Thurs 21 st Feb 2008 - The Assembly's finance committee is looking as the role of private investment in public services. It is approaching the subject with an open mind and has no agenda, other than to establish whether services remain operational or at risk and whether they are value for money or not.
A response to the Assembly Finance Committee’s Inquiry into Public-Private Partnerships
FIN(3)-04-08 : Agenda
Finance Committee The agendas, papers and transcripts for each meeting of the Committee can be found here.
The Defence Training Academy
Read the whole report
hereA recent example of a central government PFI deal affecting Wales is the award to the Metrix Consortium of a £19 billion contract to provide training for the armed forces at St Athan in the Vale of Glamorgan. This consists of a programme to:
- Rationalise defence training across the Ministry of Defence (MoD);
- Reduce the number of sites where training is conducted;
- Use a PFI model to build the new training infrastructure to replace the current training and accommodation facilities; and
- Privatise training support and delivery.
It has generally been welcomed in Wales because of the prospect of thousands of jobs coming to St. Athan and the surrounding area. There are, however, some significant question-marks over the project.
The extent of the jobs gain and savings
The Metrix project originally consisted of two separate packages, which together accounted for an estimated total of 4,000 training staff who would have been in scope for transfer to the private sector, and relocation to St. Athan from numerous locations across the country. It was announced recently, however, that 'Package 2’ - covering logistics, security, intelligence, personnel and policing - is no longer considered economical and has been removed from the scope of the project. This accounts for around 2,000 staff and more sites than Package 1 and therefore calls into question the £2 billion savings that the deal was supposed to deliver
Loss of experience
PCS is extremely concerned about the assumption that the staff providing the services within and around facilities should automatically transfer. In discussions with the MoD, PCS has consistently raised concerns over the risk to defence training of instructional and support staff not transferring to the preferred bidder. Recent transfers indicate that between 80% and 90% of staff will not relocate. Whilst the MoD recognises this as a risk, it has not addressed the scenario, nor indeed offered any solutions. Instead the MoD states that such a risk will transfer to the bidder and is therefore not the concern of the department.
The belief that a single training specialist included in the bidding consortium can deliver the same high standard provided by the current training delivery staff is questionable. If large numbers of training staff were to decide against moving to the private sector, as our indicators suggest, we believe it is unlikely that the bidders could replace them with equally experienced instructors. The project therefore raises the spectre of an incalculable skills drain in specialist training.
Lack of accountability
PCS is concerned that the department will not to be able to control the costs of the project. The contract’s length and the fact that the first breakpoint - unprecedentedly - will not be until 15 years into the contract, will almost certainly lead to spiralling costs. Numerous factors could influence training requirements, including future deployments, new equipment and the quality of new recruits. The changing nature of Britain’s defence response will also impact upon the training requirement, and for these changes the private sector will exact a high financial price. A recent NAO report into MoD contracts noted that over 50% of contracts had to be altered due to changes in specification. In a twenty five year contract in an area as fast moving as defence and its associated training requirement, it is obvious that a large number of contract amendments will be made.
Thursday, 21 February 2008
FIN(3)-03-08 : Agenda
FIN(3)-03-08 : Paper 1 : written evidence submitted to PPP Inquiry by TUC
FIN(3)-03-08 : Paper 2 : written evidence submitted to PPP Inquiry by Unison
FIN(3)-03-08 : Paper 3 - written evidence submitted to PPP Inquiry by PCS
FIN(3)-03-08 : Paper 4 : Written evidence submitted to PPP Inquiry by NUT Cymru (pdf, 290kb)
FIN(3)-03-08 : Paper 5 : written evidence submitted to PPP Inquiry by WLGA (pdf, 116kb)
FIN(3)-03-08 : Paper 6 : Analysis of written evidence received for PPP Inquiry (pdf, 91.7kb)
