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Managing the risks of public - private partnerships in Scottish local government

McGarvey, Neil and Hood, J. (2002) Managing the risks of public - private partnerships in Scottish local government. Policy Studies, 23 (1). pp. 21-35. ISSN 0144-2872

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Abstract

The involvement of the private sector in the financing and provision of public services has been placed at the core of the Labour government's second-term public sector reform agenda. PFI/PPP is a key policy instrument that is being used to transform public services. This article reviews the debates surrounding PFI/PPP before examining the implementation of the policy in Scottish local government. A key element of PFI/PPP is risk transfer. The research presented here suggests that scope exists for poor risk management decisions in Scottish local authorities. The degree of risk management involvement in the process to date is variable, and where it does exist its extent is frequently limited in scope. Local councils in Scotland appear ill-prepared to manage the risk transfer process inherent in PFI/PPP. Faced with commercial operators with substantial advantage over them in the arena of risk transfer negotiation, this increases the likelihood of PFI/PPP initiatives which offer poor value for money for Scottish local government.