Slide 1 – Introduction.
Hello Ladies and Gentleman, today Linzi, Fiona and I are going to discuss the issue of whether or not public private partnerships are indeed a valid means for procuring and delivering infrastructure and public services. Using the featured article, which I shall mention in detail in the next slide, alongside using other relevant sources of information on the described topic, we as a group will try to provide reason and a clear judgement as to whether the case for using Public Private Partnerships can be justified. In order to reach such a conclusion, I will firstly (initially) discuss the theoretical advantages and disadvantages of Public Private Partnerships in comparison with traditional forms of public sector procurement; Linzi will then address the issue of whether contracts procured under the Public Private Partnership model offer greater value for money than alternatives; lastly Fiona will discuss whether future generations should be held responsible for servicing poorly negotiated current Public Private Partnership contracts.
The above report entitled “The Private Finance Initiative and Intergenerational Equity” , published by Professor David Parker of Intergenerational foundation in 2012, was used as our main point of reference for this presentation.
Over the past 20 years, successive UK governments have signed over 860 PFI contracts, handling to future generations a debt of the region of £239 billion. Professor David Parker confronts this problem (issue) in his report by questioning; whether PFIs have (indeed) been a success and value for money for the UK government and its taxpayers; whether the nature of current PFI contracts presents a possibly unfair legacy for future generations in terms of substantial, protracted costs; and finally if (whether) there is a need for greater regulation (into the nature) of PFI contracts.
Professor David Parker (in summary) acknowledged the fact that PFI contracts offer a means of making public sector investments in times of tight fiscal constraint and remain desirable in the short term. However such contracts in turn present great difficulties for the finances of future generations in the long term in trying to meet the agreed repayments.
A public-private partnership ("PPP") is a term used to describe a government-sponsored initiative or scheme which involves the use of private finance to facilitate the provision of services to the public and/or the delivery of social infrastructure assets.
PPP à Any contract between a private sector company and a public sector body.
PPPs have been used to deliver infrastructure assets in the education, transport, defence and health sectors.
There are usually two fundamental drivers for PPPs. Firstly, PPPs enable the public sector to harness the expertise and efficiencies that the private sector can bring to the delivery of services traditionally procured and delivered by the public sector.
Secondly, a PPP is structured so that the public sector body seeking to make a capital investment does not incur any borrowing. Rather, the PPP borrowing is incurred by the private sector company implementing the project and therefore, from the public sector's perspective, a PPP is an "off-balance sheet" method of financing the delivery of new or refurbished public sector assets.
Examples of Successful PPPs include: the Dublin Port tunnel which involved the National Road Service Ireland employing a successful PPP in the construction of this toll road.
In direct contrast; an example of a failed PPP is the case of the Balmoral High School in Northern Ireland which was forced to close 5 years after construction due to falling pupil numbers, leaving the government with a £7.4 million liability for a non operational school.
Advantages of PPP.
Investment decisions under PPP contracts tend to be based on a long term view rather than short-term concerns.