Spending review fears hamper public projects

6 October 2004
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07 October 2004 | Cara Whitehouse

Uncertainty over how local authorities will meet the government's spending review savings is holding back large-scale projects, a left-leaning think-tank has warned.

The uncertainty was one of several issues voiced by participants in a recent forum on public-private partnerships (PPP) conducted by the New Local Government Network (NLGN) and the University of Brighton Business School.

The chancellor's spending review, based on Sir Peter Gershon's efficiency review in July, called on public-sector purchasers to save £6 billion as part of a major government drive up to 2008.

Central government departments and agencies, as well as local authorities, have until the end of this year to present the Treasury with plans on how they will achieve this.

Warren Hatter, head of research at NLGN, said: "Many local authorities do not know what the Gershon review means for them in practice yet.

"Authorities are hesitant to put out invitations to tender only to find in several months' time they may be told to do it another way."

Participants pointed out that this hesitancy was coming from senior management rather than themselves, Hatter added.

The results of the forum, published in the report Beyond Contract: What Makes a PPP Successful?, also showed that a skills gap is hindering PPPs, according to purchasers and suppliers.

Stephen Reeve, co-author of the report and programme director of the MA in change management at the University of Brighton Business School, urged purchasers to bear in mind the long-term risks in partnerships.

He pointed to "an element of complexity that has been underestimated" when he described how managers must cope with the new demands of a partnership venture.

"They must make a conscious effort to look forward to see how things might play out," Reeves said."Partnerships are throwing up new challenges for which the managers are probably not trained."

Partnership managers were now having to possess more skills in essential areas such as negotiation, diplomacy, flexibility and cross-organisational management.

A recent survey by the Royal Institute of Chartered Surveyors also found a skills gap in project management of PPP deals, including whole life-cycle costing, financial modelling and people skills (see News, 22 July).





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