Private sector companies are ready to aid local authorities deal with the devastating effects of government spending cuts. Councils across the country are already implementing widespread cuts before the Government’s comprehensive spending review is announced in the autumn, which is set to result in a radical overhaul of what council taxpayers can expect from the state.

Highways maintenance is one of the areas already under the spotlight with substantial sums being taken out of budgets by councils across the country. The Lib-Lab coalition in Milton Keynes has already slashed the amount it spends on its roads while Gloucester’s Conservative-controlled council is pruning its street care spend.

The UK’s top trade body for road maintenance, Highways Term Maintenance Association (HTMA) has warned that repairs and improvements to the nation’s roads is an easy target for the Government.

However, Mike Notman, outgoing chairman of HTMA, said its members were at the forefront of helping to lessen the effects of the axe. “Highways maintenance is an easy target. Capital schemes such as safety improvements, congestion management and highway improvements can simply be slashed from the budget to make savings in the short-term. But this can be a false economy as the long-term costs are greater,” said Mr Notman, PFI Project Director at leading public services provider Amey.

Prosperous relationships between the private sector and local authorities can ease the impact of the cuts. “There is no doubt that the private sector delivers a more efficient and effective service than its public sector counterparts,” said Mr Notman. “This is due to a number of reasons – they are more commercially focused, have more effective processes and procedures, have greater buying power and are focused on outcomes and performance measures.

“Private sector companies undertake these services across the UK and therefore have much greater knowledge and experience of delivery. The private sector also does not have the same final salary pension burden of local authorities,” he claimed.

Private sector companies could reduce costs by as much as 15 per cent, claimed Mr Notman. Services could be delivered to current standards at much lower costs. Many local authorities have not yet externalised their highway services – but this is through political motivation.

Many Local Authorities do not want to relinquish control of high profile front line services. As cuts start to deepen, local councils need to find better and smarter ways to procure outsourced services. The current PFI model enables a much greater level of risk transfer, but the procurement process is prohibitively expensive and cumbersome.

Mr Notman explained that local authorities were still undecided about the best way of operating in tandem with the private sector. Some councils, such as Kent, are looking to break up service packages. However others are concentrating on more integrated packages.

Mr Notman said HTMA members could provide more than just maintenance work.  Many companies undertake wider services across local authorities (Enterprise and May Gurney both do refuse collection), but companies have not yet had the opportunity to integrate and demonstrate the savings made.

More bundling of services makes sense – delivering highways, sweeping, litter picking, grass cutting/trees and car park maintenance in a single contract makes sense. Dudley Council in the West Midlands has had to postpone cutting roadside grass verges because of cash constraints.

HTMA is slowly beginning to win around authorities that traditionally frown on outsourcing derived from generations of political opposition to the private sector.

The economic situation will inevitably mean some of those ‘in the balance’ will move to outsourcing – and it is likely that some of those authorities who already outsource will extend this remit.

“There are alternative models available to suit each individual local authority need. For example a ‘Public Private Partnership’ allows a local authority to work with a service provider – enabling them to share in any profits and influence how services are delivered,” added Mr Notman.

“The HTMA viewpoint would be that local authorities should stick to procuring and commissioning services and private sector companies should deliver what is required. HTMA members are much better experienced and able to deliver both design and delivery of these services – generally in a way that is more efficient and effective,” the chairman said.

“Clients generally believe that each of their local authorities is unique and that they are doing a great job of managing and delivering services. Many cannot comprehend that a 10 or 15 per cent improvement is possible – and they are usually well versed in preaching this message,” he stressed.

Ends

Editors Notes:

HTMA’s membership of leading consultants and contractors has a combined turnover of more than £3 billion, over 20,000 employees and maintains approximately 400,000 km of highway across the UK – approximately 80% of British roads.

The HTMA members are: Amey, Atkins, Balfour Beatty, BAM Nuttall, BEAR Scotland, Carillion, Colas, Costain, Enterprise, Volker Highways, Halcrow, Hyder, Jacobs, May Gurney, Morrison, Mott MacDonald, Mouchel, Ringway, Scott Wilson, Skanska and Tarmac National Contracting.  Kiely Bros, Nynas, Petroplus and WJ Linkline Group are Associate Members.

Issued on behalf of the HTMA Press Office by Joan Roemmele.  For enquiries from the media, journalists and researchers only, the HTMA Press Office can be contacted on +44 (0) 1782 443080, +44 (0) 7917 638336 or e-mail: joan@htma.co.uk