RegulationCorporate GovernanceICAS: Increase scrutiny of Public-Private partnership projects

ICAS: Increase scrutiny of Public-Private partnership projects

A dearth of financial information about Public Private Partnerships is hampering scrutiny of public finances, according to a report by ICAS.

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

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