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

Privatisation on the British model is being adopted in every continent. Now, for all the criticism of it at home, the Private Finance Initiative is being exported to solve a world-wide need to modernise infrastructure and improve public sector efficiency.

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

Mock the tweet: Ukip leader Nigel Farage and comedian Frankie Boyle
peopleIt was a polite exchange of words, as you can imagine
Life and Style
Life and Style
Britons buy more than 30 million handsets each year, keeping them for an average of 18 months
Arts and Entertainment
TV Presenters Ant McPartlin and Dec Donnelly. Winners of the 'Entertainment Programme' award for 'Ant and Dec's Saturday Night Takeaway'
musicAnt and Dec confirmed as hosts of next year's Brit Awards
Arts and Entertainment
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Finance Assistant - Part time - 9 month FTC

    £20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

    Marketing Manager

    £40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

    Market Risk Manager - Investment Banking - Mandarin Speaker

    £45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Day In a Page

    Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

    A Syrian general speaks

    A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
    ‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

    ‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

    Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
    Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

    Fall of the Berlin Wall

    History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
    How to turn your mobile phone into easy money

    Turn your mobile phone into easy money

    There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
    Independent writers remember their Saturday jobs:

    Independent writers remember their Saturday jobs

    "I have never regarded anything I have done in "the media" as a proper job"
    Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

    11-step recipe for creating a West End hit

    Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
    Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

    Buried treasure: The Letter for the King

    The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
    Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

    The school that means business

    Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
    10 best tablets

    The world in your pocket: 10 best tablets

    They’re thin, they’re light, you can use them for work on the move or keeping entertained
    Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

    Lutz Pfannenstiel interview

    The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
    Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

    Pete Jenson's a Different League

    Popular Klopp can reignite Dortmund’s season with visit to Bayern
    John Cantlie video proves that Isis expects victory in Kobani

    Cantlie video proves that Isis expects victory in Kobani

    The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
    The killer instinct: The man who helps students spot potential murderers

    The killer instinct

    Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
    Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

    Clothing the gap

    A new exhibition celebrates women who stood apart from the fashion herd
    Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

    The Fall of the Berlin Wall

    Goodbye to all that - the lost world beyond the Iron Curtain