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Nationalising Special Purpose Vehicles to end PFI: A Discussion of the Costs and Benefits

Nationalising Special Purpose Vehicles to end PFI: A Discussion of the Costs and Benefits

Mercer, Helen and Whitfield, Dexter (2018) Nationalising Special Purpose Vehicles to end PFI: A Discussion of the Costs and Benefits. [Working Paper]

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Abstract

The article’s principal purpose is to provide an initial set of costings relating to the proposal to end PFIs in the UK through nationalising the Special Purpose Vehicles. The article uses book value to estimate that the cost of compensating the shareholders of the SPVs on HM Treasury database would be between £2.3bn and £2.5bn. It further analyse the potential savings to public authorities. The article proposes that service contracts are renegotiated so that the public authorities contract directly with the providers, not via the SPV. This secures significant annual savings from the elimination of operating profits, of £1.4bn, indicating that nationalisation will pay for itself within two years. Further the article proposes to honour all outstanding liabilities but to secure substantial refinancing through a new body in which ownership of the SPVs will be vested. Finally the article suggests that as service contracts are ended, either through break clauses or other reasons, the public authorities must bring provision ‘in-house’, ending outsourcing and also providing further savings from more rational and integrated provision. The approach has been developed on the basis of significant research into how PFIs operate and consideration of the range of alternative solutions to the PFI problem that have been put forward so far. These issues are also explained and developed in the article.

Item Type: Working Paper
Additional Information: The 1st edition of this working paper was published in April 2018. A second edition followed in October 2018, including an appendix with a critique of a study released by The Centre for Health and the Public Interest (CHPI).
Uncontrolled Keywords: Private Finance Initiative, Public Private Partnerships, Special Purpose Vehicles, Nationalisation
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Public Services International Research Unit (PSIRU)
Last Modified: 18 Oct 2018 09:15
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/20016

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