PUBLIC-PRIVATE PARTNERSHIPS

Public-Private Partnerships in United Kingdom

Public-Private Partnerships in United Kingdom

Introduction

Public-private partnership (PPP) is a contractual cooperation between public authorities and private law firms (construction, banks, etc.) for the purpose of public services of public interest. In PPP, the resources (knowledge, capital and personnel) are introduced into a joint project, and the tasks are distributed according to the capabilities of the partner (Gaffney& Allyson, pp. 319, 1999). Due to the diversity of application areas, there is no universally accepted definition of PPP. The economic use of language has now recognized that both the PPP sense and content of the concept is relevant only if the partners use their different strengths. Purely financial transactions are, therefore, not part of the concept. PPP is thus, according to current, functional understanding of the term, the most "long-term contractual collaboration between public sector and private sector (Gaffney& Allyson, pp. 319, 1999). The required resources, such as expertise, resources, capital common, personnel by the partners for mutual benefit in an organizational context are set. The existing project risks, according to the risk management expertise of the project partners, are distributed optimally (Gaffney& Allyson, pp. 319, 1999). This essay will throw light on whether the public private partnerships in UK have been a success or a failure.

Discussion

History

The increase in public debt, with the consequence of limited financial resources, encouraged the public to look for alternative funding sources. In response to the needs of the public, the Private Finance Initiative was announced in the Autumn Statement 1992. The aim of the Private Finance Initiative was to achieve closer partnerships between the private and the public sectors. Private Finance Initiative (PFI) was one of the many policies that the Conservative Government introduced. The aim of the policy was to increase the involvement that the private sector and in the provisions meant for the social services. The PFI proved to be a controversial attempt as soon as it was declared. It was then attacked by the opposition, the Labor Party. The critics of PFI were of the point of view that the PFI was nothing but a backdoor form of privatization. They warned that the apparent savings for now could be countered by the future commitments on revenue expenditure (www.nao.org.uk). The Treasury considered that the scheme was advantageous, and the government of Tony Blair was pushed to adopt it after the General Elections of 1997. Both, Labor and the Conservative governments have sought in justifying the Private Finance Initiative on the empirical grounds. They are of the point of view that the public sector does not deliver as much as the private sector. The involvement of the European Investment Bank to PPP projects goes back to the loans after the founding of the Euro Tunnel project (France / UK) was granted in July 1987. The UK Private Finance Initiative (PFI) is considered the first systematic project designed by a government of a state for the use of private capital for public projects. The EU Commission has for the first time ...