Changing reasons for public–private partnerships (PPPs)

Abstract

This article considers the micro- and macro-economic benefits and costs of PPPs and some implications of implementing new international accounting standards. If public sector financial costs are forced to move ‘on balance sheet’, then there are likely to be impacts on the use in PPPs by governments and other public bodies. This may move the basis of PPP choice towards a more level playing-field with other financing sources, potentially give a more realistic measure of future public commitments and liabilities and reduce incentives to use PPPs for budget enlargement. There may be a refocusing upon the potential efficiency gains of PPPs and a reduction in their use, in some cases.

Acknowledgements

The authors are grateful to two anonymous referees for their extremely useful comments. All views and errors remain those of the authors.

Notes

*For example, one of Lothian Regional Council's criteria for funding was to determine if it ‘was unable to procure the necessary funding via traditional procurement routes. Once this had been established, Lothian Regional Council examined different forms of PPPs with its principal objective being to ensure that CAPEX (capital expenditure) was “off balance sheet” (Scottish Parliament, 2002; see also House of Commons, 2001; NAO, 2009, p. 35).