Accountability and Value for Money in Private Finance Initiative Contracts

Within the context of New Public Management (NPM), successive UK governments have claimed that PFI projects provide more accountability, and arguably, more value for money (VFM) than conventional procurement for the public (HM Treasury 1995, 2000, 2003a and 2003b). However, recent empirical research in the UK on PFI has indicated its potential limitations for accountability and VFM (Broadbent, Gill and Laughlin, 2004; Edwards, Shaoul, Stafford and Arblaster, 2004; Shaoul, 2005; and Ismail and Pendlebury, 2006) albeit these are based on either published accounts or a limited number of key stakeholders. This paper attempts to partially redress this gap in the literature by presenting an interesting case of the impact of PFI on accountability and VFM in Northern Ireland's education sector. The findings of this research, based on forty two interviews with a wide range of key stakeholders, suggest that stakeholders have different and often conflicting expectations and the actual PFI accountability and VFM benefits are much more obfuscated than those claimed in Government publications.

The Diffusion of Risks in Public Private Partnership Contracts

Purpose The UK government argues that the benefits of public private partnership (PPP) in delivering public infrastructure stem from: transferring risks to the private sector within a structure in which financiers put their own capital at risk; and, the performance based payment mechanism, reinforced by the due diligence requirements imposed by the lenders financing the projects (HM Treasury, 2010). Prior studies of risk in PPPs have investigated ‘what’ risks are allocated and to ‘whom’, that is to the public or the private sector. The purpose of this study is to examine ‘how’ and ‘why’ PPP risks are diffused by their financiers. Design/methodology/approach This study focuses on the financial structure of PPPs and on their financiers. Empirical evidence comes from interviews conducted with equity and debt financiers. Findings The findings show that the financial structure of the deals generates risk aversion in both debt and equity financiers and that the need to attract affordable finance leads to risk diffusion through a network of companies using various means that include contractual mitigation through insurance, performance support guarantees, interest rate swaps and inflation hedges. Because of the complexity this process generates, both procurers and suppliers need expensive expert advice. The risk aversion and diffusion and the consequent need for advice add cost to the projects impacting on the government’s economic argument for risk transfer. Limitations and implications The empirical work covers the private finance initiative (PFI) type of PPP arrangements and therefore the risk diffusion mechanisms may not be generalisable to other forms of PPP, especially those that do not involve the use of high leverage or private finance. Moreover, the scope of this research is limited to exploring the diffusion of risk in the private sector. Further research is needed on how risk is diffused in other settings and on the value for money implication of risk diffusion in PPP contracts. Originality/value The expectation inherent in PPP is that the private sector will better manage those risks allocated to it and because private capital is at risk, financiers will perform due diligence with the ultimate outcome that only viable projects will proceed. This paper presents empirical evidence that raises questions about these expectations. Key words: public private partnership, risk management, diffusion, private finance initiative, financiers

'It Is Not as Easy as ABC': Examining Practitioners' Views on Using Behavioural Contracts to Encourage Young People to Accept Responsibility for their Anti-Social Behaviour

This article examines the use of acceptable behavioural contracts as a tool for engendering the voluntary acceptance of responsibility in children and young people perceived to be engaging in anti-social behaviour and low-level criminality. Based on the results of a qualitative empirical analysis with local government and social housing anti-social behaviour teams, the article explores the attitudes of practitioners to the use of this unregulated but commonly utilised intervention. Practitioners' views are contrasted with the ideals of voluntary responsibilisation upon which the contracts are supposedly based. It is argued that there is a spectrum of differing approaches among practitioners, with some using the contracts more to encourage the voluntary acceptance of responsibility, whilst others use them more coercively to hold individuals responsible for their behaviour. The implications of these differing approaches are examined.

Impact of Government Intervention on Employment Change and Plant Closure in Northern Ireland, 1983-97

Harris R. and Trainor M. (2007) Impact of government intervention on employment change and plant closure in Northern Ireland, 1983-97, Regional Studies 41, 51-63. Financial assistance to manufacturing industry is an important element of the industrial development policy in Northern Ireland. This paper uses the individual plant-level records of the Annual Respondents Database (ARD) for the Northern Ireland manufacturing sector (1983-97) matched to the plant-level details of financial support provided by the Industrial Development Board to examine the effect of selective financial assistance (SFA) on employment change and plant closure. It is found that SFA concentrated on protecting existing, rather than new, enterprises in terms of employment change. Using a hazard model, it is found that the receipt of SFA significantly reduced the probability of plant closure by, on average, between 15 and 24%.