Private-public partnerships: Will they work?

The government has come under fire from an influential think-tank over its plans to increase private sector involvement in the running of schools and hospitals.

The drive is part of Tony Blair's ambition to create world class public services during his second term in power.

Private-public partnerships are intended to bring the resources and skills of the private sector to the provision of public services.

But the Institute of Public Policy Research (IPPR) argues that while public-private partnerships have worked in some areas, there is no evidence they are suitable for hospitals and schools.

Is Tony Blair right to have faith in the private-public partnerships? Will they work?

This Talking Point has now closed. Read a selection of your comments below.

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To assume PPP means the NHS will be fleeced by private firms is naive at best. I worked for various computer companies who made most of their money doing work for the public sector (I'm sorry to say) when contracted on a project-based basis which the NHS already employs. At least a private firm sub-contracting or outsourcing projects will be far more selective and concerned with cost-effectiveness and may be better at leveraging international resources/expertise than the current NHS.
Michael, UK

Ultimately, competition needs to be natural

David, England

Private companies are appropriate for a genuinely competitive market. Where there is no real competition - ie where an effective monopoly exists - private companies are a disaster. Ultimately, competition needs to be natural. The last Conservative NHS reform attempted to impose an artificial 'internal market' on the NHS. It didn't work. I feel that public/private partnerships will not work either.
David, England

Here in Belgium the mutualities do not cover all medical treatments. I know many people that have to take out top-up assurances in order to pay for treatment of cancer etc. Whether it is PPP or completely State run, the patient at the end of the day has to pay. This is where in Britain we have a problem, as most people still think that everything is free. Until the country understands the economics of life it will never find a solution. Perhaps Mr Blair's third way is so different that I could prove to be wrong?
Eric Connor, Belgium (UK citizen)

This is just a politically acceptable way of not raising tax to improve services, rather people will have to pay extra to get the services. Shame on Tony Blair!
Neil, Wales

Blair should go the whole hog and privatise totally

Patrick, England

Look at anything in this country that is done badly and the chances are that is a public service (or is still recovering from decades of being a public service). Blair shouldn't tinker with private-public partnerships. He should go the whole hog and privatise totally. Let all the health providers etc charge for their services. Let the people choose where they get their healthcare and use the money currently poured into the NHS to refund 80-90% of the charges (100% for people on income support). That's how almost every country in Europe does it. Setting the market free in this way would transform health service provision in this country in 5 years. Look at the supermarket trade. The state doesn't interfere with that and the result is quality products at good prices.
Patrick, England

How about applying the principles adopted by private companies to the public sector (or at least well selected ones)? An example would be to incentivise the staff by offering bonuses for good performance, cost cutting etc. At least this way, the government can stay in control and avoid a service decline that was witnessed with the rail privatisation. It is clear that many people feel uneasy about simply allowing the private sector into certain areas, as the need to please shareholders is far too high. Combine the strengths of both sides and surely we'll have a winner!
Christopher Laird, Japan

Privatise the entire health system, and give us back all the tax we pay for it. Then make fully comprehensive private health insurance compulsory, just like car insurance. Regulate (which is all the government should do anyway) the insurance companies, insist on one person one price, and if people are poor then they can have part or all of that insurance paid for them. But for God's sake get rid of the civil servants and career politicians. I can't see how schools-for-all can be successfully privatised, but again, why is it that anything left with civil servants is a disaster? Somebody at the top needs to impose a culture of real accountability, instead of some nebulous spin and more forms to fill in. Put someone with a track record in command, instead of some time-served pen pusher.
Graham, UK

There is no doubt in my mind that the PPP's will be a win/win/win for the government

Haik Sarkis, USA

I run a PPP health care centre. We are partnered with the Los Angeles County Department of Health Services to provide primary care services to the medically indigent. The purpose of the Counties PPP programme is to increase access to primary care which in turn reduces the number of emergency cases seen at the overwhelmed county facilities. The program has been a success from day one, not only for the County but also for the community we serve. If the programme is run properly from top to bottom, with personnel that care to make a difference, there is no doubt in my mind that the PPP's will be a win/win/win for the government, for the community and for the business that is providing the service.
Haik Sarkis, USA

My biggest problem with PFI is that it just seems like political expediency. The money needs to be spent and can be raised in three ways - increase taxation, increase the national debt or PFI. The long leases on PFI hospitals mean that we will be paying through our noses for 60-odd years. I can't understand how the 'interest' that the private companies charge on their investment could be better value for money than govt borrowing. Seems like buying something on credit card when you've got a perfectly good overdraft facility available.

