07 October 2005
Local Improvement Finance Trusts can make a big difference to health services, but issues need to be resolved around value-for-money comparisons, resourcing and the rationalisation of primary care trusts
The introduction in 2002/03 of the NHS Local Improvement Finance Trust (Lift) programme provided a new market for investment in primary care and community-based health facilities and services. It aims to enable local authorities to deliver better integrated health services.
As an additional procurement approach, NHS Lift is destined to have a far-reaching impact on joint working arrangements between health sector bodies and local government. Unlike conventional and Private Finance Initiative procurement, the adaptability of Lift means that it is capable of meeting the present premises requirements of local authorities or primary care trusts as well as the evolving needs of various participating public bodies.
Consequently, there should be no need to go out to procurement again to find a bidder to undertake schemes, since these can be delivered via the Lift company. This should result in significant savings in bid costs and time.
There are many potential advantages to Lift. It can help to attract good quality bids for schemes with a capital value of less than £20m, which can otherwise be difficult. It can also increase the availability of PFI credits: additional funding for local government Lift supplied schemes is now available to successful bidding authorities, and PFI can be secured for such schemes even if they have a capital value below £20m.
Few Lift partnerships have completed their second tranche of schemes and so it is too early to make definitive judgements about whether the theoretical advantages of the model will be realised.
But several issues are emerging across Lift partnerships that will determine the success of the programme as a whole.
Where a company has an exclusive relationship with the public sector, it is essential that the contractual mechanisms intended to secure value for money work effectively. Benchmarking data, used as a central element in the value-for-money provisions, need to be comprehensive and relevant.
Many local authorities are struggling to find a coherent methodology for comparing Lift's value for money with mechanisms such as PFI or traditional procurement.
The strategic partnering board is the centrepiece of the partnership, bringing together all the major participants and, potentially, other stakeholders. There is evidence that some SPBs, at least in the initial stages, have found it difficult to clarify their remit and workload.
An associated issue is the resources dedicated to the Lift partnership. Complex procurement always demands resources from the participants. Lift is no exception.
Even though it does offer the promise of reduced procurement costs there are still resource requirements, in funding and personnel, that every local authority participating in such partnerships needs to recognise and address.
Some authorities have been slow to appreciate the need for dedicated Lift resources, perhaps shared with other participants, to manage the relationship with the company.
The provision of adequate resources is a key concern in relation to developing the strategic service delivery plan. The SSDP is always described as a living document that expresses the strategic thinking of the public sector participants on health and social care provision in their area. This makes it vital for resources to be committed to its drafting and development.
The SSDP is an important document in the commercial structure, since it is the origin of the Lift company's exclusivity in relation to most local authorities. Insufficient attention paid to the detail of the SSDP and its upkeep could leave authorities without a real place in the framework and expose them to unintended contractual exclusivity in some circumstances.
A further challenge is posed by the upcoming structural reforms to PCTs recently announced by the Department of Health. Many PCTs will not exist in 18 months or so, which has implications for their commitment to the Lift partnership.
Rationalisation of PCTs will have an impact on the number of future projects likely to be undertaken by Lift, as well as on contractual structures. Balancing the interests of PCTs and local authorities during this transition is essential to the successful emergence of a strengthened partnership.
In spite of these issues there are powerful reasons to remain optimistic about the potential and progress of Lift partnerships.
Where successful, they offer the public sector participants, including local authorities, the opportunity to work productively together within a strategic framework and deliver projects more quickly and at lower costs than through most other procurement routes.
Norman Ballantyne is senior executive, legal and joint services at local government procurement consultancy 4Ps