Public–strongprivatestrong partnerships lessons from the British approach.pdfVIP

Economic Systems 26 (2002) 283–301 Public–private partnerships: lessons from the British approach Michael Spackman National Economic Research Associates, 15 Stratford Place, London WIC 1BE, UK Abstract British governments have for many years sought to move activities from the public to the private sector. For the past decade, this has included the provision of public services not only operated but also financed by the private sector. In 2000, these private finance initiative (PFI) projects were incorporated into a wider programme of public–private partnerships (PPPs). Compared to conven- tionally financed procurement, the PFI approach has brought both benefits and costs. The balance of advantage is often unclear, and at the strategic level the main drivers appear still to be ideology and accounting. However in its practical application many useful lessons have been drawn and applied. © 2002 Elsevier Science B.V. All rights reserved. JEL classification: H43; H57 Keywords: PFI; PPPs; Procurement; Cost of risk 1. Introduction This paper examines the British experience of public–private partnerships (PPPs), look- ing especially at the most substantial variant—the private financing of public services. It examines and assesses, from a practitioner’s perspective, the technical and political drivers of private financing and its practical implementation. The paper has several aims. The first is to describe the evolution of UK private-financing policy and implementation, and the lessons learnt. This may be of particular interest to those assessing the value of UK ex- perience for application elsewhere. Secondly, it examines in some detail the comparative costing of public and private financing. Thirdly, it offers a critique of current policy. Most academic literature on PPPs addresses the respective roles of the public and private sectors. This issue is