Financial black holes
Purpose - This paper aims to examine empirically whether the system of public expenditure reporting is capable of delivering financial accountability, focusing on the UK government's use of private finance for roads. Design/methodology/approach - Publicly available documents from the public and private sector partners for 11 roads contracts are examined, together with a publicly provided bridge paid for via tolls as a comparator. Findings - Reporting by both public and private sectors is limited and opaque, such that accountability to the public is inadequate. The evidence also shows that the scale of the additional expenditure generated by private finance warrants greater disclosure and scrutiny than is currently the case. Research limitations/implications - These findings, which occur in the roads sector where projects are large and visible, are likely to be replicated elsewhere in the public sector. Accountability issues may be even more problematic in public bodies where reporting is more diffuse. Furthermore, the proliferation of other forms of private finance increases the problems of reporting clear financial information, the lack of which not only makes informed public debate about public and fiscal policy impossible but also may lead to the wrong policy choice. Originality/value - There has been little
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Volume (Year): 23 (2010)
Issue (Month): 2 (February)
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References listed on IDEAS
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Documentos de Trabajo
221, Centro de Economía Aplicada, Universidad de Chile.
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- Ehrhardt, David & Irwin Timothy, 2004. "Avoiding customer and taxpayer bailouts in private infrastructure projects : Policy toward leverage, risk allocation, and bankruptcy," Policy Research Working Paper Series 3274, The World Bank.
- Cooper, David J. & Sherer, Michael J., 1984. "The value of corporate accounting reports: Arguments for a political economy of accounting," Accounting, Organizations and Society, Elsevier, vol. 9(3-4), pages 207-232, October.
- Irwin, Timothy & Klein, Michael & Perry, Guillermo E. & Thobani, Mateen, 1999. "Managing Government Exposure to Private Infrastructure Risks," World Bank Research Observer, World Bank Group, vol. 14(2), pages 229-245, August.
- Basilio Acerete & Jean Shaoul & Anne Stafford, 2009. "Taking its toll: The private financing of roads in Spain," Public Money & Management, Taylor & Francis Journals, vol. 29(1), pages 19-26, January.
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