ICAS: Increase scrutiny of Public-Private partnership projects

A lack of financial information on multi-billion pound public-private partnerships (PPPs), which are used to deliver public infrastructure such as roads and hospitals, makes it difficult to determine the true extent of government debt and future expenditure, the Institute of Chartered Accountants of Scotland has claimed in a report.

The report focuses on the roads sector, which is the biggest user of the PPP sectors. However, ICAS says its report recommendations may also apply to other UK private finance projects, such as schools and hospitals.

The report -- by Professor Jean Shaoul, Dr Anne Stafford, Professor Pam Stapleton and Peter MacDonald – recommends that public bodies should routinely include information about the costs, payments and future commitments of large PPP schemes in their accounts.

The ICAS report also calls for public bodies to give information about PPP budgets, explain any cost overruns, and for public bodies to assert more control over private sector suppliers.

Professor Jean Shaoul said: 'The explanation often given about the higher cost of private as opposed to public finance is that the private contractor is taking on some of the project’s risks. However, the lack of information and disclosure on PPPs means it is difficult to assess whether this additional cost is of benefit to the public.'

David Wood, ICAS executive director, technical policy added: 'The public has
a legitimate interest in how major public/private finance infrastructure projects are set up and whether they are operating as expected.'

Read the report:

Financial Black Holes: Accounting for Privately Financed Roads in the UK