80. Joint Ventures Briefing
This briefing paper provides a summary of the Scottish
Executives' proposals for the development of Joint Ventures which
would allow private investment in Primary Care and joint premises
developments i.e. GP's surgeries and associated services possibly
including social work.
The Scottish Executive has issued a consultation
document on the Use of Joint Ventures to deliver primary care/joint
premises with two main issues on the agenda.
The first is the introduction of legislation, which
would allow Scottish Ministers and Health Boards to form, or take
part in forming companies. These companies would provide facilities
(including the use of premises, goods, equipment, materials, vehicles,
plant or apparatus) to bodies exercising functions under the National
Health Service (Scotland) Act 1978. The Scottish Ministers and
Health Boards would then hold shares in such companies.
And secondly to facilitate these Joint Venture
groups the Scottish Executive are also consulting on LIFT (Local
Improvement Finance Trusts) as a way of funding these projects.
In July 2003 the Short Life Working Group on Joint
Premises concluded that traditional processes for funding investment
in primary care facilities had been inadequate. It also stated
that as the demand for high quality, multi-functional facilities
increased, the appropriateness of current methods of funding would
diminish and require other methods of attracting finance. It concluded
that multi-purpose buildings were the way ahead for primary care
with flexible leasing options allowing more than one user to use
the same facilities. The Scottish Executive is now looking to
consult on the implications of such a move.
LIFT (Local Improvement Finance Trusts)
LIFT is part of a wider trend across the NHS (particularly
in England) and the rest of the public services to involve the
private sector in borrowing money to finance public buildings
Like PFI, LIFT involves private businesses taking
over the ownership, financing and management of public sector
infrastructure and services and tying the public sector into exclusive
long term contracts with private sector companies.
LIFT is intended for smaller scale projects than
PFI schemes and is untried and untested. The LIFT scheme was announced
in the English NHS plan in 2000 and is being promoted as the only
option for Primary Care Trusts that need to invest in new premises.
In order for LIFT to be introduced in Scotland,
primary legislation will be required to allow Ministers (and Health
bodies on their behalf) to take a shareholding in LIFT companies.
HOW DOES LIFT DIFFER FROM PFI
Like PFI, LIFT is a form of PPP but LIFT involves
the setting up of new companies in which the public sector holds
shares. Under PFI, pubic sector representatives are not required
to become members of boards of directors of profit making companies,
as required under LIFT. The setting up of such companies is promoted
by the Government as an opportunity for the public sector to have
greater influence and oversight of how its money is spent than
is the case with the traditional PFI schemes.
THE LOCAL FRAMEWORK
At local level, each LIFT scheme is required to
set up a LIFT company, known as Liftco. Public stakeholders (such
as Health Boards and local authorities) will hold 20 per cent
of the shares, the Scottish Executive holds 20 per cent and local
private sector partner holds 60 per cent.
Each Liftco looks to bring together different services.
For example one location could house a health centre, a children's
nursery and a welfare benefits advice centre.
Premises funded through a Liftco may also extend
to include commercial or retail space, which the Government hopes
will ensure the financial viability of the schemes particularly
in areas of low land values.
The introduction of such legislation will be another
step in the move towards further privatisation of public services.
UNISON Scotland has identified many reasons for
rejecting private finance involvement in the public sector including
high costs, loss of flexibility and accountability. (See UNISON
Scotland PFI web pages). Like PFI, the public sector partners
in LIFT schemes will be entering into long term legal obligations
and will be putting extensive resources, both into the initial
setting up of LIFT schemes and into leasing and maintenance contracts
with the new LIFTCO companies. In participating in LIFT schemes
public sector partners are required to enter into an exclusivity
agreement under which the local Liftcos will have the exclusive
right to provide new facilities and/or services commissioned by
the participants as part of the overall premises strategy. Under
PFI the premises that are developed may revert to the public sector
partner at the end of the contract. This is not always the case
with LIFT, where the local Liftco always owns the premises. All
this means is that questions of affordability and value for money
will arise. Given the majority shareholding of the private sector
in Liftcos, there will also be questions of accountability and
Public sector representatives, with a duty to keep
costs down and also as members of the Liftco Boards, with a duty
to maximise profits, may face conflicts of interest.
Action for Branches
This briefing is for information purposes. However
branches should look at the proposals and discuss the implications
for members and for the NHS and local authorities in general.
UNISON Scotland is responding to a separate consultation
on Joint Ventures. The response will be available on the website.
A UNISON booklet on LIFT is also available.