According to a new report from the Audit Commission, partnerships intended to overcome the drawbacks of traditional contracts between the public and private sectors often fail to live up to expectations. It warns that councils working with the private sector must not be 'seduced by warm language of partnership'.
For Better, for Worse: Value for Money in Strategic Service-delivery Partnerships (SSPs) looks at partnerships lasting 10 or 15 years designed to deliver services such as council tax collection, IT and property management. It examines why many SSPs have not yet generated all the expected benefits of partnerships with the private sector, such as greater flexibility, economies of scale, innovation and risk and profit sharing.
The Audit Commission concludes that councils should enter into these complex partnerships only if they have the high level of expertise needed to get good value for public money as circumstances change over a long time.
This is a significant issue for councils and their private sector partners alike. The 14 SSPs studied by the Commission are worth more than £2.6 billion, with individual contract values ranging from £50 million to £425 million. Three of the earliest councils to adopt SSPs have terminated their agreements early, incurring additional costs.
More than half of all councils are already engaged in, or seriously considering, some form of service partnership. Councils with SSPs often gain capital investment and meet or surpass their performance targets. The anticipated cost savings are between 1% and 15% over the life of a partnership, although these need to be seen in the context of the new government target to achieve 3% efficiency savings per annum.
Michael O'Higgins, Chairman of the Audit Commission, said:
"Complex, long-term partnerships with the private sector can succeed, but they're far from easy. If managed robustly, these agreements become true partnerships that deliver benefits for users and council taxpayers alike. But all partnerships are risky - even within the private sector, two out of every three fail.
"Our report highlights the opportunities, but also the challenges of partnerships, so both the public and private sectors know how to get the best from working together. Local authorities should not be seduced by the warm language of partnerships. Robust option appraisal before being committed, designing flexibility into the arrangements and strong contract management from the start, are the vital ingredients for success.
"The Audit Commission's framework, launched with this report, will help councils get better value for money by managing their existing partnerships more effectively, or by weighing up the pros and cons of entering one. We have drawn on the experience of councils that have pioneered SSPs, as well as existing technical guidance."
The framework identifies issues that councils will need to consider at the initiation, procurement and contract management stages, with links to supporting documentation.
Under proposals launched by the Audit Commission, there are to be minimal changes to the framework of the final Comprehensive Performance Assessment (CPA), which will be carried out in 2008.
The Commission wants to retain consistency in its approach to the Harder Test, to minimise the disruption to local councils as it moves with the other inspectorates to introduce the new Comprehensive Area Assessment (CAA) in 2009.
The CPA 2008 consultation details a small number of changes to how the Commission will assess single tier and county councils under CPA for the last time in 2008. These include:
Steve Bundred, Chief Executive of the Audit Commission, said:
"The Audit Commission does not intend to make significant changes to the CPA model for its final year. We have sought to minimise disruption as far as possible for local councils to smooth the transition to a new performance framework. This is in line with the general views expressed when we initially consulted in early 2007 on the transition from CPA to CAA."
The consultation on CPA - the Harder Test framework for 2008 closes 11 April 2008.
Tamworth Borough Council
The strategic housing service provided by Tamworth Borough Council is poor with uncertain prospects for improvement according to a report released by the Audit Commission. The inspection team gave the service, which includes homelessness and private sector housing services, a zero star rating.
The report concludes that the Council makes too much use of bed and breakfast, often for vulnerable people, and is not checking that the standards of accommodation are suitable for their needs. The time that people spend in temporary accommodation is increasing.
Weaknesses identified in the report include:
Strengths identified include:
The report makes a number of recommendations, including:
West Somerset District Council
An Audit Commission report concluded that the strategic housing service provided by West Somerset District Council is poor and has poor prospects for improvement. It awarded the service a zero star rating.
This is because the Council has not been successful in delivering new affordable housing, addressing poor housing conditions in the private rented sector and bringing empty homes back into use. Customer access to the service can be difficult and progress on equality and diversity has been poor. The service provides poor value for money - it has above average costs, performance is poor and there is low customer satisfaction.
The inspectors found some positive features of the service. These include:
To help the service improve, inspectors made a number of recommendations. These include:
Other LA Reports
Other local authority inspection reports issued by the Audit Commission during January included:
Leeds Federated Housing Association
The housing service provided by Leeds Federated Housing Association to its customers is rated as poor with uncertain prospects for improvement, according to a report released by the Audit Commission. Inspectors awarded the service a zero star rating.
They found that the Association is delivering poor services in many areas - including responsive repairs, the repair of empty properties, rent collection, the adaptation of properties for disabled people and in responding to antisocial behaviour. In addition, progress on addressing value for money and diversity issues is slow.
The inspectors found:
Inspectors also noted some positive aspects of service delivery:
To help the service improve, inspectors made a number of recommendations, including:
Walbrook Housing Association
An Audit Commission report found that the housing management services provided by Walbrook Housing Association are poor with uncertain prospects for improvement. The inspection team gave the Association, which manages 3,500 homes in Staffordshire and Derbyshire, a zero star rating. This was because tenants' homes are not well maintained, and tenants wait a long time for repairs to be completed.
In addition, the amount of rent being collected by the Association is decreasing, which means that there is less money available to re-invest in services, and the Association cannot show that its services provide value for money.
Other weaknesses include:
However, there are some strengths which include:
The report recommends:
Other RSL Reports
Other registered social landlord inspection reports issued by the Audit Commission during January included:
Cadder Housing Association has made dramatic improvements in how it governs its organisation's work for tenants. It was awarded a 'B' or good grade in a re-inspection by inspectors from Communities Scotland.
After an inspection in 2004, the association was awarded a 'D' grade for governance and financial management.
A re-inspection was undertaken in August 2007 to assess its progress against the improvement plan it put in place after the original inspection. The inspectors found clear improvements.
