Jeremy reviews the report of the independent Commission on Public Private Partnerships, sponsored by the IPPR. This article first appeared in Liberal Democrat News in August 2001.

This Report goes to the heart of the main public policy debate of the day – the balance between private and public provision of public services. Its criticism of the ways some high-profile PFI schemes have been mismanaged has been widely represented as a wholesale attack on private sector involvement in general – but in fact this Report is in fact a prolonged argument for the value of PPPs, put together in the right way.

The authors remind us that a key original motivation behind PFIs was to allow “off-balance sheet financing” – a way of bringing cash into public services without frightening middle England by having to fund it directly from taxation. But as it points out, using private finance to pay for capital investment does not of course mean “free” investment – all PFI projects are publicly funded and incur future liabilities for the Exchequer. One of their recommendations is that funding coming through this route should be brought within Government Departmental spending limits.

But this report’s authors argue passionately that some failed projects does not mean that all involvement of anyone other than ‘traditional’ public servants must always be wrong. As Charles quoted to the Centre for Reform last week, they said that “The Government’s proposed PPP for the London Underground was not the best model”. But they went on to say that “This is not to deny that some form of PPP might have been a viable option but the initial model offered by the Treasury and the DETR was not it.”

The Report provides a lot of detailed back-up for the position Charles outlined in his CfR lecture – that he is quite happy to see the private sector have a role in public services if it can help deliver better quality for the public. What is wrong is the way the Government has gone about public service reform since 1997. They, like Charles, argue that the country has had enough of dogmatic approaches over the years from the Conservatives and Labour that private is good, and public bad, or vice-versa.

Their starting point too is the Liberal Democrat one that major public services must remain publicly funded and assured. But within that, the heart of their argument is a plea for ‘diversity of provision’ – that in deciding how such services should be organised, public, private and voluntary providers should all be open to consideration. In any individual case the best service to the public might result from a PFI arrangement, from a “bonds” set-up, or from a traditional public sector method. Such diversity also promotes crucial innovation in provision.

Accountability is a key element, and in fact they argue that the split between Government’s role in funding and commissioning services, and the role of the provider (whether public or private) can assist in transparency and accountability in the Governmental process, as well as helping planning and management within the service itself.

They argue that PFI projects for prisons (notwithstanding the some highly embarrassing prisoner escape – the kind of mistake from which the traditional public is also far from immune) and for roads have delivered improved value-for-money and improvements in service. PFI in schools projects have successfully brought in new investment and new ideas, in many cases providing the only realistic possibility in the foreseeable future for replacing desperately outdated buildings.

The report reminds us too that the outward face of the most famous public service of all, the NHS, has long in fact been private. Since 1948, when going to see your GP, you have in fact been seen by a small businessperson, self-employed and providing services to the NHS on a “private” basis. “Private sector” provision of key services is not new or frightening, and what matters is how good the service is, not the precise employment status of the person who provides it.

They do leave some important questions unanswered. At no point do they address themselves to the question of why it was that Marx and a few others thought that public ownership of the means of production might be important, in the first place. He opposed the huge power which private ownership gave to corporations and the individuals who controlled them. How we can prevent this sort of power accumulation, and the distortion of service provision, making proper leadership by strong accountable public authorities impossible, remains a partly unanswered question for modern PPP’s.

But Liberal Democrats should welcome this report, as one of the few full assessments available of the possibilities for radical improvement which private sector engagement of delivery of publicly-funded and free-at-the-point-of-delivery services might bring.

Working out how best we can use this agenda to provide high-quality services for the public lies well within the radical and the Liberal Democrat tradition. This report certainly does not argue that the public sector, with all its ethos of public service – does not have a valuable and unique contribution to make. But equally those who simper only that “it’s disgusting to make a profit out of making people better” forget that Liberals have never taken a simple narrow view that all profits are evil. As Martin Taylor argues in his Chairman’s introduction “purity of motive does not compensate for inadequacy of outcome”.

Our European neighbours provide such services – in some cases of a very high quality – without our peculiarly British fixation with the distinction between public and private. And a patient needing urgent treatment, or a child needing teaching, surely doesn’t care whether their services are provided by a public worker, a private worker or a daytripper from the planet Zargon – they just want a high quality service delivered now.

This report would not have been necessary if the traditional public sector provided us with the level of services we all want to see. Since they do not, it illuminates very helpfully the way to some imaginative and innovative ways forward.