Reaping synergies amid scepticism

January 2, 1998

THE OUTCOME of the debate about the relevance of private finance initiatives in universities will determine our future system. The Treasury is committed to PFI projects because it is convinced that they will help to deliver quality public services and value for money.

In the Treasury paper Partnerships for Prosperity, the phrase "better value for money" is followed, revealingly I think, by the list of savings that can be made by integration, innovation, allocation of risk, and "more intensive exploitation of assets".

At a recent PFI conference an economics professor and a management consultant took opposite sides. The more sceptical view was that, apart from revenue-generating projects and limited purchases of major equipment, there was little mileage for universities in PFI. In fact there were major disadvantages in loss of long-term flexibility and control, questionable lines of accountability and loss of VAT exemption. It was accepted that PFI might be tempting in the short term to help fill the gap created by reductions in capital and recurrent spending. However the downside was that universities might end up paying for services they no longer required and non-PFI spending would take the full brunt of future cuts as universities would be legally obliged to keep paying the mortgage to the service provider. The enthusiast for PFI pointed to the cost savings, the fact that the client pays only on delivery of the services to the specified quality standards and the benefit to the private sector in what the Treasury calls "reaping synergies across design, build, finance and operation".

Never having reaped a synergy, I was persuaded by the sceptical argument. One alarming comment from the enthusiast for PFI was that universities were notoriously inefficient in their use of capital assets and equipment. Agreed, there might be some scope for more intensive use of premises in the evenings and weekends, particularly if lifelong learning is to become a reality. But that will also have implications for labour and maintenance costs.

I thought universities were rather good at maximising the use of their premises. Students queuing outside lecture theatres, or being moved out of their accommodation to make way for outside conference bookings, or sitting on the floor of their library or student union cafeteria, point more to overuse and overcrowding than to an inefficient use of capital assets.

Still at the PFI conference, a university worker pointed out to the management consultant enthusiast that universities had responded to the call for more business and finance leaders to be appointed to their senates and governing bodies. The purpose was, presumably, to improve the efficiency and effectiveness of universities and to ensure that they were part of the "real world". I will paraphrase the remarkable reply. Once these sensible business leaders and finance moguls were placed on senates and governing bodies, they had a tendency to go native and defend the status quo. If this is true, universities should be congratulated for their absorbency. Perhaps it is nearer the truth that we are much more efficient than we are given credit for and when the "real world" steps into the senior common room, they are pleasantly surprised.

I have this image of Britain's entrepreneurs "going native" in academe, swapping the fast buck for a Santa outfit and the reaped synergies for a sack of presents for university staff - decent pay and job security. Before the seasonal memories recede too far here is a carol to the tune of Hark the Herald Angels Sing: Soften up your Arfur Daleys/ PFI your libraries/ money value is the mission/ We'll be reaping synergies I Have a good break.

Rita Donaghy is a member of the TUC General Council, the European TUC Executive, the national executive of Unison and permanent secretary of the Institute of Education student union.

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