(Press Communication – 16 December 2014) The Juncker investment plan will be under scrutiny at this week’s European Council with many questions still to be clarified about how it will work in practice. The European Federation of Public Service Unions is concerned about the continuing restrictions on public finances, and the extent to which the private sector will be relied on to cover for the shortfall in public investment.
A briefing from the PSIRU international research organisation looks at the risks of the Public-Private Partnerships (PPPs) that the Juncker investment plan will promote. They are not the magic solution. The briefing debunks claims that PPPs assume the burden of investment, shoulder all the risk and deliver projects efficiently, effectively and on time.
The briefing argues that, rather than providing additional finance and taking on risks, PPPs invariably involve borrowing at higher cost than normal public sector debt and, in fact, leave the risk with the public sector. Furthermore, PPPs can often lock public authorities into very long-term payment arrangements that guarantee regular profits for the private sector but not value for money for the public sector.
One of the main arguments of the promoters of PPPs is that the private sector is generally more efficient than the public sector. This claim is dealt with in detail in a second report from the PSIRU. This assembles a wealth of evidence to demonstrate that this is simply not true and that across many sectors private sector operators have proven to be no more efficient that the public sector organisations that they have replaced or with which they compete.
Whether it is in the waste sector, transport, energy or health, studies have shown that while private firms sometimes emerge as the cheapest operators, this certainly doesn’t guarantee that they deliver overall value for money or quality of service.
EPSU general secretary Jan Willem Goudriaan said: “We urgently need a boost to investment across Europe to help create millions of jobs. The Juncker plan relies too much on private sector investors and fails to free up the public sector to invest directly in social infrastructure across Europe. If the Council does not boost public investment, Juncker's plan will fail”
He added: “These two important studies by PSIRU expose very clearly the risks of an over-reliance on the private sector and undermine the arguments of those who claim that public sector inefficiency demands private sector intervention.”
For more information: Pablo Sanchez, firstname.lastname@example.org, 0032 (0) 474 62 66 33