Wales in Danger of Falling Behind in Public Private Partnerships (PPP) 

22/10/2008 00:00 

A recent report has been published to suggest that Wales is in danger of lagging behind the rest of the country in Public Private Partnerships (PPP).

Professor Brian Morgan, Director of Creative Leadership and Enterprise, Cardiff School of Management, at the University of Wales Institute, Cardiff (UWIC) presented his findings (written by himself and Jeremy Williams, Hugh James) to the Government’s Finance Committee meeting held in early October at the Senedd in Cardiff Bay, where he explained how there is a strong need for a more strategic approach to be put in place for Wales to develop its own version of PPP that is relevant for our economy and our SME’s.

Public private partnerships (“PPP”) typically involve some form of capital expenditure by the private sector followed by the delivery of a service, usually involving the maintenance of the asset.

The procurement options for PPP vary greatly in relation to the undertaking of major investment programmes. These include, Conventional design and build contracts, PFI, Programme procurement vehicles such as those being used in Building Schools for the Future and the National Health Service Local Improvement Finance Trusts Investment programmes and other partnering arrangements between the public and private sectors.

Professor Morgan explained that the benefits of PPP is an option for investing in public services and the Government need only use PPP where it can be shown to deliver value for money and does not come at the expense of employee’s terms and conditions.

Compared with Wales, our Celtic cousins (Northern Ireland, Ireland and Scotland) have been far more proactive in their approach to the use of PPP for major capital investment across the spectrum.

Wales faces significant challenges to grow its economy - improvement in infrastructure is a pre-requisite for this growth. Professor Morgan explains that a key question is the extent to which greater use of PPP will allow more infrastructure investment which in turn will boost relative GDP. Once this issue has been addressed a key challenge for Wales is to develop a Welsh PPP based on best international practice for the type and scale of projects that are appropriate for Wales.

Professor Morgan said: “Most recent research suggests that, despite some concerns about the flexibility of the underlying contracts, PPP represents good value for money and stimulates innovation.  In addition PPP projects have produced a significant improvement in the number of projects being delivered on time and within budget compared with other methods of procurement.”

The Welsh Assembly Government has taken a significant step forward by establishing a new strategic framework for capital investment known as the Strategic Capital Investment Framework. At the centre of the framework sits a Strategic Capital Investment Board which is a Cabinet Committee established to take decisions on investment proposals and oversee the delivery of significant capital investment programmes.

This is critical in that the future of public service provision in Wales, lies in a mixed economy with public, private and voluntary providers all making a contribution and working in partnership. It is also vital to establish a working relationship with the private sector as this will help stimulate market interest, improve competition and deliver value for money.

For further information contact Laura Anderson, Communications Assistant:
Tel: 029 2041 6041