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.

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).

Capital Markets Union and ending short-termism: lessons from the European Commission's public consultation

The European Commission’s initiative to establish a Capital Markets Union is in sharp conflict with the more radical goals of downsizing significantly certain financial activities and firms that have become too-big-to-fail and too-big-to-govern and of ending or at least drastically limiting extreme speculation and short-termism in finance and the real economy in order to increase financial stability. The recent public consultation on the Commission’s Green Paper Building a Capital Markets Union gives evidence of how weak such demands are compared to calls for deeper capital markets with more ‘shadow banking’ and rebuilding (sound) securitisation. The consultation is an example of how framing the problem and the refined better regulation agenda influence post-crisis financial reregulation and help to marginalize more radical ideas demanding a return to a more traditional banking model and transforming finance back to serving the real economy.

Finance, social economics and community development

The last three decades have seen social enterprises in the United Kingdom pushed to the forefront of welfare delivery, workfare and area-based regeneration. For critics, this is repositioning the sector around a neoliberal politics that privileges marketization, state roll-back and disciplining community groups to become more self-reliant. Successive governments have developed bespoke products, fiscal instruments and intermediaries to enable and extend the social finance market. Such assemblages are critical to roll-out tactics, but they are also necessary and useful for more reformist understandings of economic alterity. The issue is not social finance itself but how it is used, which inevitably entangles social enterprises in a form of legitimation crises between the need to satisfy financial returns and at the same time keep community interests on board. This paper argues that social finance, how it is used, politically domesticated and achieves re-distributional outcomes is a necessary component of counter-hegemonic strategies. Such assemblages are as important to radical community development as they are to neoliberalism and the analysis concludes by highlighting the need to develop a better understanding of finance, the ethics of its use and tactical compromises in scaling it as an alternative to public and private markets.

Public-private partnerships and efficiency in public procurement of primary healthcare infrastructure: a qualitative research in the NHS UK

Aim There is growing interest in the contribution of public-private partnerships (PPPs) bridging the shortage of financial resources and management expertise in developing public healthcare infrastructure. However, few studies have evidenced PPPs’ ability in increasing efficiency in public procurement of primary healthcare infrastructure. The aim of this study was to assess to what extent PPPs would increase efficiency in public procurement of primary healthcare facilities. Subject and Methods A qualitative analysis, adopting a realistic research evaluation method, used data collected from a purposive sample of public (n=23) and private sector staff (n=2) directly involved in the UK National Health Service Local Improvement Finance Trust (LIFT). Results We find a positive association of LIFT helping to bridge public sector capital shortages for developing primary care surgeries. LIFT is negatively associated with inefficient procurement because it borrows finance from private banks, leaving public agencies paying high interest rates. The study shows that some contextual factors and mechanisms in LIFT play a major part in obstructing public staff from increasing procurement efficiency. Conclusion PPP’s ability to increase efficiency may be determined by contextual factors and mechanisms that restrict discretion over critical decisions by frontline public sector staff. Developing their capacity in monitoring PPP activities may make partnerships more efficient.

O Impacto do project finance nas empresas portuguesas no setor têxtil

Dissertação para a obtenção do Grau de Mestre em Contabilidade e Finanças Orientador: Mestre Adalmiro Álvaro Malheiro de Castro Andrade Pereira

Environmental taxes in a public Stackelberg leader duopoly

We study whether privatization of a public firm improves (or deteriorates) the environment in a mixed Stackelberg duopoly with the public firm as the leader. We assume that each firm can prevent pollution by undertaking abatement measures. We get that, since in the mixed market the industry output is higher than in the private market, the abatement levels are also higher in the mixed market, and, thus, environmental tax rate in the mixed duopoly is higher than that in the privatized duopoly. Furthermore, the environment is more damaged in the mixed than in the private market. The overall effect on the social welfare is that it will becomes higher in the private than in the mixed market.

O contrato de Project Finance

Currently, Angola portrays a notorious economic growth and due to recent innovative legislations, it has become the major investment attracting pole, especially in Sub-Saharan Africa, having, thus, an extraordinary potentiality for a rapid and sustainable development, likely to place her in outstanding positions in the world economic ranking. Yet, such economic growth entails demanding levels of intensive investment in infrastructure, what has been reported of the Angolan Government to be unable to respond to, save if recurring to very high index of external debt, poisoning, in this way, the future budgeting of the country. Due to these infrastructure investment shortages, the cost of production remains highly onerous and the cost of life extremely unaffordable. On this account, the current study disserts about the contract of Project Finance; an alternative finance resource given as a viable solution for the private financing of infrastructure, aiming to demonstrate that such contractual figure, likewise the experience of several emerging economies and others, is a contract bid framework to take into account in today’s world. It refers to a financing technique – through which the Government may satisfy a common need (for example, the construction of a public domain or public servicing), without having to pay neither offer any collateral – based on a complex legal-financial engineering, arranged throughout a coalition of typical and atypical agreements, whereby it is mandatory to look back at the basic concepts of corporate law. More than just a simple financial study, the dissertation at stake analyses the nature and legal framework of Project Finance, which is a legally atypical and innominate contract, concluding that there is a relevant need for regulating and devoting a special legal regime in the Angolan jurisdiction for this promising legal form in the contemporary corporate finance world.

Arrêt du conseil d'Etat qui ordonne que le recouvrement de la finance de la vente des offices de greffiers secrétaires et gardes des archives des universités sera fait à la requête de Me E. Bertier

[Acte. 1704-02-16. Versailles]

Arrêt du Conseil d'Etat qui subroge François Fontaine au lieu et place de François Cheron pour faire le recouvrement de la finance qui doit provenir de la vente des offices de conseillers secrétaires de Sa Majesté, créés par édit du mois de décembre 1708

[Acte. 1712-03-15. Versailles]

Édit... portant suppression des offices de conseillers du Roy notaires et secrétaires dans les cours de Parlement, Chambres des Comptes et Cours des Aydes, Grand Conseil, Requestes de l'Hostel et du Palais, Conseils supérieurs et provinciaux, Cours des monnoies et Bureaux des Finances ; ordonne que les greffiers en chef des cours seront tous tenus de se pourvoir de l'un des offices de secrétaires, créez dans les chancelleries près les Cours par édit... de juin 1715 ; que la vente des offices de receveurs et payeurs des gages des officiers desdites chancelleries créez par édits... de novembre 1707 et décembre 1708 sera continuée ; et restablit les gardes des sceaux des chancelleries près les Cours dans leurs offices, en payant un supplément de finance... [Enregistré au Parlement le 13 juin 1716.]

[Acte royal. 1716-05-00. Paris]

Arrêt du conseil d'état qui ordonne que ceux des officiers des chancelleries près les cours et conseils supérieurs du royaume, qui payeront leur supplément de finance dans les termes y indiqués, seront déchargés des 2 sols pour livre

[Acte. 1755-11-25. Versailles]

Arrêt du conseil d'état qui ordonne que les quittances de finance pour l'acquisition des 1800000 livres de rentes héréditaires au denier vingt, créées sur l'imposition des deux sols pour livres en sus du dixième, seront expédiées au choix des acquéreurs en leur nom ou au porteur

[Acte. 1756-08-31. Versailles]

Instruction pour le recouvrement de la finance des jurez des arts et métiers, créez par édit du 12 mars 1691

[Acte. 1691]