Over the years public-private partnerships have got a bad name – and in many cases, justifiably so. Branded a waste of money by critics, the property and infrastructure schemes often resulted in inflated prices being paid by the public sector, ultimately shouldered by the taxpayer.
But there are ways in which the private and public sectors can work together to deliver development schemes which benefit communities. “I think it’s quite an interesting moment for public-private partnerships at the minute,” says Kim Grieveson, director at Avison Young. “We’ve got some big procurements which we’re live with at the moment, and we have had a good level of interest.”
Colin Murray, partner at DWF, says for local authorities, public-private partnerships are “absolutely fundamental”.
“They remain absolutely crucial to the delivery of local authorities’ aspirations, whether that be office accommodation strategies, town centre regeneration or other things,” he adds. He predicts that the property sector is going to get “more collaborative, not less”.
Trust is crucial
So how can local authorities make the most of working with the private sector? Building a successful partnership comes down to trust, says Tom Edgerley from U+I, which often works with public sector partners to deliver large regeneration schemes.
“It takes a long time to make sure that we both feel that we listen to each other,” he adds.
And when it does work well, the results of partnership work can bring wider benefits. Murray says he was encouraged by an experience in Conway in North Wales, where the council procured a developer and built a modern office building for its staff. “You get lots of social value as well,” he explains. “There’s 750 people in high quality jobs in Conway who weren’t there previously. There’s now regeneration around the building, driven by people going out for lunch and so on.”
It’s not around just getting together for a deal, it’s actually collaborating in general, having conversations about how you can work together
– Jamie Holmes, VU.CITY
And despite their reputation, Jamie Holmes, chief executive of VU.CITY, says he has seen nothing but positivity from public-private partnerships.
But, he says, the lines of communication could be more open. “[People say that they] only ever communicate with the private sector when [they] are negotiating and on the other side of the table,” he says, adding that local authorities appreciate simply being in the room with a developer to have conversations.
“It’s not around just getting together for a deal, it’s actually collaborating in general, having conversations about how you can work together.”
Grieveson says she is keen to “upskill” local authorities to ensure that they are “properly engaging in the joint venture”, which will help them get the most out of arrangements.
Barriers to entry
But there are still concerns: Murray says that private sector partners often become frustrated about the number of hoops they have to jump through in order to win public sector work. “They say, look, we want to get this done, why can you not just crack on and do it?” he says.
For Grieveson, the major barriers to entry for public-private working, especially on larger projects, are cost and political risks.
“[Clients want to check that] everybody is on the same page all the way through that authority, because the biggest risk to development in London at the moment is that political landscape – that’s what is putting a lot of the private sector off, I think,” she says.
Edgerley has similar concerns: “I don’t think you can get around how long it takes to do things. Development takes a long, long time, and often the political landscape changes over that period of time. But if you understand how it works on the ground and you do a lot of work researching what people think and what people want, it gets rid of a lot of that risk,” he says.
But Holmes says he has encountered a willingness from both sides which he hadn’t necessarily expected.
“It’s not just all about profit anymore [for developers]: it’s about people and the planet and all sorts of stuff. Likewise, I’ve seen the council saying ‘I’m sure we can squeeze some more into this development’.”
So what is the future of public-private partnerships? The government’s decision to increase the cost of public borrowing by 1% earlier this year is one thing which will change the market, Grieveson says.
“There are probably going to be increased calls from the local authorities and the whole public sector world to work more with some of the finance houses, and more private banking solutions are going to come in,” she predicts.
Holmes suggests that there will need to be wider collaboration between various private developers working within the same local authority area, and Edgerley agrees.
“As technology gets better and platforms such as [VU.CITY] and other digital platforms allow us to have a wider conversation with a wider disparate group of people that all have a stake within the products that we’re building, that collaboration will naturally grow from just the landowner and the local authority to all of those who interact with our developments,” Edgerley says.
Without private sector involvement, the public sector could be missing out on millions, if not billions of pounds of funding, Murray warns. So despite a dubious past, it is clear that public-private partnerships must continue.
What could the future of real estate look like if everyone collaborated more?
In this EG Property Podcast, Collaborators editor Rhiannon Curry gathers a panel of experts to answer that question and talk about the potential of future collaboration in the industry, particularly between the public and private sector.
Joining Rhiannon for the discussion are:
- Kimberley Grieveson, director, Avison Young
- Jamie Holmes, chief executive, VU.CITY
- Colin Murray, partner, head of local government, DWF
- Tom Edgerley, development director, U+I
