Treasury publishes joint venture guidance as Total Place gathers momentum

The Treasury has issued guidance for public sector bodies on forming joint ventures with the private sector, including not-for-profit and third sector providers, as implementation of the Total Place agenda gathers pace.

The guidance sets out the factors which the public sector – including local authorities – should consider “in determining whether a joint venture is the best delivery model for its infrastructure and public services needs and one which will meet its objectives in the most effective and efficient way”.

The government’s approach to procurement of complex public infrastructure through public private partnerships is described in another Treasury publication, Infrastructure procurement: delivering long-term value.

However, the Treasury says that “going forward, the government expects that a number of different delivery models may be used by public bodies to deliver infrastructure and public services in conjunction with the private sector”.

The guidance suggests that, usually, the core reason for the public sector to consider a joint venture is to mobilise complementary resources. “The JV enables the complementary resources of the public and private sector parties to be integrated, so creating a wholly new business not otherwise achievable,” it says.

The Treasury says the purpose of the JB typically stems from one, or a combination of the following objectives:

• Value capture: the desire to capture long-term value, from say property development or a commercialisation/wider markets initiative opportunity
• Route to market: The need to establish a new route to market for intellectual property or other assets, and
• Service delivery programmes: The need to manage a long-term programme of service delivery and/or investment in order to improve the delivery and efficiency of public services and infrastructure justifies the formation of a separate self-standing and sustainable organisation.

The guidance covers the key steps in establishing a joint venture, from the initial planning stage all the way through to launch and ongoing management.

It calls on public sector bodies to ensure that they have professional legal and financial advice when setting up a joint venture, adding that “some public sector bodies will need to seek further advice from other relevant organisations, eg issues surrounding statutory powers, classification and financial reporting of local authority JV companies should be raised with Local Partnerships (previously 4ps) or the Department for Communities and Local Government.”

The Treasury emphasises that the guidance is not intended as a tool to determine if a joint venture is the most appropriate way forward for a public sector body in relation to the range of conventional and private sector solutions available. Instead, this should be done through a full business case and assessment of value for money based around the principles set out in the Treasury’s Green Book and associated guidance.

Rob Hann, Director of Legal at Local Partnerships, welcomed the new guidance. He said: “The topic of joint ventures is one that has grown in importance for many local public bodies and which is clearly identified within the Total Place report as one which will enhance the delivery of regeneration as part of a 'whole area' approach.”

Local Partnerships is already working with the DCLG, Partnerships UK and the Treasury to develop further guidance specifically for local government. A delivery support service to help local authorities to scope and develop options for joint venture procurement will also developed by Local Partnerships, following on from its recent conference on the topic earlier in March.

Hann added: "The Total Place report makes abundantly clear that joint ventures will be a key mechanism for the provision and improvement of services, as well as better and more efficient management of public assets."