Public Private Partnerships,the Levels of Public Investment and the New Member States

Some of the features of public private partnerships (PPPs) are outlined. The arguments that PPPs provide additional investment are critical examined, and the way in which the accounting treatment may influence the use of PPPs examined. The costs of PPPs are compared with ‘conventional’ public investment and it is argued that PPPs are a relatively expensive way of undertaking public investment. The idea that PPPs effectively transfer risk from government to private companies is assessed. Issues relating to the nature of contracts under PPPs, the transactions costs and the implementation of the contracts, are briefly considered. For the New Member States, it is suggested that national accounting rules and perceived constraints on budget deficits may encourage the use of PPPs, even if that use is not warranted in terms of costs of public investment.