IHE president scrutinises local authority use of PFIs

17/03/2015
Highways Reporters

The president of the Institute of Highway Engineers (IHE) is concerned about the increasing use of private finance initiatives (PFIs) by local authorities.

Nightingale (pictured), who is a director at JCT Consultancy, spends a large proportion of his working life visiting local authorities to deliver training to their staff in traffic engineering.

Speaking in his blog, the IHE president says it is becoming increasingly apparent that a serious problem is looming with respect to the scrutiny of highway design proposals.

He said: “Over the past year I am getting the same message from all the authorities that I train ‘We simply don’t have enough in house staff and those we do have often lack the skills and experience to fully scrutinise highway proposals properly’.

“Local authority highways departments have always struggled with the disproportionate levels of capital and revenue funding and in recent years revenue cuts of 33% have hit hard. This level of cuts are likely to continue in to the next parliament. Also the increasing use of outsourcing and joint ventures is exacerbating this problem to as yet unseen levels. PFIs, whilst few in number, have brought and are bringing significant opportunities to local authorities to renew dilapidated assets and deliver improvements and the longevity of some of the deals is a welcome step forward giving opportunities to undertake forward planning. The problem with the increasing use of outsourcing and PFIs is they can often result in a rapid skills drain from the authorities they serve.”

Nightingale points out that because local authorities are under severe financial pressure they are often keen to transfer their spending on staff from a revenue to a capital account.

He added: “The easiest way to do this is encourage the transfer of employment to the private consultancies who deliver the services. It’s not always a bad idea and can work well but I am increasingly being told of some of the problems that can result. Consultancies are naturally profit driven and must utilise their assets (including staff) to the maximum. This can sometimes result in the most skilled engineers being used to provide services across several contracts rather than focusing on a geographical area as they did when employed by the local authority. This can result in a loss of real resource to some authorities. The flip side is of course that consultancies can bring additional skills in from elsewhere and enhance the services but I am regularly told that the local authorities value local knowledge highly and they mourn the loss of local engineers taking ownership of local schemes.”

According to Nightingale, this can also lead to relationships between consultancies and local authorities becoming adversarial with cooperation being replaced with a “charge for everything” culture.

He notes: “Ultimately this serves no one and it’s sad to hear. The most worrying concern I am hearing however is that of the increasing lack of ability for local authorities to provide proper scrutiny of schemes and proposals. If the arrangement is to work the local authority may contract out the design work but must retain the duty to set strategies, scrutinise proposals and consider the long-term impacts and of course satisfy the wider local interests including the political. Denuded of skilled staff they are finding this increasingly difficult.

“We need to ensure that our joint ventures are run well, in a spirit of cooperation and that both parties get what they need to deliver quality sustainable solutions. And in simple terms I am being told that we have to find a way to divert and ring fence some of the capital spend to support the employment and training of local authority engineers. This will allow local authorities to retain at least a small core of highly skilled and highly motivated engineers and importantly make provision for succession. Some larger authorities are very good at this, Transport for London have a long standing programme of graduate recruitment and invest heavily in growing talent, Transport for Greater Manchester are also making significant progress. But it costs money and is often the preserve of these large authorities. So why not cooperate, neighbouring authorities could pool resources, what about regional graduate training schemes?”
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