Public Private Partnerships in the wake of the Carillon collapse and the failure of the Haringey Development Vehicle (HDV).

These partnerships bring together local authorities, the wider public sector, and private companies, allowing them to pool resources in order to undertake major regeneration schemes.

Public Private Partnerships - or PPPs - are often conflated with private finance initiatives (PFIs), what the report describes as their ‘toxic cousin’, and outsourcing more generally. For this reason, councils and communities tend to be wary of them.

Polling commissioned by U+I found that 56% of people thought that the private and public sectors should work together to help address the housing crisis. However, this figure drops to 45% when asked about using PPPs as the mechanism to develop public land.

‘There is no great love for PPPs and they are seen by local authorities and the communities they serve as a sub-optimal option that is on the table for a public sector that lacks the regulatory freedom and funding to deliver large scale regeneration projects on its own, not to mention the skills and expertise,’ the report says.

However, U+I’s chief executive Matthew Weiner stresses the importance of PPPs because, as he explained at the report’s launch, ‘without the skills and resources of the private sector, the public sector will be unable to develop the houses, offices, and critically the communities that this country so desperately needs.’

The report, which is based on three roundtable events in London, Manchester and Birmingham, as well as one-to-one interviews with 17 experts from all the relevant sectors, sets out a number of key recommendations for improving PPPs.

It urges public and private actors involved in a partnership to promote the benefits of that partnership to the wider community.

It also recommends that all partners on a project need to establish their understanding of the community most likely to be affected and most likely to benefit from a proposed scheme.

This community should be engaged throughout the lifetime of the scheme. ‘Involving local people, rather than imposing a plan from a distant headquarters, is more likely to lead to something that delivers real value to an area,’ Mr Weiner said.

The report also emphasises that transparency and effective scrutiny ‘must sit at the heart of all projects’ and are the responsibility of all partners. It adds that local government should take a strong leadership role.

U+I believes this aims can be achieved in a number of ways. It urges PPPs to tell and show communities they are working in that they are in the business of delivering social wellbeing as well as economic wellbeing.

It also tells public authorities and private developers to ‘marry well.’ PPP proposals should be realistic and be tailored to the realities of the specific site.

PPPs should also have the correct governance so that they are flexible enough to adapt to change over long periods.

There should never be any requirement for local authorities to relinquish their assets, the value of which will grow over time, the report says. U+I warns councils against ‘selling the family silver.’

Local government minister Rishi Sunak described the report as a ‘welcome contribution to the conversation about how we create excellent places that improve peoples lives.’

Mr Sunak, who spoke at the report’s launch, said he was a ‘big believer in the power of local government’, but said that councils can benefit from ‘the commercial expertise, the international knowledge, the technical skills, and the cost discipline’ of private companies.

Matthew Taylor of the Royal Society of Arts (RSA) also welcomed the report, but added more needed to be done to improve public trust in PPPs.

‘Capitalism is facing a crisis of legitimacy and within that PPPs are going through a crisis of legitimacy, and it’s hard for anybody to break out of that level of public distrust and scepticism,’ he said at the launch.

He said that in this context U+I and other developers had to be clearer about practices that the public find unacceptable, including profit gouging and excess pay for CEOs.

Mr Taylor also criticised developers for reneging on their social housing commitments and warned of the imbalance of power between cash-strapped councils and private companies - an imbalance that can lead to unfair partnerships.

More innovation by PPPs is required, he added, particularly when it comes to public procurement and service delivery.

Waltham Forest LBC leader Clare Coghill, who also spoke at the launch, stressed that the fraught political landscape made PPPs difficult to deliver.

Citing the political conflicts which prevented the HDV from going through, she said there needed to be an ‘increasingly sophisticated conversation with the general public’ about how to deliver services at a time when councils were strapped for cash.

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