Public-private financing of infrastructure - challenging government over value and affordability
Our critical financial analysis of public-private financing has led to dialogue with national audit regulators and presentation of evidence to parliamentary committees. Our work has contributed to policy changes and the renegotiation of recent PFI project payments in the UK.
Our work is part of a body of evidence that has changed policymakers’ perspectives about the cost and transparency of public-private financing. We have presented our independent financial scrutiny and analyses to a wide variety of politicians and policymakers at national and international levels.
Our research has been cited in evidence to:
- The Economic Affairs Committee House of Lords on their report ‘Private Finance Projects and Off-Balance Sheet Debt’ (Session 2009-10) in relation to the high additional cost of PFI
- The Treasury Committee House of Commons report ‘The Private Finance Initiative’ (Session 2010-2012)
- The Welsh Affairs Committee report on the Severn Crossings Toll, related to the lack of transparency around cost
- The Western Australia Public Accounts Committee
- International Transport Forum on PPP transport policy, contributing to the basis of discussion between transport ministers of 54 countries.
We have also explained our findings to public oversight bodies in the UK and abroad, including Audit Scotland, the Northern Ireland National Audit Office, the UK National Audit Office, the UK Office of National Statistics, the Dutch Court of Auditors and the New South Wales Audit Office.
The UK Government has now issued a new PPP policy called PF2 which takes account of some of the points raised by our research. Specifically, long-term operation and maintenance is excluded from new contracts and private sector partners must demonstrate more transparency by disclosing their profits earned from the contract.
HM Treasury recently renegotiated several existing PFI contracts, saving the taxpayer £2.5billion over their lifetime.
Our interdisciplinary research was the first to use financial analysis to demonstrate and evaluate the likely and actual social and economic outcomes of public-private sector contracts in UK PFI hospitals and UK and Spanish PPP roads.
- In early PFI projects, risk transfer to the private partners was not always effective so that management risk and associated costs were borne in practice by the public sector partner or citizens
- There is a lack of clear, consistent and complete financial information in both sectors
- In both Spanish and UK projects, there are invisible risks for the taxpayer given that financing is underpinned by public support.