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: See how much you could save by switching credit cards. Compare now
peopleContenders for Time magazine's Person of the Year are a mixture of the good, the bad and the holy
newsAs the world remembers Mandela the hero, the prison where he spent 27 years seems all the more brutal
tvSteven Moffat reveals the actor was dying to take on the role of the Time Lord and says he is excited to see what he will do with the character
sportBayern Munich 2 Manchester City 3: City come from two down to beat reigning European Champions
arts + ents... and a chance to paint Booker Prize winning author Hilary Mantel
danceUnder Tamara Rojo's inspired direction, it seems possible that it could challenge the dominance of the Royal Ballet. We meet some established names and rising stars
travelDiscover Uruguay's jet-set beach resort, an Atlantic enclave with plenty of art and culture to explore on the side
- 1 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 2 Sir Ian McKellen hits back at Damian Lewis' 'fruity actor' claims
- 3 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 4 Selfie at funeral: Cameron squeezes in on Obama snap at Mandela memorial
- 5 Is Facebook making us forget? Study shows that taking pictures ruin memories
- < Previous
- Next >
iJobs Money & Business
£50000 - £65000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...
£60000 - £85000 per annum + BONUS + BENEFITS: Harrington Starr: A leading asse...
£45000 - £70000 per annum + Bonus + Benefits: Harrington Starr: Technical Impl...
£65000 - £90000 per annum + Bonus + Benefits: Harrington Starr: Rogue Trading ...
Day In a Page
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000