Privately financed capital in public services

Heald, D. (1997) Privately financed capital in public services. Manchester School, 65(5), pp. 568-598. (doi:10.1111/1467-9957.00082)

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Abstract

Recent changes in U.K. policy, notably the retirement of the 1981 Ryrie rules, presage a substantial increase in the use of private finance for public sector projects. The most important features of the relaxations of 1989 and 1992 relate to successive modifications of the value-for-money test, notably in connection with removing the requirement for a systematic comparison with a hypothetical publicly financed project (e.g. when the private sector can be directly remunerated by user tolls); less stringent rules on leasing; and allowing private borrowing on the security of Exchequer-funded assets. The crucial issues are identified to be the extent of private finance and the implications for macroeconomic indicators; whether the hypothesized operational efficiency gains are sufficient to offset higher financing costs; whether risk is genuinely transferred to the private sector; and whether risk ought to be transferred to the private sector.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Heald, Professor David
Authors: Heald, D.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Manchester School
Publisher:Wiley-Blackwell Publishing Ltd.
ISSN:1463-6786
ISSN (Online):1467-9957
Published Online:16 December 2002

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