Being a form of Government intervention, SGs should demonstrate that they are in the public interest. Political motives (e.g. election timing, fiscal targets) will often encourage Governments to take on more risk than is appropriate, or prefer bearing risks over the long-term to spending cash in the short-term. This can lead to sub-optimal decisions about SGs.
Guidance: Based on the issues outlined in this paper, decision-makers should have an appropriate framework in place for judging when an SG is likely to be justified as part of their PPP programme. Sound decisions are more likely if the Government carefully considers the full costs and benefits of SGs. Appointing specialised advisers can help decision-makers understand the exposure to risk, assess the benefits and estimate the "whole life" cost of an SG. In the context of the cost-benefit analysis, SGs will need to be assessed against other forms of Government intervention (e.g. grants, interest rate subsidies, tax breaks).