80. Joint Ventures Briefing

Introduction

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.

Overview

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.

BACKGROUND

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 and services.

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.

IMPLICATIONS

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 control.

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.