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Do PPPs in Social Infrastructure Enhance the Public Interest? Evidence from England's National Health Service
Author(s) -
Hellowell Mark,
Pollock Allyson M.
Publication year - 2010
Publication title -
australian journal of public administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.524
H-Index - 41
eISSN - 1467-8500
pISSN - 0313-6647
DOI - 10.1111/j.1467-8500.2009.00658.x
Subject(s) - private finance initiative , finance , general partnership , private sector , public capital , investment (military) , business , rate of return , public finance , public–private partnership , public sector , economics , public economics , public investment , economic growth , public fund , politics , political science , economy , law , macroeconomics
This article outlines and critiques the main fiscal and economic rationales for the Private Finance Initiative – by far the dominant form of public‐private partnership in the United Kingdom (UK) – and examines the impact of the policy on the long term financial viability of the National Health Service. It shows that the interest rate on private finance contains a significant element of ‘excess return’ to investors, and there is no evidence that this ‘excess cost’ to the public sector is offset by greater efficiency through the contracting process. It concludes that the private financing of public capital investment is highly problematic – and can have a serious impact on the finances and capacity of public authorities.