Carillion may have collapsed, but public-private partnerships can be so much more
Last month, Carillion, one of the largest companies in the UK which regularly entered into contracts with government to deliver public infrastructure and services, went into liquidation. Since then, public-private partnerships (PPP), and their pantomime villain superstars - private finance initiatives (PFI) - have received an unprecedented level of criticism. The Guardian Opinion section – and my love-hate relationship with it - has gone into overdrive!
Concerns around private companies delivering under par public services, following perverse incentives, whilst also making high profits, have long been aired. Many on the political left have always been suspicious of the inclusion of private companies in public life like this. This view is now emboldened, where once it was ignored under PFI’s boom during the Blair-Brown years. Many see Carillion’s collapse as a watershed moment to be used to curb significantly, if not entirely halt, the use of these types of PPP. However, the ability of any government, left-leaning or otherwise, to actually kill-off PPP remains to be seen. The legal tussle would be huge, and the capacity of government to take ‘in-house’ the delivery of huge swaths of public infrastructure and services is questioned by many.
The reasons behind PFI’s and PPP’s continued use despite often higher costs, sometimes poor delivery, and some high-profile examples of failure, are an open secret. They do cost more, but crucially they are ‘off-balance sheet’ which makes them appealing to government at the best of times, let alone in the era of austerity. This might be changing – the Office for National Statistics has recently changed accounting rules, potentially forcing the government to include these types of arrangements on-balance sheet. These dry technical distinctions can be extremely important!
So, the picture is not a rosy one for PPP, but I would like to argue that they can, and should, be so much more than this. Rather than just government contracting in companies to delivery services or build big stuff, they should be genuine multi-partner collaborations, built on trust and sharing of expertise, between the public, private, and third sectors. In this mode, PPP are a fundamentally different proposition. They become part of a different narrative; part of the decentralisation of political power; part of devolution; part of a movement towards empowered cities and communities; part of the closer working of public, private, and third sectors to address the biggest challenges our society and economy face. They can become part of our efforts to make the economy and society redistributive and regenerative by design, and so fit for these challenges.
I believe we should take advantage of this public ‘crisis’ in PPP, not to consign them to the neoliberal history books, but to reimagine and improve them, as part of a brave new (excuse the buzzword bingo) post-capitalist, open-data, decentralised, and low-hierarchy future. We should stop using bilateral partnerships based solely on contracts in which both parties seek to wring every last drop of value from the other, and replace them with multi-partner collaborations built on trust, mutual goals, and the exchange of expertise, skills, and resources.
This won’t be easy, or happen overnight, but one area in which we are seeing these types of partnerships emerge and thrive is in the food-energy-water-environment ‘Nexus’ domains. Take for example the Manchester City of Trees initiative, or the Northern Forest project, both delivering vital green infrastructure. Or the ambitious plans being explored by the South Lincolnshire Water Partnership, for multi-sector managed water resources. Or the recently formed Food Sector Council, a partnership aiming to boost productivity and make the food industry more resilient, sustainable and competitive. Or take the consortiums of public, private, and third sector organisations, led by local authorities, who partner to deliver ambitious new heat networks. These types of partnerships are breaking new ground on the path towards sustainable development in the twenty-first century UK. They are also central to the delivery and success of the UK Government’s Industrial Strategy and 25-year Environment Plan. These types of government strategies and plans mean Theresa May repeatedly finds herself signing-off forewords which explicitly or implicitly emphasise the need for these types of partnerships – who’d have thought!
However, for these PPP to really thrive and for their reimagining to be complete, we will need greater learning from past failures and successes. We will need to grasp a clearer picture of the broad range of types and forms of PPP, and the various domains in which they can be used most successfully. We will need a stronger understanding of their dynamics beyond financial and commercial arrangements, and the contracts that underpin them. We will need new and better tools to assess proposed PPP plans, and regularly evaluate and refine ongoing PPP.
Lots of things we need it seems - and so to the rescue my new RCUK Innovation Fellowship hosted by CECAN! I will be trying to address exactly these needs and challenges. To build critical understanding of the breadth of PPP, to build frameworks and tools to assess and evaluate PPP, and – most importantly – to LEARN from their successes and failures.
Right, I’m off to get on with it, you can read more about the fellowship at https://www.innovativeppp.org/