17 March 2000
Chief Secretary to the Treasury Andrew Smith unveiled a programme of some 200 capital projects involving private sector funds and expertise on which contracts will be signed by 2003.
This is a significant increase on the value of projects signed by Labour in its first three years of government. So far £12bn worth of contracts have been signed since May 1997. The previous government signed only £4bn worth.
Most of the projects announced on March 15 at a media event at Lewisham railway station – itself a PPP project – cover just four government departments: health, education, defence and transport.
Proposed schemes include a new Birmingham City hospital, a Glasgow schools project, Hackney Library, an extension of the Docklands Light Railway to London City Airport, and a Eurofighter Mission Support Centre.
'This announcement is getting the message across that PPP is already achieving, already delivering and showing how much more can be done,' Smith told Public Finance.
However, government confidence could be dented if the plug is pulled on two controversial planned PPP schemes, the London Underground and the National Air Traffic System.
Asked if the timing in the run-up to the May London elections was coincidental, Smith said the government had been preparing it for some time in advance of the Budget. But he added that it contained an 'important message' for Londoners.
This message was endorsed by Labour's London mayoral candidate, Frank Dobson, who turned up at the launch to remark: 'The chances are that a PPP will be the best option [for the London tube].'
Other experts were not so sure, counselling the government against putting all its eggs in one basket. John Hawksworth, head of the macroeconomic unit at PricewaterhouseCoopers, said that ministers relied on using PPP although there were alternatives.
'They are still using the argument that this is the way to bring in investment that otherwise wasn't affordable,' he said. He also called for independent inquiries into major PPP schemes before they are given the go-ahead.
Earlier in the week, a report by the Institute for Public Policy Research, part-authored by Hawksworth, claimed that money saved under Private Finance Initiative schemes, a form of PPP, was 'small beer'.
Carl Emmerson, senior research economist at the Institute of Fiscal Studies, said £20bn 'isn't much' compared to overall government spending of £345bn in the current year.
PFmar2000
