18 September 2019

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Play Time

The launch of the UK government's outsourcing 'Playbook' may signal an important shift in thinking when it comes to risk
Play Time

The word 'playbook' is more commonly found in the world of sport than government. For example, after the weekend's exploits, one could say the Welsh rugby team employed tactics out of a different playbook to usual, in order to beat the English (as a Welshman, I could hardly miss this opportunity!)

However, Cabinet minister Oliver Dowden used the term last week when referring to the government's new approach to outsourcing.

Cynics will argue that the term 'playbook' is a usefully elastic one for government: it does not have the formality of even the phrase 'guidance', and so there is little responsibility on the government to stick to its precepts in the event that it wishes to change its approach.

Nonetheless, the new document can and should be welcomed by the outsourcing and PPP market as a recognition that something needs to be done about the question of risk.

Indeed, the playbook could provide the first positive steps in improving the relationship between public and private sectors since Chancellor Philip Hammond washed his hands of PFI and PF2 at the Budget. One of the biggest problems that has faced the government over recent years is a propensity to put the cart before the horse: deciding, for example in PF2, how the risks should be carved up before any project or programme is identified.

This has led to many in the PPP market deciding that the risks being asked of them are too great to bear – particularly in a post-Carillion world, where the excesses of bidding the lowest price while accepting the higher levels of risk have been laid bare. PF2 may not have single-handedly brought Carillion down, but the fact that no other investor was willing to take on either of its ongoing hospital contracts on a PPP basis tells a story.

Dowden told the CBI, where he launched the playbook, that the new publication “makes explicit that when designing contracts, departments must seek to mitigate, reduce and then allocate risks to the party best able to manage it”.

Those are promising words in the face of criticisms over recent years about the levels of risk that the public sector has been forcing onto private investors, with the vast majority of British contractors now out of the game altogether, as I discussed in this column last week.

They also echo what was said at our joint event with Amey last month, where it was made clear that there is an openness within organisations like the Infrastructure & Projects Authority (IPA) to discuss such issues with the industry.

However, one red flag here is the reference to departments being required to look at risk allocation, rather than the IPA itself. After all, as one source puts it, “the civil service have never liked private finance”. Giving individual departments, long shorn of their private finance units, the decision over risk transfer may not be entirely without prejudice.

Some may feel that there should be more than simply a 'playbook' in play, but it is at least a step in the right direction.  

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The launch of the UK government's outsourcing 'Playbook' may signal an important shift in thinking when it comes to risk

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