Underlying the global drive for PPPs in recent years are two key trends. One is the demand from citizens for ongoing improvements in infrastructure and public service delivery, the other is the budgetary pressure faced by governments worldwide.
In some countries, such as the UK, the former has been the driving force. Public support for reform is one part of this - 62% of UK citizens surveyed in 2006 wanted the pace of public services reform to increase.15 However, the UK is likely to be increasingly influenced by the latter constraint - future public sector spending agreements are unlikely to mirror the generous settlements of the late 1990s. The UK's Comprehensive Spending Review, expected later in 2007, will place government spending departments and local governments under tighter budgetary constraints than previously. In continental Europe, growth has been slow over the past decade overall, placing tight constraints on public spending, while the strong economic growth of the emerging economies of Central and Eastern Europe has been balanced by their exceptionally high infrastructure requirements, many of which have resulted from under-investment over previous decades. The requirements to modernise public services or update infrastructure are often the drivers to the development of PPP markets. High investment needs for these changes, coupled with tight budgetary constraints, can explain much of the international growth of the PPP sector in recent years.
A lack of efficiency and innovation in traditional public service provision can incentivise governments to partner with the private sector to utilise their experience and resources. Delays in delivery, overrunning on cost and user dissatisfaction with services are common factors in many overstretched public service facilities. The private sector can offer skills and experience that bring innovation and efficiency to services and will improve outcomes.
| NATIONAL CASE STUDY 1 | Spain |
| PPPs in Spain date back to toll road construction during the 1970s and 1980s but the latest moves towards PPPs were boosted in the mid-1990s by the electoral success of the conservative Partido Popular. The Populists were behind the drive for private investment in infrastructure, and devised the National Infrastructure Plan, which focused on private financing of road projects. The rise of the Socialist Party to power in March 2004 meant the project was subject to intense ideological debate and financial scrutiny, but the success of the PPPs approach convinced the government to include private sector involvement in its plans for the development of new infrastructure. Today, Spain's regional governments and municipalities are the force behind PPP development which is extending to healthcare, education, prisons, government buildings and accommodation - and Spain is now noted as an exemplar on PPPs' usage. | |
| NATIONAL CASE STUDY 2 | France |
| France has traditionally been sceptical about private sector involvement in public service delivery. But attitudes are now changing and there is growing interest in using PPPs. The Ministry of Finance has also established a PPP Taskforce - the Mission d'Appui à la Réalisation des Contrats de Parte-nariat Public-Privé (MAPPP). Changes to legislation began in 2002, with the introduction of laws which allowed a PFI-style model to be used for the justice sector in building police stations, prisons and courts. Following the successful launch of a €1.4bn hospital programme in 2002, this model was extended by the centre-right government in December 2003 when it launched the 'Plan Hôpital 2007' to speed up modernisation of France's hospitals. Under this plan, the government committed additional resources available to the hospitals concerned, enabling them to invest €6bn over five years.16 The government also launched a €1.3bn prison programme in 2004, and in 2007 ongoing projects include building a university hospital, national road works and renovating a prison. | |
So while PPPs can offer a route to addressing budgetary pressure, PFIs and other types of PPPs require the public sector partner to think about the whole-life costs of a project and to be less infuenced by short-term budgetary constraints. PPPs allow communities to benefit from public service facilities and infrastructure earlier than they would have done otherwise, and relieve pressure due to under-capacity in other sectors.17 When considering whether to invest in private finance, a public authority must consider the benefits and value to the public over the long term.