Industry seeks clarity on Labour PPP stance

Exclusive by Carol Millett

Contractors have this week called for clarity from the government on its policy towards private sector involvement in public services in the light of its recent decision to pull the plug on Railtrack.

The move comes all too soon after the government-imposed moratorium on hospital public private partnership projects and the transport minister's clumsy handling of the recent political opposition to the London Underground PPP. Now PPP contractors, funders and lawyers are threatening to approach future PPP work with much greater caution, which they warn will ultimately cost the taxpayer.

Major Contractors Group director Bill Tallis said: "Clearly it will make the process more difficult to do. It will need more lawyers and there is likely to be fewer funders and everyone will be more cautious. The government is already in the process of changing the rules on staffing levels in the NHS, and London Underground is another example of how the goalposts keep moving. There was a time when we thought we understood what PPP was, but now we have to question that."

But James Stewart, chief executive of Partnerships UK, insisted this week that the government remains firmly committed to PPPs. He told CJ: "The point is that Railtrack is an entirely different entity. It was a privatisation, not a PPP and although two-thirds of its revenue came from the government, the rail regulator, and not the government, controlled the company.

"In contrast a PPP is a bilateral contract between the government and the private sector. The question of whether shareholders will be treated fairly does not arise in a PPP because the way the shareholders are dealt with in a PPP is set out explicitly in the contract."

Stewart added that the government is totally committted to its PPP programme. "There are more than 300 PPP deals in procurement and many more deals to come. I am absolutely confident the market will continue," he said.