21 September 2001
The two parties announced the breakdown of negotiations – which had been going on for ten months – last week, but refused to elaborate on the reasons. It is understood to be the first major failure of a PPP in local government at such a late stage, with both sides confirmed to have spent substantial resources preparing the deal.
Sources close to the negotiations said the Conservative-led council was unhappy with the value for money offered by HBS for the ten-year partnership to take over information technology, finance and personnel. There was also a dispute over the price Kent was paying for the deal in comparison to the level of risk HBS was prepared to take on.
HBS group chief executive John Jasper said in a statement: 'We couldn't reach an agreement which reflected the right balance of risk and reward. It is very disappointing for both of us.'
In a further twist, the county now seems prepared to go it alone and scale down its partnership plans, keeping staff and services in-house.
'The work undertaken enabled us to review our own in-house capacity,' said Sandy Bruce-Lockhart, leader of the council. 'We have concluded that our own staff have the expertise, potential and commitment to develop and take forward these support services in a mix of public and private sector provision. I am confident that this will be in the best interest of the council taxpayer and the services we provide.'
Unison, which had opposed the partnership, hailed the news as a watershed in public-private partnerships which could set a trend elsewhere. 'We think that it's significant that a Conservative grand privatiser such as Kent took a prudent approach and decided the private sector didn't provide value for money, while Labour authorities seem happy to jump into bed with the first deal,' said Malcolm Wing, Unison's head of local government.
He added that the collapse of the deal raised questions over the viability and value for money of some of the major strategic partnerships recently signed around the country.
PFsep2001
