Lessons on private finance for the rest of the world
By the Jubilee Debt Campaign
Public-Private Partnerships (PPPs) are a type of contract under which private companies build and operate public services and infrastructure, while much of the financial risk remains with the public body concerned.
The UK was one of the first countries to develop PPPs in the early 1990s, and its PPP programme, known as the Private Finance Initiative (PFI), subsequently expanded across all parts of public spending including healthcare, education and the military.
This briefing sets out the major problems and risks the UK has encountered through its extensive experiment with PPPs, including how they have:
- Cost the government more than if it had funded the public infrastructure by borrowing money itself
- Led to large windfall gains for the private companies involved, at public expense
- Enabled tax avoidance through offshore ownership
- Led to declining service standards and staffing levels
- Hollowed out state capacity to design, build, finance and operate infrastructure
- Eroded democratic accountability
PPPs are hugely unpopular in the UK, which has led to PFI being rebranded in both England and Scotland, and the number and value of new projects falling since 2008, reaching its lowest level since the mid-1990s in 2014 (the latest year with figures available).
However, the UK government and companies are now heavily promoting PPPs around the world. In recent years, more than 90 countries around the world have passed laws relating to or enabling PPPs to be taken on.
This briefing sets out the real story of PPPs in the UK, with the hope of better informing interested and affected parties in other countries around the risks and costs involved in PPPs.