Down our road
Despite misgivings in Britain, the idea of private cash for the public sector has been embraced by South Africa and many other nations, says Paul Gosling
Wednesday 19 March 1997
Hambros Bank has even gone so far as to place British PFI experts in South Africa and Canada to advise on equivalent schemes there, and it is also involved in public/private partnerships in Finland and Portugal. "More and more governments across the world will leap on the band wagon," James Stewart, head of UK project finance at Hambros, predicts. "A lot is happening around the world on this, and the UK experience is very useful."
The South African government has just announced that it is looking for private finance for six new prisons, and is also looking to make the private sector a partner in the renovation of its tax collection services.
David Cain, who is on secondment to the government's Private Finance Panel from Deloitte and Touche, confirms that South Africa is the most enthusiastic PFI disciple. "I met finance ministers of South African provinces at the beginning of this year to give a presentation on the PFI," he says. "Many were taken by it as a way of developing infrastructure across the provinces."
The attractions of the PFI are obvious for countries with out-dated infrastructures, enormous public demand for renewal, and problems with collecting sufficient taxes - much of Africa, and central and eastern Europe, for example. But even the wealthiest European countries are also examining the PFI, and government representatives from Spain, Belgium and the Netherlands have all had briefings from Treasury officials on the the British experience.
"What the PFI in the UK is responding to is trends common across the world," Iain Watmore, Andersen Consulting's partner responsible for government in the UK, Ireland and South Africa, argues. "Governments are finding it increasingly hard to finance infrastructure out of tax revenues. They are starting to get their operations more into the private sector. They are looking to purchase more from the private sector on a payment by result basis, rather than payment by inputs. And they are trying to get private sector innovations into government. People are inventing different solutions to those problems - but all have PFI-like characteristics."
"I think it is highly exportable to Canada and the United States," David Cain suggests. "There is still a tendency by state and city governments there to own and manage their own properties rather than transfer risks into the private sector. Canadians have done a lot of bridge building projects using schemes close to the PFI. Their own reform programme is based on privatisation."
Andrew Porter, a director in corporate finance at Price Waterhouse, says that Poland, the Czech Republic and Hungary are all interested in road building that is paid for on a results basis over the next 10 or 20 years.
But the British PFI model needs to be adapted for use in other countries. "The UK model doesn't always fit," Hambros's James Stewart says. "We have had to work hard looking at local cultures, which is why we have also recruited locals in South Africa and Canada."
Andersen's Iain Watmore adds: "There is nothing more blue chip than the UK government, but that doesn't apply to all governments across the world. People will be anxious. South Africa looks a good bet today, but I wouldn't like to say that about every developing country. There is a risk that you will build the asset and not get paid a penny."
It is also important to learn lessons from other countries where the public/private partnerships are beginning to work more effectively than in Britain. "One of the things Australia has done," Mr Stewart says, "is to recruit specialist project negotiators to lead negotiations on behalf of the public sector. They have prioritised projects, working on a few, select, large projects, and put a lot of resources into making these deals happen. In the UK we have a much broader-brush approach."
Andrew Porter of Price Waterhouse suggests that other countries' legal and financial systems can bring the public and private sectors together more comfortably than ours does. "The French have been doing financing through concessions for years, but the French legal system works differently. They are not so obsessed by whether something is public or private sector borrowing. Grant maintained schools here are outside the public sector borrowing requirement, but NHS trusts are inside. There is no consistency.
"The UK government has decreed that the PFI must be off-balance sheet, but it should be about value for money, and whether it is on or off balance sheet should be irrelevant."
Britain may be the teacher on PFI, but the best teachers learn things from their pupils as well
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens