UK Public Private Partnerships and the Credit Crunch: A Case of Risk Contagion?

During the past twenty years, the UK has relied heavily on Public Private Partnerships (PPP) and especially the Private Finance Initiative in the procurement of infrastructure and services. Discussing the causes of the credit crunch and its effects on PPP, this paper notes that the provision of new public sector infrastructure and related services has been adversely affected by the impact of the credit crunch on Private Finance Initiatives (PFIs). These problems have arisen primarily from the unwillingness of commercial banks to replace collapsed PFI bond financing unless new PFI contracts reduce financial risks; which, in turn, is likely to increase the cost of these projects to the public sector. Additional financial strains have arisen for the UK government from the need to bail out collapsed PFI projects. Overall we find evidence that the UK commitment to PFI has not only increased immediate fiscal pressures on the UK when these have become least palatable, but has also created fiscal vulnerabilities at local and national levels which are likely to hamper the country’s ability to launch counter-cyclical responses to the ongoing crisis.

Bank Failures of the 1990s::An Exploratory Analysis

Past research has frequently attributed the incidence of bank failures to macroeconomic cycles and/or downturns in the regional economy. More recent analyses have suggested that the incidence and severity of bank failures can be linked to governance failures, which may be preventable through more stringent disclosure and auditing requirements. Using data on bank failures during the years 1991 to 1997, for the US, Canada, the UK and Germany, this study examines the relationship between institutional characteristics of national legal and auditing systems and the incidence of bank failures. In the second part of our analysis we then examined the relationship between the same institutional variables and the severity of bank failures.
The first part of our study notes a significant correlation between the law and order tradition (‘rule of law’) of a national legal system and the incidence of bank failures. Nations which were assigned high 'rule of law’ scores by country risk guides appear to have been less likely to experience bank failures. Another variable which appears to impact on bank failure rates is the ‘risk of contract repudiation’. Countries with a greater ‘risk of contract repudiation’ appear to be more likely to experience bank failures. We suggest that this may be due to a greater ex ante protection of stakeholders in countries where contract enforcement is more stringent.
The results of the second part of our study are less clear cut. However, there appears to be a significant correlation between the amount paid out by national deposit insurers (our proxy for the severity of bank failures) and the macroeconomic variable 'GDP change'. Here our findings follow the conventional wisdom; with greater amounts of deposit insurance funds being paid during economic downturns (i.e. low or negative GDP 'growth' correlates with high amounts of deposit insurance being paid out). A less pronounced relationship with the severity of bank failures can also be established for the institutional variables ' accounting standards' as well as 'risk of contract repudiation'. Countries with more stringent ‘accounting standards’ and a low ‘risk of contract repudiation’ appear to have been less prone to severe bank failures.

Perspectives on the Future of Public Private Partnership in the UK

During the past two decades the UK has played a leading position in the development and application of Public Private Partnership (PPP) based infrastructure procurement through its Private Finance Initiative model. This model had been developed during the last years of the Major Government and expanded during the early years of the Blair Government. The banking and economic crisis of 2007-09 has created major challenges to the use of PPP in the UK, making the sustainability of past levels of PPP investment and the future direction of PPP based infrastructure procurement in that country uncertain. This chapter summarises key developments in UK PPP up to the crisis; reviews the economic issues that have led up to the crisis; discusses the immediate impact of the crisis on the UK PFI and PPP market together with the transition arrangements that were put into to place by the Brown government; and, lastly, looks at recent initiatives taken by Cameron’s Conservative-Liberal Coalition Government under the designation of Private Finance 2 (PF2).

An Overview of Public Private Partnership

In many developed and developing countries there has been a move toward an increased reliance on Public Private Partnerships (PPPs) for infrastructure development. This involves an engagement with, or participation of, private companies and the public sector in the financing and provision of infrastructure. In most countries these PPP arrangements have been aimed at overcoming broad public sector constraints in relation to either a lack of public capital; and/or a lack of public sector capacity, resources and specialized expertise to develop, manage, and operate infrastructure assets.
In a number of countries Public Private Partnerships are now commonly used to accelerate economic growth, development and infrastructure delivery and to achieve quality service delivery and good governance. The spectrum of nature and types of public private partnerships (PPPs) are vast, making a precise and complete definition of a PPP difficult. However, significant developments in the use of PPP in many countries have made it increasingly important to understand these practices, as well as to unveil any underlying common principles and problems and to capture and develop a body of good practices, where such can be achieved.

Risk and the Politics of Public Health:A Critical Review

Twentieth century public health initiatives have been crucially informed by perceptions and constructions of risk. Notions of risk identification, assessment and mitigation have guided political and institutional actions even before these concepts became an explicit part of the language of public administration and policy making. Past analyses investigating the link between risk perceptions and public health are relatively rare, and where researchers have investigated this nexus, it has typically been assumed that the collective identification of health risks has led to progressive improvements in public health activities.
Risk and the Politics of Public Health addresses this gap by presenting a detailed critical historical analysis of the evolution of risk thinking within medical and health related discourses. Grouped around the four core themes of 'immigration', 'race', 'armed conflict' and 'detention and prevention' this book highlights the innovative capacity of risk related concepts as well as their vulnerability to the dysfunctional effects of dominant social ideologies. Risk and the Politics of Public Health is an essential reference for those who seek to understand the interplay of concepts of risk and public health throughout history as well as those who wish to gain a critical understanding of the social dynamics which have underpinned, and continue to underpin, this complex interaction.

The Role and Effectiveness of Public – Private Partnerships (NHS LIFT) in the Development of Enhanced Primary Care Premises and Services:Report for the National Institute for Health Research Service Delivery and Organisation programme

The research project analysed the role and effectiveness of LIFT via a multi-method study which included semi-structured interviews with policy elites and users, as well as case studies and an exploratory analysis of the financial characteristics of three LIFT Companies. While the team felt that it was able to identify key aspects relating to the advantages and drawbacks surrounding LIFT, some aspects relating to the representativeness of the study was adversely affected by a reluctance of PCTs to participate in the case study analysis and commercial confidentiality restrictions. The study was nonetheless able to identify important issues in relation to the funding and procurement of primary care premises and services.