Frequently asked questions

PSP was established to offer Local Authorities funding in connection with their property portfolios.


Below are some commonly asked questions, more can be found via the link at the bottom of the page
1How is PSP different from other public private partnerships?
A PSP Limited Liability Partnership (LLP) is a genuine partnership where public and private sectors work together to increase revenue and capital income or reduce revenue costs from public sector assets. PSP LLPs are joint ventures with public and private sector partners sharing equal representation on the Board. Public authorities have the assurance that they will receive the current market value of their property asset, whether this be in terms of revenue income from investment portfolios or capital receipts from the disposal of surplus property. Any additional revenue income or capital value generated by the LLP over and above this is shared between the partners.

Property initiatives must be able to demonstrate added value over and above the authority’s traditional approaches and the up-front investment is uniquely supported by private sector funding, removing any risk to taxpayers money.

PSP LLPs do not involve the privatisation of services or the commitment of property up front before the partnership can be established, as would be the case with other public private partnership approaches such as Private Finance Initiative (PFI) projects and Local Asset Backed Vehicles (LABV).
2How is the culture of a PSP initiative which applies the relational partnering concept different from a traditional public private partnership?
The idea of relational partnering is based simply on the principle that it is more beneficial for public and private sectors to develop the necessary confidence and trust in each other as a prerequisite to doing business together. The idea of forming the relationship first, (by establishing a jointventure LLP together) without prior property commitment and then working together in an organised manner is preferable and achieves much better outcomes than forming a contract first and relationship second.

Traditional tendering is an obvious example of where award of contract occurs without the strength of the relationship being formed. It is heavily reliant on the promises and assertions made during an adversarial and highly competitive beauty parade.
3How does the public body benefit?
The core concept of relational partnering is about creating a culture whereby the public and private sectors can develop trusting, open and honest relationship which adds value, brings efficiencies, increases investment returns and generates capital and revenue value from property portfolios. The establishment of the joint-venture LLP creates the cultural environment to innovate, share ideas and information on a without commitment basis.

The private sector partner brings to the table commercial expertise and inward investment funds and the public sector partners apply their local knowledge and make available their property portfolio information. The partners then work together to analyse this information and develop property solutions to mutual and shared benefit. This hybrid form of partnering combines the best of both public and commercial sectors.

Projects and initiatives are only taken forward where there is agreement and clear added value compared to other more conventional approaches.

The LLP can draw down private sector investment funds through the application of a validation model called the 4es and projects can only proceed if they pass the tests of e3, that is, they must be able to demonstrate that the solution proposed is better or as good as a traditional approach. The private sector partner covers all upfront project costs and the LLP's running costs, taking on the costs and risks that the authority may find difficult to justify in the use of public funds. There is no loss in value for the authority and all added value that can be generated over and above the authorities conventional approaches is shared between the partners. There is, therefore, nothing for the authorities to lose and an increase in income and or value to be gained.
4What types of project can best be delivered?
The model is very flexible and is being applied to a diverse range of property projects. It can focus on revenue savings or the generation of additional revenue and capital value. Typical projects include;

• generating additional revenue and capital value from property investment portfolios
• creating a property investment portfolio where one does not exist
• investing in town centre and economic regeneration initiatives
• boosting in-house capacity to speed up an authorities review of operational properties to reduce maintenance liabilities and revenue costs, and increase the value of the capital asset
• adding value to surplus property and land before disposal through site assembly, initial infrastructure works or demolitions, and obtaining planning permission for a change of use
• creating pools of property to generate and then recycle capital receipts into revenue streams for the authority

Case studies can be viewed here.