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

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  • M.G. Pollitt

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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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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/wp0001.pdf
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    References listed on IDEAS

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    1. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
    2. Brealey, R A & Cooper, I A & Habib, M A, 1997. "Investment Appraisal in the Public Sector," Oxford Review of Economic Policy, Oxford University Press, vol. 13(4), pages 12-28, Winter.
    3. repec:hrv:faseco:30727607 is not listed on IDEAS
    4. Grout, Paul A, 1997. "The Economics of the Private Finance Initiative," Oxford Review of Economic Policy, Oxford University Press, vol. 13(4), pages 53-66, Winter.
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    Citations

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    Cited by:

    1. 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.
    2. Graeme A. Hodge, 2010. "Reviewing Public–Private Partnerships: Some Thoughts on Evaluation," Chapters,in: International Handbook on Public–Private Partnerships, chapter 5 Edward Elgar Publishing.
    3. Miranda Sarmento, J. & Renneboog, L.D.R., 2014. "Public-Private Partnerships : Risk Allocation and Value for Money," Discussion Paper 2014-017, Tilburg University, Tilburg Law and Economic Center.
    4. 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.
    5. Tahir Nisar, 2007. "Risk Management in Public–Private Partnership Contracts," Public Organization Review, Springer, vol. 7(1), pages 1-19, March.
    6. 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.
    7. 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.
    8. Balazs Egert, 2009. "Infrastructure investment in network industries: The role of incentive regulation and regulatory independence," William Davidson Institute Working Papers Series wp956, William Davidson Institute at the University of Michigan.
    9. 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.
    10. 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.
    11. Anthony Wall & Ciaran Connolly, 2009. "The Private Finance Initiative," Public Management Review, Taylor & Francis Journals, vol. 11(5), pages 707-724, September.
    12. Valila, Timo, 2005. "How expensive are cost savings? On the economics of public-private partnerships," EIB Papers 4/2005, European Investment Bank, Economics Department.
    13. 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.
    14. Jamasb, T. & Pollitt, M., 2005. "Deregulation and R&D in Network Industries: The Case of the Electricity Industry," Cambridge Working Papers in Economics 0533, Faculty of Economics, University of Cambridge.
    15. 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.
    16. 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.
    17. 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.
    18. Paolo Balduzzi, 2006. "Models of Partnerships," Working Papers 96, University of Milano-Bicocca, Department of Economics, revised May 2006.
    19. 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.
    20. 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, vol. 37(7), pages 512-536, June.

    More about this item

    Keywords

    Private Finance Initiative; Infrastructure; Value for money test; Privatisation; Investment;

    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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