Aug 19, 2011

Public private partnerships under increasing attack in the UK


While British Columbia continues to invest billions in public private partnerships(P3s), a UK Parliamentary Committee today told its government to “wean itself off the practice.”  The Treasury Select Committee found:

We have not seen clear evidence of savings and benefits in other areas of PFI projects which are sufficient to offset this significantly higher cost of finance. Evidence we studied suggests that the out-turn costs of construction and service provision are broadly similar between PFI and traditional procured projects, although in some areas PFI seems to perform more poorly. For example we heard that design innovation was worse in PFI projects and we have seen reports which found out that building quality was of a lower standard in PFI buildings. PFI is also inherently inflexible, especially for NHS (National Health Service)projects. This is in large part due to the financing structure and its costly and complex procurement procedure.

In the UK public private partnerships are called private finance initiative (PFI).

The Guardian newspaper reports that MPs found using P3s cost 1.7 times more than using public money for projects.

“The difference in finance costs means that PFI projects are significantly more expensive to fund over the life of a project. This represents a significant cost to taxpayers,” the report finds.

The Conservative chair of the Committee said:

instead of transferring risk to the private sector and cutting costs for the taxpayer, PFI had fooled the public – and Whitehall officials – into thinking they could get shiny new public services “on the never-never”.

While in the UK P3s have been under skeptical review, here in Canada, and particularly in BC, the government still refuses to make critical information public. The information is, the government says, a Cabinet Secret.

The business community in the UK continues to defend the lucrative projects with their guaranteed profits.

Here in BC we have billions  of dollars invested in P3s for 30 years or more.  Every new hospital built in the last decade is a P3.  Roads, bridges, sewage plants and now a prison have all gone the P3 route. There is no sign the government and its privatization agency, Partnerships BC, are slowing down. There is no sign they are prepared to even have a public review of the costly projects.

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