Joint PPP project threatened

18 Jul 02
The ground-breaking public-private partnership between Milton Keynes and Northamptonshire County Council was hanging in the balance this week after fears over the long-term future of one of the private sector bidders.

19 July 2002

Milton Keynes Council was holding a full meeting to debate whether to take the proposed joint £400m PPP any further, as Public Finance went to press.

The Labour group on the Liberal Democrat-controlled authority is calling for the project to be postponed or scrapped, following the stock market decline of one of its two bidders, Amey.

The company has lost 10% of its value in the past two weeks and has debts of £106m. It is also understood to be reviewing to what extent it will continue bidding for PPP and Private Finance Initiative contracts. Hyder Business Services is also in the running.

Nigel Long, leader of the Labour group at Milton Keynes, said the financial risks of the project – under which the private sector would deliver both authorities' core services, such as finance, legal, benefits and information technology for ten years – were now too great.

'Amey has already lost £400m off its share price. We are talking about transferring 15% of our workforce to the private sector. What happens if the company folds, who will pick up the tab?' he said.

Long added that it would prove too risky to continue negotiations just with Hyder, the other bidder, and claims it is now more financially viable to keep the services in-house.

Northamptonshire was due to debate the issue on July 18, with Amey's performance also expected to be on the agenda. But the council is understood to be more anxious to press ahead with the project.

A spokesman told PF that Northamptonshire would be deciding whether to move forward on a 'best and final offer'. This would keep both companies in the negotiations. He added that the authority was likely to press ahead with the project 'with or without Milton Keynes'.

But he conceded that there had been substantial slippage in the PPP, with 'preferred bidder' status originally expected in the spring. It is now expected in October ,with the contract beginning in April 2003.

PFjul2002

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