Scotland's response to the Consultation on the use of Joint Ventures to deliver
primary care/joint premises.
Scotland welcomes the opportunity to respond to the consultation on the use of
joint ventures to deliver primary care/joint premises.
UNISON Scotland is
opposed to private business taking over the ownership, financing and management
of any public sector infrastructure and services and tying the public sector into
exclusive long-term contracts with private sector companies.
has concerns regarding the requirement of public sector partners i.e. to hold
shares and to become members of boards of directors of profit making companies
as required under this new venture. We believe this will cause problems with accountability
and conflicts of interest
UNISON Scotland has concerns about the majority
shareholding of the private sector in LIFTCOS as it raises questions on control
as it brings new and different commercial aspects to public services.
Scotland is concerned that there is no indication as to how the Joint Ventures
will be evaluated and we believe it will be necessary to fully monitor and review
all contractual and governance arrangements in the interests of transparency and
UNISON Scotland believes that there should be a wide-ranging
consultation regarding Joint Ventures and the use of LIFT involving all sectors
of the community particularly older people, children, ethnic minority ethnic groups
and disabled people.
UNISON Scotland has concerns that the national joint
venture companies involving Partnership UK are supposed to give independent advice
to local LIFT projects. It is questionable how independent this advice would be
given that these companies have a stake in the local LIFT projects.
Scotland has concerns regarding the LIFT scheme in terms of affordability and
value for money. Participants in the scheme will be required t o commit themselves
to long term contacts and put extensive resources into the setting up of the scheme
and into leasing and maintenance but will not own the building at the end of the
UNISON Scotland is concerned at the job losses, which will be
sustained through the use of Joint Ventures. The premises owned by the LIFTCOS
will be maintained and serviced by them. There is also concern that, as in the
past with other PFI schemes that costs will be cut and profits increased by worsening
staff pay and terms of employment and career opportunities for new staff, so creating
a two tier workforce.
UNISON Scotland is concerned that there will be new
issues of capacity and risk with the LIFT schemes and it is unclear how much risk
will actually be transferred to the private sector. As with any other private
company, LIFTCOS could fail and so there will be risks in the public sector contracting
with LIFTCOS and also in being shareholders.
UNISON Scotland is concerned
that the cost of using PFI has tended to escalate during contract negotiations.
The risk of such cost increases in LIFT will be borne by the Health Boards and
other public sector partners. Therefore a LIFT agreement is likely to make significant
claims on the revenue budget of the organisation for many years with a consequence
to other services.
is Scotland's largest trade union representing 150,000 members working in the
public sector. We are the largest trade union in local government and the NHS
in Scotland. UNISON welcomes the opportunity to respond to the consultation on
the use of Joint Ventures to deliver primary care/joint premises as it covers
issues of great concern to our members not only in their professional lives but
as citizens too.
This paper constitutes UNISON Scotland's
response to the consultation on the use of Joint Ventures to deliver primary care/joint
Scotland is opposed to private businesses taking over the ownership, financing
and management of any public sector infrastructure and services and tying the
public sector into exclusive long term contracts with private sector companies.
UNISON Scotland believes that there
are unacceptably high financial, employment and democratic costs to using this
method of financing Scotland's public services and is opposed to it, believing
that in many such schemes, the ‘value for money' criteria is not met and that
such schemes in reality cost more that the alternatives.
Scotland also believes that such schemes are not affordable and result in substantial
cuts in services and in addition have little transparency or user involvement
during the planning stages.
Scotland believes that such schemes involving the private sector are under misguided
pressure to pursue off-balance sheet schemes and this has encouraged the unnecessary
transfer of staff.
definition of proposed powers
Scotland has concerns regarding the requirement of public sector partners to hold
shares and to become members of boards of directors of profit-making companies
as required under the LIFT scheme which is proposed for Joint Ventures. 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 traditional PFI schemes. However the public sector will have
only a minority of shares in the LIFTCOS (initially 20 per cent at the local level,
which can be sold) and it is questionable whether or for how long their activities
will remain part of a wider public sector strategy for premises development.
Scotland also believes that the creation of the LIFT scheme means that, for the
first time, NHS and other public bodies will directly hold shares and directorships
in companies that are operating for a profit. This will bring a new and different
commercial aspect to public services and a new set of responsibilities and liabilities
and potential conflicts of interest for executive and non-executive directors,
councillors and other public sector board or governing body members. It may be
a ‘convincing' model from the private companies concerned but not necessarily
in the public interest.
has concerns about the majority shareholding of the private sector in LIFTCOS.
It raises questions of accountability and control and the involvement of public
sector representatives, both as purchasers of LIFTCO services with a duty to keep
costs down, and also as members of the LIFCO boards, with a duty to maximise profits
for shareholders may give rise to conflicts of interests.
is no indication in the paper as to how Joint Ventures will be evaluated. It is
essential that such schemes have a realistic public sector comparator with a genuine
level playing field as recommended by Audit Scotland for PFI schemes.
Scotland believes that during the life of a local LIFTCO it will be necessary
to fully monitor and review contractual and governance arrangements. It will be
important that any LIFT scheme remains transparent and accountable in operation
and continues to provide value for money. Governance arrangements will need to
be clear and because there is no precedent for the governance of companies such
as LIFTCOS, it will need to be monitored for any problems of accountability and
conflicts of interest.