I appreciate the dilemma that Labour had. When they got into office they had to prove that they could manage the economy. They've been anxious not to be seen as tax-and-spenders or borrowers, but 60-year contracts which offer poor value for money may be good window-dressing now but reduce the options of future governments, as well as being an obvious rip-off.
Justine, London, UK

I am not opposed to PPP, I just worry who in their right minds is going to take it on. When looking for something to invest in you look at staff morale, conditions of your capital etc. The NHS and schools in the UK are no go areas for potential investors. There will have to be a heck of a subsidy for potential investors. The current system is not working, with advances in healthcare an expansion of education it never will, and the burden on the Treasury will break the UK. We need to look at the alternative, it may not be what we want to hear but if we don't the whole infrastructure of the state will collapse around our ears.
Penny B, Britain

Sooner or later there will be a conflict of interest

Viv, United Kingdom

Public Private partnerships just do not work, sooner or later there will be a conflict of interest e.g. profit vs. safety. We all know which one will be compromised. There is no getting away from the fact that HEAVY investment is required to bring public services especially transport up to the same standards as some of our European neighbours. Given that tax levels are high in these European countries, but surely even our tax levels are high enough to fund our public services adequately.
Viv, United Kingdom

As we are an aging population the country cannot afford both an adequate health care and education service. Privatisation of one of the services could be a good thing if it is placed in the hands of responsible people. I have been working in private schools in the Middle East for the last ten years and have found that profit is more important than supplying good education. My worry is that the companies that already exist in the UK that the Government are already using are not investigated properly as to their motives. In the end profit is all that companies are really interested in.
Carole Hawkins, Oman

Private-public partnerships will certainly work for the private companies. They will, of course, only take on contracts that they can profit from. The taxpayer will be left to run the services that can't make a profit, and pay extra for the services that can to finance the shareholders. I wonder if this is going to be a repeat of the Tory privatisation scam, where the directors of the new companies end up being MPs.
Chris, Bradford, UK

I'm in favour of public-private partnership if it helps improve the NHS, that's the most important thing. I'm sick and tired of the unions moaning, it's all they do - the word "private" is a swear word in their eyes.

People against public-private partnerships cite Railtrack - they always single out the worst, they never mention all the good private companies. I say the most important thing is improving the health service no matter where the investment comes from
Paul Woodhouse, England

I did not enter teaching twenty years ago to put money in the pockets of private companies. I will not stay to do so now.
Ann Sherwood, UK

The private side will cherry-pick the profitable and leave the rest to the State.
Colin Woodward, England

It's time Britain bit the bullet and takes the only medicine that will give the NHS a chance

Clive, Australia (ex UK)

Tony Blair is dead right. First off, the IPPR is not exactly what I would call an "independent" body. Technically its a charity - its "charitable" donor's being wealthy individuals, companies and trade unions. I'll bet my bottom dollar they don't receive any money from companies involved in private healthcare. Secondly, it is an organisation that openly admits to operating within a "centre-left" ideology. Independent in so far as they are not funded by the state but their advice and policies are hardly independent of a particular political dogma.

Ignore them Tony, and bring the Healthcare Service into the 21st Century. Throwing endless amounts of public money at the NHS has never worked and will never work. It's an absolute money-pit. Other countries realised this long ago - it's time Britain bit the bullet and takes the only medicine that will give the NHS a chance.
Clive, Australia (ex UK)

I'm a bit confused by this whole debate. Where are the "private sector experts" waiting, supposedly, in the wings to come in and reform our public services? Education is a prime example - LEAs such as Hackney, which have been privatised, bring in this "private sector management expertise". Yet where did the staff come from? They were excellent CEOs poached from successful LEAs around the country. Is this really what we want to do to our public services?
Pete Maycock, UK

PPP sucks public money into the hands of shareholders, and there's no evidence that better services are delivered. On the contrary, there is plenty of evidence that public policy is being shaped in the interests of the private companies involved. PPP is privatisation of public services on a scale that Thatcher never dreamt of.
Neil Gall, Scotland

He is right. I think that the primary role of Government is to regulate and facilitate. Let the private sector compete for the work of caring for the sick. The hard work is for the Government to work out a mechanism to differentiate between those with means and those without.
Garth, Zimbabwe

Most of your posters talk as though completely tax funded schools and medical care were a new idea that just needs some time. It's been sixty years, folks, and this stuff has never really worked. It's time to try another way of doing things.
Jon Livesey, USA

Public services should be run in a more business like fashion, but as a non-profit entity. As a former state employee in the USA, I think most government sectors would go bankrupt if they were private businesses. They are so badly run with hideous amounts of "red tape". Because state services have the luxury of an endless stream of tax money, they appear to believe that economy doesn't apply to them. By all means utilize all the professional help available and get this poor and derelict health system healthy once more.
Amanda Bradley, Seattle, Washington

