Has the NAO Audited Risk Transfer in Operational Private Finance Initiative Schemes?

The aim of this paper is to analyse the risk transfer issue in Public Private Partnership/Private Finance Initiative (PPP/PFI) procurement documents in the United Kingdom (UK) and Malaysia. It utilises qualitative research methods using documentation and interviews for data collection. The UK documents (guidelines and contracts) identify the risks related to this form of public procurement of services and makeexplicittheappropriateallocation of those risks between the public and the private sector PPP/PFI partners and so the types of risks each party should bear. However, in Malaysia, such allocation of risks was not mentioned in PPP/PFI guidelines. Hence, a question arises regarding whether risk transfer exists in Malaysian PPP/PFI projects, whether in contracts or by other means. This research question is the rationale for the comparative analysis ofdocumentsand practicesrelatingtorisk transfer in the PPP/PFI procurements in both countries. The results clarify risk-related issues that arise in implementing PPP/PFI procurement in Malaysia, in particular how risk is conceptualised, recognised and allocated (whether explicitly or implicitly), whether or not that allocation is intended to achieve optimum risk transfer, and so the implications forachievement ofvalue for moneyor other such objectivesinPPP/PFI.

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Outsourcing on steroids: regeneration meets the Private Finance Initiative

Safe as houses ◽

10.7228/manchester/9781526141866.003.0003 ◽

2019 ◽

pp. 56-92

Author(s):

Stuart Hodkinson

Keyword(s):

Public Housing ◽

Case Studies ◽

Public Services ◽

Evidence Base ◽

Local Authorities ◽

Private Finance Initiative ◽

Risk Transfer ◽

Private Finance ◽

The Face ◽

Corporate Takeover

This chapter introduces the controversial background and evolution of the PFI model in public housing regeneration. A first section outlines the basic workings of PFI and how it emerged as part of the wider corporate takeover and financialisation of public services. A second section debunks official claims that the inflated cost of private finance is justified by the superior ‘value for money’ delivered through PFI’s ‘risk transfer’ and ‘payment by result’s model. A third section provides an overview of the origins and evolution of PFI as the ‘only game in town’ for local authorities during the 2000s that wanted to retain ownership of public housing and access the desperately-needed finance for home and estates in need of major regeneration and refurbishment. It introduces the twenty public housing PFI regeneration schemes now operational in England, introducing the three London local authority case studies which form the evidence base of the book: Islington’s Street Properties, Camden’s Chalcots Estate and Lambeth’s Myatts Field North estate. A final section reveals the controversy on the ground that met the undemocratic imposition of many housing PFI schemes – sometimes in the face of resident opposition – and the problems that engulfed the procurement of these contracts.

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