The Government will spend $11 million on consultants and $10 million on internal costs before they start building a new prison in Auckland.

Department of Corrections documents released under the Official Information Act show it is already employing 18 companies, including accounting firm PricewaterhouseCoopers and British lawyers Allen & Overy, to help oversee the deal.

The 960-bed prison will be a public private partnership (PPP), in which a private company pays for, builds and runs the facility.

The Corrections Department’s own analysis say this may cost more than a publicly owned prison.

Corrections deputy chief executive Christine Stevenson said costs were high because it was New Zealand’s first PPP prison.

The consultants would provide “specialist technical advice” and outside scrutiny.

But the Corrections Association, which represents prison officers, said the consultants were “hired guns” who offered little value.

“They quickly work out what the payer wants them to say and they research to that,” said the union’s president, Beven Hanlon.

Ms Stevenson refused to say how much a public prison would have cost to set up, or put a figure on the prison’s total construction cost. Internal Corrections documents suggest it could be about $300 million.

PPP schemes overseas have been criticised for employing large numbers of lawyers, accountants and consultants.

The Haringey local council in London spent £24 million ($46 million) on consultants before it started its school-building programme.

Conservative MP Richard Bacon told the Financial Times this year: “It is clear that [PPP] has spawned an entire industry of advisers who have done extremely well out of it.”

Corrections’ business case says the costs of a PPP “will be higher” than those of a public prison, because private companies pay more to borrow money and need to make “commercial returns”.

The deal will be cheaper only if the company can run the prison 10 to 15 per cent cheaper than the department.

The Corrections Association said a private firm would “most definitely” make savings by cutting staff and wages, putting prison safety at risk.

Three consortiums, all headed by Australian security firms, have been shortlisted for the contract, expected to be signed by July.

The numbers:

• $11 million sum the Government will spend on consultants for the new men’s prison at Wiri
• $10 million sum spent on internal costs before the prison is built
• 18 companies employed by Department of Corrections on the project
• 960 number of beds proposed new prison will have

First published in The New Zealand Herald

John Carleton is the head of Local Partnerships, the newest body trying to help councils drive a better bargain with private companies. He brings a wealth of experience from public service, banking, consultancy … and international rugby

Perhaps one of the lowest points in John Carleton’s international rugby career, in which he garnered 32 caps for England and seven tries, came on the unsuccessful 1983 Lions’ tour to New Zealand. Three months of rain had culminated in yet another defeat in the “horizontal snow” of Dunedin.

“I remember it distinctly,” Carleton says, “because the World Cup cricket was on in the UK. I was lying in bed in New Zealand in a tracksuit, cold, and watching England and Pakistan from Old Trafford on the TV and it was 80-odd degrees and people had their shirts off.”

He looks, fortunately, much happier now, newly installed as the first chief executive of Local Partnerships. The agency, formed out of the ashes of its predecessor, the 4ps, is now run as a joint venture between the Local Government Association and Partnerships UK, itself a public-private hybrid.

The agency’s job, Carleton says, is to be at the “interface” between councils and their private and voluntary sector partners, trying to make those relationships run more smoothly. But, as he acknowledges, it is no easy task.

Carleton, 53, has the kind of solid, compact build you’d expect from a former international winger, and an accent that bears the traces of his native Lancashire. His career has spanned both public and private sectors, first as a banker specialising in real estate, then at the Housing Corporation, where he says he was “humbled” by the dedication of his fellow workers showed in their attempts to improve some of the worst housing in the UK.

At that time, the relationship between the sectors was tainted by “huge amounts of suspicion on both sides”, he says.”I used to work for a guy who described partnership as the suppression of mutual loathing to access somebody else’s cash … I think a lot of people could see that sort of approach.”

Now, he says, both sides have come “an awful, awful long way”, though he accepts the relationship is far from perfect.

He acknowledges, too, that some public-private partnerships and outsourcing deals have been failures. That, he says, comes down to councils not knowing what they want at the outset.

“I bet nearly every time you find a partnership agreement that isn’t working, has flaws, has problems, those flaws can be rooted back to when the partnership was originally set up, and will be rooted back to potentially really poor choices, uninformed choices at [that] point.”

The mission for Local Partnerships, as he sees it, is to help councils make those choices better. Taking politicians’ promises of localism at face value, he insists that whichever party wins power in the general election next year, councils will be in control of more spending and policy.

“It’s not our role to second-guess how local authorities will deliver services to their people”

But as part of that, they will have to make “informed decisions” about what services they provide directly and which ones they outsource.

