Publicprivate partnership and private finance initiatives in the EU and Spanish local governments

Abstract

This paper analyses the different public-private partnership initiatives carried out by EU and Spanish local governments in the framework of public sector reforms. In the first part we analyse the degree of externalization in the public services delivered by the most important EU cities and the kind of organization chosen to provide them. In the second part we study the different methods of PFI applied in Spain and the accounting, auditing and monitoring of these kinds of contracts. The results of our survey show that almost all EU local governments provide similar services, that there is a high degree of PPP initiatives in the delivery of local government services, and that PPP is concerned with those activities which do not constitute the core of public administration. This means that an important part of the activity controlled by the local governments, which are responsible, are not reflected in their individual annual accounts. Because of this, local governments will have to implement accountability and monitoring tools, such as PPP and PFI accounting standards, consolidation of annual accounts, regulatory bodies and value-for-money audits in order to assess the performance of local services delivered under PPP initiatives, and to prevent monopoly abuses.