Unison says its against it and threatens Labours cash income, then a Blairite Think Tank comes out against it, this leave Tony free to backtrack on every promise he's made. Four more years of doing nothing and a Health Service down the drain
Phil Davies, UK

The pursuit of profit and shareholder value will undermine the schools' and hospitals' abilities to deliver service. If this is to proceed then a watchdog with the very largest teeth will be needed, but then that will discourage private investment. I do not see any way of making this a win/win venture.
Duncan, UK in US

I just hope we get over this stupid obsession with the perceived superior efficiency of all things private, where passengers, patients and pupils are "customers" and services are a basket of goods we can choose from. The sooner we get back to honest funding of modern life's essential services by proper income taxation, the better.
Richard, UK

Privatisation is just "increased disparity of wealth" through the back door. If the Tories had had their way, Britain would have gone back to something resembling Disraeli's "Two Nations". Let's pray Mr. Blair doesn't make the same mistakes!
Daniel Brigden, UK

Given the failure of regulation, I'd rather have inefficient public services not aiming to make a profit, than inefficient private companies who are.
Graeme, UK

Everything has to run at a profit - your home, local charity or church. Otherwise, their creditors take them to court. Yes, privatise the lot but make sure there is a regulator with teeth, responsible to the government, to ensure that the 'public interest' is recognised and obeyed. That way you get the best of both worlds.
Anthony, England

It is vital that we get more money into the public services but I'm not sure whether the PPP is the right way forward. However, I do find it hypocritical for people to criticise Tony Blair for going down this route when it's obvious that the voters are not prepared to pay for decent public services. This was shown in the recent general election. If we don't want to pay more tax, then what else can the Labour Party do to provide good public services? We must see if this 'Third Way' will work!!
G. Simpson, England

Public services should be financed by public finance - tax. Private funding or partnerships with businesses will by the very nature of business - ie to make money - not serve the whole population in a fair and public way therefore becoming less democratic.
Emily Shirley, UK

Private systems can work well, and almost always better than government-run systems

Solomon Drury, UK

It has seemed for a long time that the left has a phobia of everything private. Private systems can work well, and almost always better than government-run systems. That is not to say that they are perfect, or that the government needs to let all control go at once. And in answer to those critics who point to such things as the railways, it is the decades of under investment, and poor management, under government control which is to blame, coupled with the rotten control which they have now. Cut petrol prices, remove any rail subsidy, and spend it on the roads. That will focus minds at Railtrack!
Solomon Drury, UK

The NHS doesn't make its own beds for use in hospitals; schools don't make their own computers, desks or blackboards - no, they buy them in from the private sector. So where's the problem with buying in the building of a school/hospital from the private sector? And the people to run it? There has for too long been an obsession with "vertical integration" in the public sector - where everything has to be provided by the same organisation. No sane private sector organisation does this - instead, they buy in "best of breed" services from other companies. And so it should be in the State sector too. Maybe if we outsourced the training of teachers to commercial training companies we'd get them faster, cheaper and better too?
David Moran, Scotland/Australia

If I wanted a private-public partnership I would have voted Tory!
Sharon B, UK

To be interesting to the private sector there has to be profit to be made

Janice, England

To be interesting to the private sector there has to be profit to be made - and if they're making a profit then that amount of money is being removed from the funding of the public service, never to be returned. Do you really believe that the private sector can take their profit and still leave the service better off? Even if there were massive efficiency savings to be made, wouldn't that just translate into massive profits and unchanged (or poorer) services?

If the private sector is to become involved without sucking public services dry, how about a system of secondment of management to introduce new practices and ideas? I once read that M&S already do this with charities. The charity benefits from the expertise, the manager benefits from a broader experience, M&S benefit from the manager's experience and the "corporate citizenship brownie points".
Janice, England

'Partnership' has given us British Telecom and Railtrack. Do I need to say more ?
DominiConnor, UK

You can't have it both ways. Private schools are run to a business plan and are no place for children whose parents are below the poverty line. In Australia the federal government is proportionally giving more to private schools than those in the state system. Consequently we see schools with million dollar facilities while the state counterpart is patching up and forever playing catch-up. Those who can afford it go to private schools but don't take money away from the state system to prop up an elitist section of education.
Peter Haslett, Australia

If private hospitals have empty beds why shouldn't the NHS make use of them?
Peter Robinson, Southport, England

Most State and local government run systems prove to be a burden on the taxpayer

J Trosud, UK

In France and Germany they have a private led system. The government could easily allow the private sector to run such services as health and then buy into it. Most State and local government run systems prove to be a burden on the taxpayer.
J Trosud, UK

If nationalised industries removed 'keeping people in work' as a primary objective, the efficiency gap would be less. Side effects are not nice, however.
RAH, UK

I guess it depends what kind of partnership the PM has in mind. Selling the schools and hospitals to private concerns and leasing them back would make economic sense. Maintenance and upgrading would be the responsibility of the owners, freeing up public resources to concentrate on service delivery.
Tom, Australia

The main difference between the public and private sectors seems to be that the private sector employs just as many bad managers but pays them far more than they would get in the public sector. Let us hope that this doesn't end up with tax money being used to shore up these organisations while they pay dividends to their shareholders.
Gill, UK

PPP = a lack of imagination!

