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
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
Principles and Strategy for Reforming Public Services
(ii) Sensible risk management
(iii) Accelerated capital investment = better
(iv) Creating long term mature partnerships
with a joint incentive to perform to specification and encourage
period service review and accelerated investment
There is a need for an outline guiding strategy
that allows public bodies to develop innovative partnershipsthe
current approach is broadly OKexamples 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
Only in certain sectors, eg transportotherwise
needs local and community service delivery dimension.
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.
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.
No. The public service ethos is not an anachronism.
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 servicessee Best Value Principle
(iv), DETR Circular.
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
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.
If overstated or misinterpreted for dogmatic
or narrow policy reasons, yes. Otherwise, no.
Of coursesee above. Especially in long
term partnerships with the public sector based on clear obligations
and joint incentives to succeed.
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 specificationsincentivise
longer term contract relationshipseradication of the "CCT"
mindset! Sensible dispute resolution procedures.
Provisions to share refinancing and investment
benefits:be realistic in commercial expectations in this
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.
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!
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.
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.
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.
(i) Clear contractual and partnership obligations;
(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).
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
We believe this is a non-question as the basic
requirements can be dealt with (see above).
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.
This is really a question on constitutional
matters but we would say as abovesee 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!
Nothe 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.
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.
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.
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!
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.
For discussion, see above.
Citizen's CharternoService Firstpossibly.
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.
Partner, Head of Public Sector Group, Projects Department