ESSU

The London Borough of Barnet plans to transfer Adult Services to a Local Authority Trading Company (LATC) together with Barnet Homes, the Arms Length Management Organisation managing the council housing stock. About 160 Adult Services staff will transfer to the LATC. The LATC model is intended to commercialise Barnet’s provision of learning disability and physical and sensory impairment services for adults. The business case refers to ‘profits’ and the Council using its power as shareholder to demand annual ‘dividends’. Rather than subsidising important social and housing services, these services will in future subsidise other Council services!

A short video of a BBC Southwest programme about Southwest One, Somerset County Council’s strategic service-delivery partnership with IBM where only £3.3m of the promised £200m savings have been achieved since 2007. Includes revealing interview with Leader of the Council about renegotiating the contract. (Takes a few seconds to get on to piece and for sound to cut in).

Examines the recent Cross Border Healthcare Directive, the role of the European Court of Justice and the ‘Europeanisation of Healthcare’. The introduction of EU law into healthcare presents many problems. The most pressing being that EU institutions have sought to apply the ‘economic’ rights enshrined in the EU Treaty’s free movement law to national healthcare systems, like Britain’s NHS, that are essentially ‘social’ in purpose and aims. Expanding the ‘choices’ of users and providers of cross-border European healthcare is a further indulgence of the choice agenda that we’ve seen in Britain. This will only serve to further undermine social healthcare provision in the UK and the rest of Europe.

The Briefings will examine the impact of EU liberalisation and competition policy on the provision of public services in Britain. No 1 – European Union Competition Policy and the Liberalisation of Postal Services and No 2 – The Impact of European Union Competition Policy on Public Transport Policy and Provision in the UK, both by Andy Morton. See Publications: ESSU Reports and Briefings for summary and downloads.

Following various reviews the County Council has decided to renegotiate the public private partnership contract with IBM and Mouchel just three years into the ten-year £400m contract. The Council wishes to bring some services and functions back in-house, change the governance of the JVC, achieve further savings and simplify the contract. The Council considered terminating the contract but this was ruled out because of early termination financial penalties and significant transition costs. The contracts with Taunton Deane DC and Avon and Somerset Police Authority are not affected by this decision.

Two articles in The Press, Barnet (13 January and 27 January 2011) on the potential effects of the sale of equity in PPP companies, focusing on Barnet General Hospital which featured in the ESSU Research Report – £10bn Sale of Shares in PPP Companies.

‘A Very Private Partnership’ in The Guardian Public section, Monday 17 January, has detailed coverage of the sale of shares in PPP companies by Jo Adetunji. It had a revealing response from HSBC Infrastructure. However, it is no longer available on The Guardian website.

A new ESSU Research Report reveals 240 PPP equity transactions involved 1,229 PPP projects (including multiple sales) valued at £10.0bn in the last decade. Average profit was 50.6% in individual and group equity transactions. £517.9m profit from a sample of 154 PPP projects. If the same level of profit were maintained for the 622 individual and group PPP project equity transactions the total profit would be £2.2bn. (This excludes the undisclosed profits obtained in the sale of secondary market infrastructure funds). Increased use of tax havens for UK infrastructure funds – 91 PPP projects with 50% – 100% equity ownership with funds registered in tax havens. A hard copy of the report is published by Spokesman Books ISBN 978-0-85124-791-5, price £8.95.

Dexter Whitfield said “The level of profiteering from PPP equity transactions makes a nonsense of the original value for money assessments – if these profits had been taken into account at the evaluation stage then few PPP projects would have been approved. PPP projects are little more than money-making mechanisms for builders and banks.”

The new expanded edition covers 43 contracts with a total value of £8.6bn and employing over 17,500 staff plus several large highway services and waste contracts. The Database reveals that BT, Capita and Mouchel dominate the rankings with a 61.9% market share by contract value. Six of the ten companies are foreign owned and have a 32.0% market share by contract value. 12 local authorities have commenced procurement but then rejected an SSP for various financial and operational reasons (see Table 8). The failure rate, based on 40 contracts and 5 failures, is 12.5% (see Table 9). Also includes evidence of problems in several other SSP contracts.

The London Borough of Barnet Council commissioned Impower/Agilysis to deliver an options appraisal for the future provision of Planning, Building Control, Environmental Health, Trading Standards and other Regulatory Services. They recommended “The market option most likely to deliver the improvement and price changes needed is a strategic partnership with the private sector.” They also recommended expanding the Development and Public Health Services Project to include Regeneration, Highways and Transport Planning. Barnet UNISON commissioned this detailed critique of the consultants report which concluded that the options appraisal contained many sweeping assumptions, lacked empirical evidence and market analysis and failed to meet even the basic scope and quality standards expected of an appraisal.