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PUBLIC PRIVATE PARTNERSHIPS -
THE GOVERNMENT ’S APPROACH
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Introduction
1 Public private partnerships (PPPs)re key element in the Government
’s strategy for delivering modern,high quality public services and
promoting the UK ’s competitiveness.They cover range of business structures
and partnership arrangements,from the Private Finance Initiative (PFI)to
joint ventures and concessions,to outsourcing,and to the sale of equity
stakes in state-owned businesses.
2 The Government took action to enhance PPPs within days of taking
office in May 1997,starting by overhauling the PFI.The flow of investment
from PFI deals is set to rise rapidly as result:
- contracts with an estimated capital value of over £8 billion have
been signed since the election in reas as diverse as hospitals,schools,military
helicopter tr ining and water treatment services;
- in addition,in June 1998 the Government renegotiated the Channel
Tunnel Rail Link project, with capital value of over £4 billion;
- the Government ’s other PPP plans are expected to generate at
least a further £20 billion of investment.This includes PFI projects
currently out to tender and the Government ’s plans for PPPs for
London Underground and National Air Traffic Services (see below).All
this compares with less than £4 billion of private finance contracts
signed during the whole of the last Parliament.(Excluding the original
Channel Tunnel Rail Link contract.)
3 The Government announced plans in July 1999 to build on this success
by establishing P rtnerships UK -a private company with public interest
mission,which will enhance the public sector ’s ability to use public
private partnerships to achieve its objectives.
4 The Government is also using PPPs to help state-owned businesses
to compete and to provide improved services to their customers,while
retaining responsibility for public interest issues in the public
sector.These include:
- a PPP for London Underground in which private sector partners
will be granted long-term concessions to upgrade and modernise the
tube infrastructure,including some £8 billion of new investment
in the first 15 years,backed by a rigorous performance regime to
ensure that this investment leads to better services;
- the introduction of private sector strategic partner into National
Air Traffic Services (NATS)to fund and manage more effectively the
company ’s large,modernising investment projects,while separate,public
regulation will ensure NATS maintains its high safety standards
and offers value for money for airlines and their passengers;
- plans to sell a minority stake in BNFL,subject to further work
by the Government and its advisers and to the company ’s overall
progress towards achieving a range of performance targets set by
the Government.This would enhance commercial disciplines s BNFL
seeks to exploit opportunities in the competitive nuclear and environmental
clean-up markets worldwide,while retaining the regulation that is
essential to meeting high safety and environmental standards;
- the Government has legislated to enable the sale of majority stake
in the CDC (formerly the Commonwealth Development Corporation).This
would enhance the business ’s ability to r ise funds which would
continue to be invested in the poorest countries in the world;
- the Government has announced its intention to sell the Horserace
Totalisator Board (the Tote),in order to give the business greater
freedoms in a rapidly changing market;and
- the Government is considering the form of a PPP for the Defence
Evaluation and Research Agency (DERA)to enable it to respond to
the changing demands of MoD customers,and to unlock its extensive
store of expertise and knowledge to benefit the UK economy as whole.
5 In addition,the Government is extending the partnership approach
to an ever widening range of public sector activities,drawing on business
skills to develop and implement policy,and using the expertise of
private sector partners to make better use of public sector ssets.
6 PPPs are not only vital for the modernisation of the UK.There is
huge international interest in the UK ’s approach to developing partnerships
between the public and the private sectors.It is an area of public
policy where the UK leads the world.Over 50 countries have consulted
the Treasury about the PFI.Some,like Italy,Ireland,Japan and the Netherlands
re following us in the way we organise within government to deliver
partnerships.Some are legislating to enable them to happen.PPPs lso
offer British companies the opportunity to use the skills and expertise
they have developed in providing services within the UK to enter new
export markets.
7 This paper sets out the underlying principles and themes which
apply to ll the various forms of PPP,and which are centr l to the
way in which the Government goes about designing new partnerships
with the private sector.By applying these principles in each case,and
learning the lessons from the privatisation programme and the early
years of the Private Finance Initiative,the Government will deliver
partnerships with the private sector that will provide better public
services for customers and local communities,greater opportunities
for staff and better value for the taxpayer.
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