European Services Strategy Unit

2017 news and events from the European Services Strategy Unit.

Article by Stewart Smyth and Dexter Whitfield in Accounting Forum journal. The UK’s government auditors, the National Audit office (NAO), play a central role in the accountability relations surrounding government expenditure. Commonly portrayed as being independent, they carry out performance audits assessing value for money. To date the emerging market for PPP equity transactions has attracted little attention. This paper explores that emerging market through a Gramscian framework utilising the concepts of ‘common sense’ and ‘good sense’, focusing on a dialogical analysis of a NAO report. Open Access download: http://dx.doi.org/10.1016/j.accfor.2016.06.003

An hour-long BBC television ‘Scotland Investigates’ programme on 22 August revealed evidence by Dexter Whitfield that over 80% of Scotland’s PFI schools are partly or wholly owned in offshore tax havens. The programme investigated the cause of the closure of 17 Edinburgh schools for repairs after construction defaults were found. Equity in this project had been sold 13 times. Part of the interview was on the BBC Television National 6.00pm news and was the lead item on the Scottish News. http://www.bbc.com/news/uk-scotland-37135611 A detailed ESSU Research Report on secondary market infrastructure funds will be published shortly.

A joint UNITE Somerset and European Service Strategy Unit statement summarising the case against the planned outsourcing of the Learning Disability Service. It exposes fundamental flaws and negligent practice, which indicate the Council has not learnt the lessons of the failed PPP Strategic Partnership contract with IBM.

The additional cost of PFI for the PPP1 schools project is estimated to be £104m compared to the cost of direct provision by the City Council. Offshore infrastructure funds own a majority of equity in the special purpose company and 100 percent of equity in the PPP2 project. http://www.scotsman.com/business/flawed-schools-cost-capital-100m-too-much-say s- pfi-expert-1-4102451

A prime example of connecting the £11.5m profit from Balfour Beatty’s 50% stake in the PFI special purpose company to the HICL offshore infrastructure fund generating a 19% return; the Salford Royal NHS Foundation Trust’s forecast of a £14.9m deficit this year; a £17m PFI payment due in 2016 towards the total project cost of £705m for building works that cost £137m; and the junior doctors strike: http://salfordstar.com/article.asp?id=3190

New research reveals the rapid growth and power of offshore secondary market infrastructure funds – a £17.1bn (€20.1bn) industry buying and selling equity in PFI/PPP project companies. The three-way profit gain – original SPV shareholders, secondary market fund sales and shareholder dividends of secondary market funds – means the total annual rate of return could be between 45%-60% – three to five times the rate of return in PFI/PPP final business cases. The five largest listed offshore infrastructure funds made a total profit of £1.8bn (€2.1bn) in the five-period 2011-2015 but paid ZERO tax. Recommends termination of PFI/PPP programme, nationalisation of SPVs, increased public investment and many more policy changes.

Submission by Dexter Whitfield on the critical importance and need for alternatives to privatisation. A demand for public ownership alone is inadequate. It must be accompanied by proposals to radically change the way public services are managed and held democratically accountable. Otherwise, public ownership alone will ultimately lead to re-privatisation later.

London Borough of Barnet Council recently decided to retain the Adult Social Care service in-house. That policy reversal did not last long. The Street Scene options appraisal (waste collection, recycling, street cleaning, grounds maintenance and fleet management) includes a designed to fail ‘in-house (pre December 2015)’ option. It is now examining options involving Local Authority Trading Company, outsourcing and shared services options. This report exposes the risks and flaws in this approach.

China Social Welfare journal has published a 6,000-word summary of the Alternative to Private Finance of the Welfare State, a global analysis of Social Impact Bond, Pay-for-Success and Development Impact Bond projects by Dexter Whitfield. Thanks to Prof. Li Bing, Beijing.

Analysis of Barnet Council’s proposals for the Library Service – 46% job loss and 70% cut in hours. 72% of library opening hours will be unstaffed technology-enabled opening with 10% being volunteer-supported. Highlights widespread community opposition, flawed economics and the false claims made to justify the transfer or outsourcing of the Library Service.

Analysis of planned new operating model for Adult Social Care in London Borough of Barnet in parallel with £18.5m cuts over 4 years. Model relies heavily on volunteers and asserts that community and voluntary organisations will be ‘equal partners’. Barnet UNISON makes a series of proposals to radically change the Council’s and its consultants approach and planned outsourcing.