This doesn’t mean that the agency will be promoting privatisation, Carleton insists. Rather, it will be using its wealth of experience in hundreds of public-private schemes to help councils, especially small ones that struggle with complex, private sector-based projects, to strike better deals.

“It’s not our role to second-guess how local authorities will deliver services to their people,” he says. “It’s our job to help them find the best way of delivery, whether that be direct [public services], or whether that be working with partners.

“Our job … will be to help them find those partners, to help them structure the partnership arrangement right, to help them with the governance around that – and maybe even identify how they can fund that.”

One criticism levelled at the predecessor to Local Partnerships, the 4ps, was its lack of profile amongst senior council directors.

Carleton won’t comment on that, but says: “If that’s been the perception in the past, it certainly won’t be the reality in the future.”

He hopes to get out of his London office “at least” one day a week and go round the country talking to local councils. As he does, he will be “particularly interested” to hear from councils who feel their relationship with the 4ps “has not been that great. My offer, my promise, my commitment is, talk to me and let’s see how we can repair that.”

Another part of his mission is to get councils working together better. He admits it’s “not easy”, but insists good examples do exist, and that he will be pushing that message vigorously. He will also be pointing out that demands for services – notably in housing – Increasingly overspill local authority boundaries.

And he may be able to offer councils the incentive of start-up funding. In situations where a potentially cost-cutting project is being stymied by lack of upfront cash to invest, Local Partnerships could, he thinks, step in with some of its own money.

One problem he faces, however, is the need to charge councils for the agency’s services. Around a quarter of the Local Partnerships budget comes direct from government, but funding squeezes means the agency will increasingly look to the council fees that already currently make up the rest of its budget.

Will councils cough up more, given the enormous strain on budgets?

Carleton insists they will – as long as the agency can prove that its experience of working with private companies can help them drive a good bargain, and thus save money.

“If we can demonstrate to local public bodies that … we can help them deliver more for less – then, yes, they will pay for that.”

He takes the same line when asked whether the Conservatives, having made clear their dislike for quangos, might scrap Local Partnerships if they won power.

“Whichever government is in power, the services that they [councils] are empowered to deliver will increase,” he says. “So consequently if we are making them more efficient, more effective … I feel fairly comfortable that Local Partnerships has got a future, no matter who’s in government.”

First published in The Guardian

The costs of planning and setting up new schools have soared by 50% under the government’s rebuilding programme, with one council paying consultants £24m before a single building had even been constructed.

The massive rises in the cost of new privately financed schools – obtained under the Freedom of Information Act – have contributed to the bill for the government’s flagship school rebuilding programme spiralling from £45bn to £55bn.

A pledge made five years ago by ministers, to be fulfilled by 2020, promised the “biggest school-building programme for generations”. The Building Schools for the Future (BSF) scheme would see the rebuilding or refurbishing of almost every secondary school in England.

However, new research reveals that authorities in the later stages of the scheme have seen costs rise by an average of 50% just to set up a school building deal. The costs include spending on outside consultants to develop building plans and draw up contracts before any deal is signed with a construction firm.

The 31 councils surveyed had originally expected to spend £122m on setting up their schemes, covering the period from advertising it in the European Union’s official journal to reaching financial close with a private consortium. However, they now anticipate spending £161m, or 32% more. Half of all councils admitted that they had already seen costs rise, with councils more than 18 months into the programme expecting to spend £36m more than the £78m they first budgeted, an increase of 46%.

Haringey council in north London spent £23.8m – the cost of a new school and nearly four times the government’s recommended amount – on consultants before any schools had been built. A spokeswoman for the council said the figure was so high because it was accounting for its costs “upfront”, while other authorities “hid” them by spreading them out over a longer period.

Critics have long claimed that BSF is too complex and imposes unnecessary delays and costs on councils. The programme began in 2004 with the aim of rebuilding half of all secondary schools, remodeling just over a third and refurbishing the rest. But just 42 of the planned 200 schools were rebuilt in the first four years of the scheme, putting it three years behind schedule.

The research by the PPP Bulletin reveals the extent of councils’ problems and raises fresh concerns over BSF. Ty Goddard, head of the British Council for School Environments, said the figures were “an important contribution to the debate about how we can sharpen up the process of investing in our schools.

“In fragile economic times, it is vital that we match this present government’s commitment to schools capital with an honesty and frankness about how the money is invested and some of the big challenges on the ground,” he said.

A spokeswoman for Partnerships for Schools, the agency in charge of BSF, said it was “looking at the issue of capacity within local government” and continued to share best practice and lessons learned.

Written with Amelia Hill and first published in The Observer