It won’t surprise many working in local government or public private partnerships to learn that councils’ attitude towards outsourcing has cooled.
LocalGov covered a study from the New Local Government Network (NLGN) which showed that 39% of municipal leaders plan to outsource less in the next two years, against only 15% who plan to outsource more.
Following the collapse of Carillion and other high-profile PFI failures, this attitude is understandable.
Indeed, at the Society of Local Authority Chief Executives annual summit last week, partnerships were at the forefront of the conversation and there’s real energy to improve the current situation.
As the NLGN report rightly finds, there is a huge difference between a transactional contracting out of a project, service or function, and forging a collaborative, meaningful and mutually beneficial partnership.
Partnerships that don’t work are often characterised by a relationship that is fought out through the levers of the contract. Councils and the private sector have worked in silos and find themselves in an adversarial position relying on legal clauses about cost, timescales or prescriptive ways of working. This is a recipe for everyone losing out.
The NLGN report is spot on in its headline recommendations: we need partnerships that are more collaborative, creative, adaptable, accountable and place-based.
Building trust, sharing skills
In a good partnership, both parties bring their skills and resources to the table. There needs to be a shared vision, an alignment of interests, and the building of mutual trust.
This sounds intangible, but it’s possible when the local authority has real involvement and control. When Morgan Sindall Investments partners with councils, we typically do so through a 50:50 joint venture company formed to deliver a business plan that we have created together. This guarantees joint decision making at board level and ensures that the interests of both parties are aligned – we both share in risk and reward. The local authority is in joint control of the project, not simply policing it.
This approach puts concern about public vs private to one side and allows us to focus on achieving outcomes together.
The councils we work with want to deliver holistic socio-economic regeneration through a series of successful joint property development projects. They want to drive better value from their land and assets, delivering not only a return on investment, but new homes, community facilities, commercial space and social infrastructure.
They recognise that to achieve those outcomes they need external support – to secure private investment in a constrained financial environment, to access greater development resources and skills, and to proceed at a faster pace across a portfolio of projects.
Equally, Morgan Sindall Investments will rely on the council for a strategic perspective on local needs and priorities, and an unparalleled understanding of the community – an invaluable part of the equation.
Taking the conflict out of partnership
This collaborative approach can take the conflict out of public private partnerships. We are currently working in strategic joint ventures with Slough Borough Council, Bournemouth Borough Council and Hertfordshire County Council – different authorities, of different political colours, with different needs and aspirations, but each focused on delivering outcomes for its communities.
In Slough, the council has prioritised a series of leisure, education and health projects – including an award-winning new library, theatre and cultural centre – as well as commercial, residential and retail schemes. In Bournemouth, our joint venture is progressing 17 sites, including the recent completion of one of the first Build to Rent developments in the South West.
Of course, this particular model is not appropriate in every scenario. A 50:50 joint venture company won’t be necessary for an IT contract or building maintenance services agreement. But the importance for such partnerships to be focused on outcomes and alignment of interests remains the same.
The NLGN’s report contains valuable recommendations on how this can be achieved. Particularly interesting are the points on social impact and how it is defined and measured – more work is required here from everyone.
If we can create partnerships focused on outcomes, and then better define, deliver and communicate their true value to communities, perhaps we can turn the tide on the PPP debate.
Andrew Savege is director of new partnerships at Morgan Sindall Investments