Robert Osborne

A forgettable year for PPP, 2009 saw Building Schools for the Future, the academies and English waste programmes make slow progress. Some (possibly cosmetic) changes were made to the public advisory bodies such as the new Infrastructure UK and Local Partnerships. With the banks reeling after the crash, the European Investment Bank stood forward in funding deals, while the Infrastructure Finance Unit stood by. On the one hand, the PPP industry was trying to do as much as possible before the general election, yet, on the other, it was huddled against the recession and waiting for something to happen. But what?

History has taught us not to make predictions about politics. We don't know enough about the manifestos to make any firm plans, let alone plan a response to a hung parliament – policy chaos and hiatus or a progressive coalition?

So, if we don't know about the politics, what can we be confident about in 2010? We know:
• That pre- and post-election the public services will be a battleground centrally and locally with unceasing demand simultaneously for improvement and cost savings;
• That, whatever is promised, sometime soon there will a lot less public money– and that this will be the 'new normal' for years to come;
• That economic recovery will need to be driven by a combination of public service cuts, higher taxes and a resurgent private sector driving tax revenue;
• That, in addition to fixing the economy, the new government must also address: the burgeoning social care and mental health needs, 'broken society', the environmental agenda, and the UK's domestic and energy security.

A feeble response would be for the private sector simply to retrench and wait to see what happens. A more helpful approach would be to exploit three opportunities.

First, faced with a double-dip recession, the new government may postpone the slow-down of public spending until the private sector is able to take up the slack. This buys time for public and private sectors to think, shape and adapt to the future.

Second, faced with the demands to do 'more for less', the new government must realise that at least as much (and probably more) improvement in cost-efficiency and service outcomes comes from proper investment in people and systems rather than bricks and mortar.

These drive the third opportunity that is to accelerate the development and growth of a new class of private sector equity, which is focused on service delivery rather than asset delivery. Educators, healthcare providers, energy 'merchant venturers' and a new class of public housing companies are examples.

Both public and private sectors must play their part.

The private sector must not wait for major investment programmes on a plate. First, it should invest in thinking and propose ideas for cost savings and service improvements. Then, over the longer term as the new class of operational service companies expands, it must initiate and invest on a massive scale in new PPPs.

Yet for this to be possible, the new government must drive major change in the public sector (at all levels) to create a flexible commercial, planning and competitive environment, which facilitates public private solutions on a scale not seen to date. This will require many changes, one crucial example of which is to find a new approach to protect and reward intellectual property in a competitive environment.

These are big challenges and both sides must show courage and leadership so that new forms of PPPs can play their part in supporting the UK's recovery.