John Peterson , Britain

PPP = a lack of imagination! The kind of management needed in the still-nationalised sectors is akin to that of disaster coordinators, ie receiving a government sum and figuring out the most effective way of spending that money - not a businessman wondering what market he can 'milk' of its income. Public services are the antithesis of capitalism - they provide 'valuable' services to grateful taxpayers! Bringing in the 'profit' sector will mean exactly the same money going to the service from government, minus a massive slice diverted into the fatcats' pockets!
John Peterson , Britain

Blair clearly believes that private sector companies can do things better. There is one sense in which I agree. Private companies are adept at haggling over contracts, bidding up prices, and including penalty clauses that can cost the taxpayer millions - indeed they are far better at this than the public sector civil servants who carry out the government's end of the bargaining. Tony Blair would surely agree with the logic of this position, and therefore must know that the result is the private sector do extremely well out of these deals - and we taxpayers lose out. Blair himself falls somewhere in the middle - as his pledge to do this wins him the support of big businesses anxious to win a slice of the action.
Martyn, UK

Seems like a bit of an experiment to me, but yes private companies should realise that they are nothing without people, and therefore give the people something back i.e. invest in public transport, education and new technologies. Profit can be used for more good than just high salaries. It's not about being told to do things, but doing what you can when you can, if you have the resources.
Daren Leonard, UK

The problem with the private sector is profit

Tim Edwards, Wales

The problem with the private sector is profit. There is no morality associated with profit. Sadly, this is the overriding measure of success today. Bringing profit into the equation is only going to add to the overall expense without necessarily bringing in good management. What we need is good management that is committed to the public sector. The problems of the public sector cannot be solved by private enterprise and any success will only be temporary.
Tim Edwards, Wales

The premier of the province where I live is very fond of public-private partnerships to fund various public works. So far, I am not impressed. Corporations do nothing for the public good, since they are driven by boards of directors and stock-holders who are interested only in profit. Having corporations fund your schools and hospitals means that these corporations will milk money from the public purse in an ongoing way, which may be difficult to reconcile with public needs. If Nike builds a hospital, will someone wearing Reebok be admitted?

I am not speaking entirely in jest. A few years ago a public-private partnership supplied the educational system here with a small amount of revenue in return for exclusive rights to place soft-drink machines in the schools. Despite the dubious health-value of carbonated sugar-water, it is now impossible to obtain juice from drink machines in the schools. Where does such a trend end?
Peter, Canada

They haven't worked so far (unless your name is Gerald Corbett), so what on earth makes the government think they'll work in the future ? Of course, all these politicians need to line up nice, cushy directorships for when even they can't lie to the public any more and have to leave parliament.
Chris, UK

Where was the IPPR looking? There was an example on the news just the other day about how private money turned around a school. In principle I do not see any problems with PPP, as long as it does not mean poorer conditions for workers, and does not compromise safety and accountability. If Tony Blair wants to change the perception of "private means trouble", then he should make sure that such schemes are kept on a tight public leash. At the end of the day with PPP, it should be the public part that has the final word in the arrangement, particularly with such sensitive areas as health and education.
Eddie Talbot, UK

The fact that consultants can work for both private and public is obscene

Eric Dunn, England

I am of the opinion that the private health sector 'leeches' on the public health. The fact that consultants can work for both private and public is obscene and only inflates public waiting lists.
Eric Dunn, England

Of course they won't work - you can never successfully marry profit margins to services such as the NHS, and more imaginative solutions need to be found. I agree with Lord Hattersley on this - he puts the case more eloquently than I can.
Robert Crosby, Nottingham, UK

The private sector runs things more efficiently

John B, UK

The private sector runs things more efficiently, in order to make a profit. This discipline is a good thing, although cutting corners is not. The worst-case scenario - which is likely to happen given Improved New Labour's track record - is that the private sector will keep the profits while the public sector takes the blame.
John B, UK

You do need experienced business minds and resources to help improve public services, but these should be non-profit organisations, as companies that think about the share price and profits too much have an adverse effect on quality and, more importantly, safety.
Mark, UK