Recall EDDC, Exeter and Teignbridge are about to share IT services. Although they currently do not have a public/private partnership in mind it could happen but the pitfalls ennumerated here could happen to any joint arrangement where “transparency” becomes an issue:
Click to access 2014%20Sept%2025%20-%20Item%207%20Lessons%20Learnt%20report.pdf
East Devon Watch 
As an IT Programme Manager with extensive experience of outsourcing contracts (having worked on both customer and supplier sides), I share your concerns about both outsourced and shared services models.
I will go so far as to say that in all the years and all the outsourcing contracts I have seen and worked on, I have yet to see even one outsourcing deal which was, in the end, considered successful by the customer, even for customers who were on their 4th generation of outsourcing contract despite expecting that they would have learnt from the three previous contracts. In some cases the services were provided reasonably well, but the services was inflexible and the costs of change were much higher than expected, but in some cases it was just a disaster. The Somerset report is (in my experience) not un-typical of large, complex outsourcing.
That said, a shared-services model as proposed by EDDC is more likely to succeed than an outsourced contract because the tensions between customer and supplier in an outsourced contract will be far greater than the much smaller differences in requirements between similar local government organisations in shared-services. There will of course be differences in detailed requirements and priorities, but providing the relationships between the three councils remain good these should be compromised away relatively easily. The contractual management overheads in shared-services should also be much lower than in an outsourced arrangement. And of course it remains to be seen whether the costs savings will actually be achieved.
As for transparency, it doesn’t seem to me that making IT into a shared-services model will make any difference to transparency. Whether local council services are transparent or not is purely a decision of the council leadership about whether to be open and publish everything, or instead to keep as much confidential as the law allows (or even using appeals, tribunals etc. to extend the period of secrecy even when e.g. the ICO orders the material released).
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