UNISON Scotland believes that the exclusivity clauses
in the LIFTCO contracts mean that the local LIFTCO will have exclusive right to
provide new facilities and/or services commissioned by the participants as part
of the overall premises strategy. Public sector partners will need to ensure that
only those services and facilities that are genuinely part of the Strategic Services
Development Plan are included in contracts with LIFTCO.
believes that making public sector infrastructure subject to commercial business
considerations will open up LIFTCOS and their contracts to all sorts of trade
agreements. This will include the General Agreement on Trade in Services (GATS)
and that will require extensive monitoring - more than is currently required in
relation to premises' management in the public sector.
UNISON Scotland also
believes that the following issues will have to given full consideration as regards
the governance and monitoring of LIFTCOS:
- What is the liability
of LIFTCO board members, including any public sector partner board members?
mechanisms will there be to ensure that public sector board members are accountable
to the bodies they represent?
- How much control will the original board
- How vulnerable will a LIFTCO be to a takeover?
mechanisms are in place to ensure compliance with the original contract with the
LIFTCO and the termination of the contract if it is breached?
- How will
the public sector ensure that all and only those new facilities and/or services
covered by the exclusivity agreement are provided by the LIFTCO
- Do the
organisations have the capacity to monitor the implication of and compliance of
the LIFTCO with relevant trade agreements and other aspects of commercial practice?
UNISON Scotland believes that setting
up a local LIFT scheme could take up to two years. This should allow time for
members of public sector bodies and trade union representatives to have their
views heard and for them to ask questions about the LIFT process and its outcomes
and to assess, at each stage of the setting up process, whether the LIFT route
is in the best interests of the communities and staff that they represent.
Scotland believes that there should be a proper strategy for public and service
user consultation during the development of a Strategic Services Development plan,
the assessment criteria for bids, the detailed design stage and throughout the
life of the LIFTCO when new premises and services are being introduced.
Scotland believes that premises designed and serviced by LIFTCOS are intended
to have sufficient flexibility and adaptability to cater for changes in health
and social care needs, new technology and new forms of service delivery. Therefore
the consultation process should be designed so that local people, service users
and staff have an opportunity to consider future needs in imaginative ways.
Scotland believes that the consultation takes into consideration the needs and
wishes of different groups of people such as the older people, children, minority
ethnic groups and disabled people. These consultation techniques must be suitable
to meet the communications of all these different groups.
Scotland has concerns that the national joint venture companies involving Partnerships
UK are supposed to give independent advice to local LIFT projects. UNISON believes
that it is questionable how independent this advice will be, given that these
companies will have a stake in the local LIFT projects and will hope to make a
profit from them. It would obviously not be appropriate to use these advisers
to consider alternatives so LIFT, so assurances should be sought out on financing
options by genuinely independent sources. One of the companies the Scottish Executive
has already listed as one of the Joint Venture consultees is Ballast Wiltshier.
Earlier this year Ballast went into liquidation leaving a trail of devastation
in its wake.
The Local Improvement Finance Trusts
Scotland believes that LIFT is intended for smaller scale projects than PFI schemes
but it has all the disadvantages of PFI and as a vehicle for borrowing LIFT is
wholly untested and untried in the NHS arena.
believes that by participating in LIFT schemes, the public sector partners will
be required to enter 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. Despite all this financial
outlay, and unlike the PFI contracts, the public sector will not take ownership
of the building at the end of the contract. It will remain the property of the
local LIFTCO. This raises questions of affordability and value for money.
Scotland believes that the premises owned by local LIFTCOS will also be maintained
and serviced by them. This means that some staff who are currently employed by
the NHS, by GPs or by local authorities and possibly schools and other public
sector bodies may be transferred to LIFTCO. In addition some new jobs, instead
of being public sector posts, as they might have been in the past, will become
part of the private sector.
SCOTLAND is concerned that, as in the past with other PFI and private sector providers
of public services, that costs will be cut and profits increased by worsening
staff pay, terms of employment and career opportunities for new staff, so creating
a two tier workforce. It is unclear from the consultation paper if this scheme
is to be treated as a PPP scheme and therefore covered by the Scottish Executive/STUC
PPP staffing protocol.
is concerned that in the past, local NHS primary care bodies have not had to participate
in and manage such complex legal agreements or such large capital projects. There
will be new issues of capacity and risk in being involved in local LIFT schemes.
It is unclear how much risk will actually be transferred to the private sector.
It could be that under the terms laid down for the setting up of LIFTCOS, Health
Boards may have to take over leases, if the GP's lease expires without a successor
being immediately available. So there may be risks for public sector bodies in
contracting with LIFTCOS and there may also be risks in being shareholders, since
LIFTCOS, like any other private company, can fail. With all PPP schemes the real
risk falls back on the public sector who have to ensure the delivery of the essential
UNISON Scotland is
concerned that the cost of using the Private Finance Initiative for hospital and
school buildings has tended to escalate during contract negotiations. The risk
of such costs increases in LIFT will be borne by Health Boards (and other public
sector partners.) A LIFT agreement is likely to make significant claims on the
revenue budget of the organisation for many years, with consequences for other
Alternatives to LIFT
Scotland believes that there are alternatives to Joint Ventures and LIFT and that
these should be adopted. These involve the use of conventional borrowing by PSO's
. This option allows borrowing at lower interest rates and without the need to
finance private profit. Where projects involve local authorities then prudential
borrowing powers can be considered. There is also a need to consider mechanisms
for extending these powers to the NHS.