Confrontations Europe June 2006

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Confrontations Europe June 2006
Public Private Partnerships The UK Perspective

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Margie JaffeNational OfficerUNISON
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UNISON

• UNISON Britains largest trade union
• 1.3 million members
• local government
• Health
• education
• energy, water and transport
• EPSU
• 8 million workers
• 209 public sector unions
• in more than 36 European countries
• Threefold Interest in Public
  Services

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Public Private Partnerships

• PPPs the answer for investment?
• A European Framework for PPPs
• (3. Capacity and Partnership)
• PPPs in the UK

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PPPs in the UK

• Private Finance Initiative (PFI)
• 463 projects - capital value 68 billion signed
• 800 projects capital value 16 billion at
• preferred bidder stage
• Signed Capital
• Department Projects value m
• Transport 45
  27,054
• Health 110 9,554
• Defence 45 6,925
• Education 85 4,659
• Scotland 46 4,057
• Home Office (prisons) 29 2,426

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PPPs in the UK

• Many new PPP models
• Local government - Strategic partnerships
• eg shared services environmental services
  revenue and benefits
• Primary Health Care - LIFT
• Local Improvement Finance Trusts to redevelop
  health centres and doctors surgeries
• Building Schools for the Future
• 15 year programme for entire secondary
  school stock
• 4.4 billion in 2005-6

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PPPs in the UK

• BUT
• No systematic evaluation
• No data on risk
• No data on quality of services
• No data on employment
• No comparison with publicly funded alternatives

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1. Are PPPs the answer for investment?

• A. Private Finance is not new money
• B. PPPs costs more
• C. PPPs inflexible
• D. Two Tier Workforce

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1. Are PPPs the answer for investment?

• A. Private Finance is not new money
• borrowed from same markets but at higher rates
• public sector still pays back the loan over
  longer period

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1. Are PPPs the answer for investment?

• B. PPPs cost more
• Higher interest rates - 2- 3m for every 100m
  invested
• High profit margins - 14-15
• Payments for 68bn signed projects total 215bn
  until 2013
• High transaction costs
• Queen Elizabeth Hospital London technically
  insolvent
• PFI payments 29m /year for a 135m hospital
• Extra 13m /year than conventional procurement
• Closure would incur 230m penalty to operator

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1. Are PPPs the answer for investment?

• C. PPP inflexible for dynamic public services
• Locked into long contracts
• Cannot adapt to policy changes
• Conflict with market

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1. Are PPPs the answer for investment?

• D. Two tier workforce
• What is it?
• Government response
• What remains

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1. Are PPPs the answer for investment?

• UK Government restrictions on PPPs
• 2004
• No more IT projects
• No projects below 29 million
• More conventional procurement
• Workforce protections
• 2006
• reduction of hospital programme from
• reduce cost of flexibility
• central control over contract lengths
• central control over large projects
• soft services only where value for money proven

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2. A European Framework for PPPs?

• A. Monitoring
• B. Setting standards

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2. A European Framework for PPPs?

• Framework directive on public services (SGI)
• Monitoring of PPPs
• Stakeholder involvement
• Public service principles
• Accessibility
• Universality
• Affordability
• Solidarity
• Accountability
• Databank of projects
• Register of risks what risks value
• Performance problems good practice

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2. A European Framework for PPPs?

• 2. Setting standards- Social and Environmental
• Public service exemplar
• Framework of workforce protections
• End Two tier workforce
• ILO Convention 94
• Fair wages clause
• PPPs without the people