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Regular news: Issue 589 3 Feb 2012

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Road management / Maintenance, East of England

Essex sets sights on raising extra cash with highways joint venture

Lee Baker

The new integrated highways  contract partners Essex County Council and Ringway Jacobs have set out the detail of their plans to form a joint venture spinning out the public and private staff of the Essex Highways partnership into a new body in order to generate income.

Ringway Jacobs started mobilising for the April start of the contract, that involves the integration of ten separate contracts, last  November, after it was awarded preferred bidder status.

Last week, Essex’s cabinet signed off the award of the contract and the finalised business case for the ten-year, £1bn+ deal, which Paul Bird, Essex’s director for highways and transportation, said was “in terms of scale unique”.

His report to the cabinet sets out the conditions and process for deciding to turn the strategic partnership into a joint venture. It states: “Should the relationship mature sufficiently and the market opportunities support the decision, then the contract allows for the model to develop into a joint venture.”

The decision would be subject to a separate business case that would recognise the impact on the authority’s central services budget of hiving off the highways service. But the report makes clear that moving to the new delivery model is the partners’ “aspiration”.

They have already agreed the heads of terms covering details such as what shareholdings each partner would have in the proposed new body and commercial opportunities are being appraised as part of the mobilisation. Neighbouring authorities have expressed informal interest in procuring via the contract.Ministers have advocated joint ventures and mutuals as public service delivery models with the potential to improve efficiency under a Cabinet Office drive. But there has not been significant interest in the idea from highways departments over the last two years despite the Whitehall push.

Suffolk, a high-profile case of an authority considering the merit of a joint venture, rejected it because providers  said the model would be “less likely to derive early savings than the private sector option” (LTT 4 Nov 11).

However, Bird told LTT: “We want the ability to trade either by providing direct to other local authorities or by bidding for contracts. There is scope to work with district/boroughs and other public sector bodies and we could also provide infrastructure for the private sector. This would allow us to keep critical mass.”

Bird told the cabinet that the extent of the “income opportunities” for Essex Highways would have a bearing on the size of a necessary “reduction in the overall head count”.

LTT hosts it's Future of Highways Delivery event in London on the 21 March.

Essex Highways will be responsible for services currently delivered by 380 Essex staff and 515 supplier staff. The “majority” of the Essex staff will move into Essex Highways, but still be employed by the authority.

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