Councils sign ground-breaking PPP contract

19 Dec 02
Northamptonshire and Milton Keynes councils have awarded Hyder Business Services 'preferred bidder status' in what could be the largest public-private partnership in local government history.

20 December 2002

The move ends a two-year search for a business partner and will be the first joint PPP between two local authorities.

The final terms of the ten-year contract have yet to be finalised, although the information technology and human resources divisions of both authorities will be outsourced. According to HBS, the final value of the deal could top £1bn, with current proposals valued at £776m.

Under HBS's basic offer, as many as 2,300 staff in support services such as property, finance and procurement would transfer. The company would also provide investment for one-stop shop reception areas and on-line services.

Both councils have been coy about the level of savings they expect from the deal, although HBS group executive John Jasper conceded that costs would be reduced through staff losses. 'Everywhere else we have made savings through business process re-engineering and new technology which means we need considerably fewer staff,' he told Public Finance. 'We have made arrangements in other contracts to find jobs for staff that are surplus to requirements,' he added.

Les Patterson, Northamptonshire's Cabinet member for finance, said staff transfer would form 'an important part of the negotiation process'. He said: 'Staff would transfer into the employment of HBS on their current terms and conditions.'

All three parties will now begin complex negotiations to determine which services HBS will take over. Significantly, Amey Plc, which lost out to Hyder, has been appointed 'reserve bidder' if 'negotiations with HBS do not progress'.

The final contract is expected to be signed in summer 2003, but the project has already taken longer than expected. The preferred bidder was originally due to be announced in the spring with the deal beginning in early 2003.

Both authorities concede that it has been more complex than expected, while political changes at unitary authority Milton Keynes, from Labour to Liberal Democrat, are believed to have caused some problems.

The Labour group attempted to scrap the scheme after fears over the performance and share value of Amey. It claimed that the deal would be cheaper in-house but was outvoted by the majority LibDem councillors. Northamptonshire voted overwhelmingly to continue with the project.

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