ACCOUNTABILITY AND THE PFI/PPP PROCESS

Pamela Edwards (UMIST) and Jean Shaoul (Manchester University)

The use of Public Private Partnerships (PPP) and the Private Finance Initiative (PFI) is an international phenomenon promoted by global institutions such as the World Bank, IMF and the European Union and governments around the world. They have been introduced as a means of raising finance for infrastructure and procuring public services on a long-term contractual basis. Their use is justified in terms of value for money, a concept that includes the greater efficiency that the private sector will bring to the management of service delivery and the risks transferred to the private sector. While the UK government has specified procedures designed to ensure value for money, if these benefits are to be achieved without undue additional financial and social costs, transparency and accountability in the PFI/PPP selection process are vital elements.

As the process is acknowledged to be a complex one, it has been argued that it requires a project champion from the public sector agency to bring it to a successful close. This in turn has the potential to create a conflict of interest if such a champion comes from the sponsoring agency. There is a distinction between regulatory control, which exists to control the process independently of a policy that encourages it, and positive policy–driven regulation, which also seeks to promote PFI/PPP.

This paper uses a case study approach to explore the nature of the control procedures, especially in relation to transparency and accountability. It uses focuses on a school project aimed at improving its facilities, to examine information disclosure and substantive transparency. After outlining the historical development of the project and examining the information in the public domain, the paper argues that the public agency acted as champion for this project but in so doing exercised a positive promotion of PFI. The case therefore casts doubt about the strict regulatory control of this project, particularly in terms of meeting the identified needs of the school and transferring risk to the private sector. This, together with other evidence from other projects, suggests that the potential conflict does materialise and regulatory control is limited.