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(23 December 2022) Back in 2020 EPSU welcomed the publication of Eurodad’s first History RePPPeated – see article - and this 2nd edition provides more useful evidence and examples of the failure of PPPs to provide added value compared to direct public investment and traditional public procurement. With continuing calls for PPPs to ‘incentivise’ private capital to invest in the financing of much-needed public infrastructure and services, the Eurodad report is a timely reminder that there is no such thing as a free lunch. Furthermore, governments and local authorities that look to PPPs to bridge financing gaps end up being doubly disappointed: PPPs not only cost a lot of money at the outset, they drain public resources in the future as well. In this second Eurodad report a good example of this is the case of hospital parking in Scotland. In 2020 during the hight of COVID-19 the Scottish Government decided to suspend parking charges for staff and patients in recognition of the exceptional circumstances. The consortium running the parkings however stuck rigidly to the contract and the Government ended up having to pay 6.5 million in compensation. This case illustrates that public services are essential, that when crisis hits the public sector has to step in, and the PPPs just get in the way because they are not fair contracts. Only one party – in this case the parking consortium - is protected from unforeseen risks. Another telling example in the Eurodad report concerns the King Juan Carols hospital in Madrid, the contract for will run for 30 years at a budget of 2.9 billion+. Built in 2010 without any comparison being carried out over alternative investments (i.e., expanding provision at existing hospitals) or cost-benefit analysis, the details of the contract remain shrouded in secrecy. Citizens are rightly concerned that the hospital’s private investors will over time extract public resources that would be better spent in the Spanish public healthcare system.
As well as case studies, the report also analyses emerging trends, particularly in light of the COVID-19 pandemic and the multiple crises facing the world. The recommendations echo previous call of many to halt the aggressive promotion and incentivising of PPPs and to strengthen rigorous government regulation and high transparency standards of private investment in public services. While the actual value of PPPs remains quite small in comparison to the size of the public sector, the push for PPPs undermines good governance, ethics and democracy, and increases risk for government debt. As the IMF notes ‘while spending on traditional public investments can be scaled back if needed, spending on PPPs cannot. PPPs make it harder for governments to absorb fiscal shocks…’ Indeed, so why still promote them?
PPPs must not be allowed to become yet another mechanism for maximising private sector accumulation at the expense of people and planet. Today private investors are capturing much of our democratic space and wealth. In the development context, especially worrying is the reliance of PPPs to implement the Sustainable Development Goals (SDGs) – see SDG17- and to export a failed model. As pointed out by Eurodad, if the World Bank and other multilateral development banks would put effort into improving the quality and effectiveness of publicly-funded infrastructure and services rather than wasting precious resources on PPPs, realising the SDGs would be a step closer.
See also EPSU briefing on PPPs
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