29 January 2008 | Paul Snell
Councils have not seen the benefits expected through partnerships with private sector suppliers, according to a new report.
For Better, for worse: Value for money in strategic service-delivery partnerships (SSPs), a study published by the Audit Commission, found that although authorities believed they were getting value for money, the management of contracts and performance was often poor.
More than half of local authorities are using SSPs, where private sector contractors provide services for councils. The total value of the 14 contracts examined by the Audit Commission is £2.6 billion. The potential benefits of SSPs include greater economies of scale, more flexibility and shared risk.
The Commission also warned: "Some councils have relied unduly on the language or spirit of partnership, believing erroneously that contractors would pursue shared goals without incentives to do so."
Councils were advised that SSPs are a potential method of providing efficiency savings, up to 15 per cent in some cases. But added they are complex deals, and require appropriate resources and skills to manage them.
"Complex, long-term partnerships with the private sector can succeed, but they're far from easy," said Michael O'Higgins, chairman of the Audit Commission. "But all partnerships are risky - even within the private sector, two out of every three fail. Local authorities should not be seduced by the warm language of partnerships."
The Commission has also developed a framework that identifies issues that local authorities might come across at initiation, procurement and contract management stages. It is available at http://www.audit-commission.gov.uk/strategicpartnering