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Abstract

This paper is a contribution to the debate about appropriate financing mechanisms for public investment in Britain. The paper examines the government's plans for the London Underground Public-Private Partnerships (PPP), against the experience offunding the Channel Tunnel Rail Link (CTRL), and examines alternative funding mechanisms, including bond financing. The keyfindings are that whilst the PFI is a usefulfinancial toolfor certain types of projects and to fill certain types of financing gaps, an alternative option of funding Underground investments by way of a bond issue is preferable, with project management and construction work being undertaken by the private sector. Should the Government go ahead with the PPP in its present form, it is essential that the commitment to undertake a Public Sector Comparator be seen to be a genuine test for good value for money against the best realistic alternative, namely one using the cheaper financing offered by a bond issue. The comparison should be undertaken by an independent agency such as the National Audit Office, and be in the public domain. But the PPP is not the only way forward. The arrangements for the PPP cut across the Government's own desire to return local democracy to London. There is still an opportunity to deliver a cheaper, more democratic, alternative.

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Getting Public Private Partnerships Going in Transport

Abstract

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