PPPs are complex, driven by officers/civil servants and consultants and require elected members and democratic representatives to understand the key issues in the procurement process and the main requirements of the contract. Some PPPs, for example, for whole service contracts, are becoming even more complex. The level of governance is minimal once contracts are signed with occasional scrutiny reviews and inadequate contract management in many cases - for example, the London Borough of Barnet's PPP street lighting contract (Barnet UNISON, 2012).
Accountability and transparency are entirely absent from the sale of PPP equity (Whitfield, 2010 and 2011). The National Audit Office approach illustrates the problem: "In terms of managing PFI contracts public authorities need to be aware that investors in their projects may change. The authorities should make sure they understand the business drivers of any new investors" (House of Lords, 2010). This is disingenuous because authorities have no role whatsoever in selecting 'new investors' and can only seek to 'understand' if they are informed of a change in ownership in advance of the transaction and the identification of the purchaser.
Responsibility should be reversed - decisions to purchase PPP equity should be subject to due democratic process in which the authority determines its policy on proposed transactions. Private sector investors should be required to understand the public authorities policies and strategies before they embark on a transaction.
Parent companies usually oppose disclosure requirements because they are concerned that information about a transaction could send a negative signal to stock markets about their financial status and/or a change in corporate strategy, or they want to avoid public debate about the high level of profits.
The Public Accounts Committee recommended: "If transparency is to be meaningful and comprehensive, private organisations providing public services under contract must make available all relevant public information. The Cabinet Office should set out policies and guidance for public bodies to build full information requirements into their contractual agreements, in a consistent way" (House of Commons Public Accounts Committee, 2012).
The House of Commons Justice Committee concluded "…that contracts provide a more practical basis for applying FOI to outsourced services than partial designation of commercial companies under section 5 of the Act, although it may be necessary to use designation powers if contract provisions are not put in place and enforced. We recommend that the Information Commissioner monitors complaints and applications for guidance in this area to him from public authorities" (House of Commons Justice Committee, 2012).
Neither of these approaches or the transparency proposals in PF2 are likely to be effective. New disclosure regulations are required for the procurement process because information is required on a constant basis. Information and disclosure requirements must be included in PPP contracts and Freedom of Information extended to private companies delivering public services.
PPP consortia and public bodies must be required to inform the public, including service users, staff, community organisations and trade unions, with details of the sale of PPP project equity at least a month before the transaction is completed. This should include the date, the percentage shareholding being sold, price, profit, and purchaser of the equity and ultimate holding company and the location of its headquarters.
All bidders should be required to identify their role in secondary market transactions so that public bodies can assess the likelihood of the sale of equity. There are no guarantees, because a company may have a policy of retaining PPP equity, but changed economic circumstances may lead to a PPP equity sale. It requires public authorities to research and understand the secondary market and the potential implications for PPP projects.