While PPP provides finance for investment in new facilities and infrastructure in NI, it does not provide funding. It is a method of accessing capital, like direct borrowing and it creates a long-term funding requirement for the public sector in much the same way. Annual unitary charges must be paid throughout the length of the PPP contract, providing a return on the private sector's capital and fees for the services it provides. Thus, increasing investment through PPP requires an increase in funding - and this can only come from the UK Treasury, higher regional taxation or user charges.
However, under certain conditions, using PPP rather than borrowing directly can circumvent (often strict) constraints on capital investment, and this has been one of the central drivers behind its use.
This report provides an overview and an evaluation of the use of PPP in Northern Ireland. It is organised in three sections:
Section 1: illustrates the increasing significance of the PPP method in NI, along with the implications for future public expenditure.
Section 2: summarises the main developments in PPP policy in NI over the last decade, describing the embrace of a "limited" PPP programme by the devolved administration of 1999-2001; and the expansion of the policy and its rationales under the subsequent period of direct rule.
Section 3: provides an evaluation of PPP against the three main rationales for the use of PPP in NI, focusing on claims of PPP's ability to: provide additional resources, address macro-economic imbalances; and deliver higher efficiency.