Public and private: a collaborative approach

According to the National Institute for Economic and Social Research , the cut in real government consumption will amount to 10% between now and 2015. This compares with cuts in the 1930s, 1950s and 1970s of about 1.5%. The recent Emergency Budget mapped out various policy measures which demonstrate the direction of travel for the new government. A key challenge for the public sector is to find savings in service delivery while at the same time minimising the effect on frontline services. Potential solutions, HM Treasury's March 2010 report on the initial Total Place pilots, claims that there are real service improvements and savings to be made from a "Total Place approach". A key feature of this is to find ways for public and private organisations to work together more collaboratively to find efficiencies. Some types of joint working are simple and do not require much engineering. Others require an "externalisation" of services, including: • shared service arrangements between one or more public sector bodies and a private sector provider for the provision of services • the outsourcing of services such as ICT, HR, finance, administration and asset management to deliver economies of scale, drive efficiencies, and deliver new investment, with a greater attention to operational costs, a tighter performance regime and some sharing of risk • the adoption of a "whole systems" or "pooled budget" approach between a council and a PCT Successful joint working, particularly where services are to be externalised, depends to a large degree on how well the joint working model is put together from both a financial and legal perspective. 10 Do's and Don'ts Successful collaborative working is more likely to be achieved if certain rules are followed. Here are our 'top 10': 1. Be crystal clear on the specific objectives and what "success" looks like 2. Work out what level of investment and budget is required to deliver the success – delivering something new to save costs is rarely free 3. Identify and deal with the specific key cultural/organisational barriers that may prevent success being achieved – for example, resource constraints, cultural/political resistance, an "us and them" mentality", weak local management, fear of the new 4. Identify and deal with the specific key legal barriers that may prevent success being delivered – for example powers/vires issues; contractual/structural complexity, public procurement issues, pensions/employment considerations 5. Identify with precision the assets and services that are relevant for the joint working – isolate any interfaces and overlaps and determine any cost implications that may complicate or otherwise affect delivery 6. Irrespective of the particular governance requirements of the chosen way of joint working, identify who should "control" the joint working and the final say in making decisions – the answer may be linked to relative contribution levels (see 7 below) 7. Work out and agree upfront who is contributing what to the joint working and the relative value of each contribution – this will drive the discussion as to the proportions in which the profits/costs savings delivered by the joint working should be shared (which is often contentious) 8. Think about what will happen if the proposed joint working arrangements break down — make sure that you are not creating something that will be a nightmare to unravel either legally or financially 9. Particularly with public/private joint working models where a separate entity is being created to deliver the joint working, carefully consider the tax implications and obtain advice at the outset 10. Where the joint working involves a contract, identify at the outset how it will be managed and operated – bearing in mind that it is in the period after the contract is signed where success will be delivered Andrew Pettinger and Paul Bentham, are partners in Addleshaw Goddard , a UK law firm