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The Declining Role of the State in Infrastructure Investments in the UK

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  • M.G. Pollitt

Abstract

This paper explores the increasing private involvement in social infrastructure projects in the UK since 1979. It begins by reviewing the effect of privatisation on the quantity of investment undertaken by the utility sector. The evidence is consistent with the view that the private sector is capable of raising the necessary finance. The history, theory and experience of the Private Finance Initiative (PFI) is then discussed. Five case studies of major PFI projects are reviewed, covering hospitals, prisons, computer services and transport projects. The author concludes that the PFI has been a qualified success in the UK especially when compared with the experience under the previous regime of government procurement.

Suggested Citation

  • M.G. Pollitt, 2000. "The Declining Role of the State in Infrastructure Investments in the UK," Cambridge Working Papers in Economics 0001, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0001
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    1. Brealey, R A & Cooper, I A & Habib, M A, 1997. "Investment Appraisal in the Public Sector," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 13(4), pages 12-28, Winter.
    2. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1127-1161.
    3. Grout, Paul A, 1997. "The Economics of the Private Finance Initiative," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 13(4), pages 53-66, Winter.
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    Cited by:

    1. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Anatomy of Public-Private Partnerships : Their Creation, Financing, and Renegotiations," Discussion Paper 2014-017, Tilburg University, Center for Economic Research.
    2. Fedderke, J.W. & Perkins, P. & Luiz, J.M., 2006. "Infrastructural investment in long-run economic growth: South Africa 1875-2001," World Development, Elsevier, vol. 34(6), pages 1037-1059, June.
    3. Graeme A. Hodge, 2010. "Reviewing Public–Private Partnerships: Some Thoughts on Evaluation," Chapters, in: Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), International Handbook on Public–Private Partnerships, chapter 5, Edward Elgar Publishing.
    4. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Public-Private Partnerships : Risk Allocation and Value for Money," Other publications TiSEM b9218010-a357-4c0a-805a-7, Tilburg University, School of Economics and Management.
    5. Alessandro Turrini, 2004. "Public investment and the EU fiscal framework," European Economy - Economic Papers 2008 - 2015 202, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. M. Pollitt, 2004. "Electricity reform in Chile. Lessons for developing countries," Competition and Regulation in Network Industries, Intersentia, vol. 5(3), pages 221-263, September.
    7. Devkar, Ganesh A. & Mahalingam, Ashwin & Deep, Akash & Thillairajan, A., 2013. "Impact of Private Sector Participation on access and quality in provision of electricity, telecom and water services in developing countries: A systematic review," Utilities Policy, Elsevier, vol. 27(C), pages 65-81.
    8. Balazs Egert, 2009. "Infrastructure Investment in Network Industries: The Role of Incentive Regulation and Regulatory Independence," CESifo Working Paper Series 2642, CESifo.
    9. Anthony Wall & Ciaran Connolly, 2009. "The Private Finance Initiative," Public Management Review, Taylor & Francis Journals, vol. 11(5), pages 707-724, September.
    10. Tooraj Jamasb & Michael Pollitt, 2005. "Deregulation and R&D in network industries: the case of the electricity industry," Working Papers EPRG 0502, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    11. Hodge, 2004. "Risks in Public-Private Partnerships: Shifting, Sharing or Shirking?," Asia Pacific Journal of Public Administration, Taylor & Francis Journals, vol. 26(2), pages 155-179, December.
    12. Alfons Van Marrewijk & Marcel B. Veenswijk, 2016. "Changing institutional practices in the Dutch construction industry," International Journal of Project Organisation and Management, Inderscience Enterprises Ltd, vol. 8(1), pages 44-62.
    13. Graeme A. Hodge & Carsten Greve, 2009. "PPPs: THE PASSAGE OF TIME PERMITS A SOBER REFLECTION," Economic Affairs, Wiley Blackwell, vol. 29(1), pages 33-39, March.
    14. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge.
    15. Inácia Pimentel & Miguel St.Aubyn & Nuno Ribeiro, 2017. "The impact of investment in Public Private Partnerships on Public, Private investment and GDP in Portugal," Working Papers Department of Economics 2017/13, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    16. John Luiz, 2010. "Infrastructure investment and its performance in Africa over the course of the twentieth century," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 37(7), pages 512-536, June.
    17. Tahir Nisar, 2007. "Risk Management in Public–Private Partnership Contracts," Public Organization Review, Springer, vol. 7(1), pages 1-19, March.
    18. Joop Koppenjan & Martijn Leijten, 2005. "Privatising Railroads: The Problematic Involvement of the Private Sector in Two Dutch Railway Projects," Asia Pacific Journal of Public Administration, Taylor & Francis Journals, vol. 27(2), pages 181-199, December.
    19. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    20. Valila, Timo, 2005. "How expensive are cost savings? On the economics of public-private partnerships," EIB Papers 4/2005, European Investment Bank, Economics Department.
    21. Paolo Balduzzi, 2006. "Models of Partnerships," Working Papers 96, University of Milano-Bicocca, Department of Economics, revised May 2006.

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    More about this item

    Keywords

    Private Finance Initiative; Infrastructure; Value for money test; Privatisation; Investment;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

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