Buying and selling: hospitals, health centres, mental health facilities, schools, colleges, care homes, libraries, trams/light rail, motorways, roads, street lighting, council offices, police stations, courts, prisons, fire stations, defence equipment, social housing, student accommodation, leisure centres, government offices, waste disposal plants, water and wastewater plants.
‘Public infrastructure’ consists of the networks, buildings, land and equipment required to sustain and improve the economy and quality of life. It includes the facilities needed for education, health and social care, recreation and culture, public housing and community amenities, the natural habitat, environmental protection, transportation, utilities and communication networks, public safety, democratic and public administration and defence. It encompasses organisational structures, intellectual knowledge, a trained and skilled workforce and operational systems in addition to buildings.
The Conservative Government introduced the PFI/PPP model in 1992. Successive governments – Labour (1997-2010), Coalition – Conservative and Liberal Democrat (2010- 2015), Conservative (2015-) and the Scottish National Party (2007-) have implemented this programme. The slightly amended PF2 model was introduced in late 2012, but it did nothing to address the profiteering and growth of the PFI/PPP secondary market despite widespread criticism. It changed the debt/equity from a 90/10 to 80/20 ratio and encouraged public bodies to become minority shareholders in PFI/PPP projects – basically encouraging public sector bodies to join in the profiteering instead of tackling the core issue.
This report refers to PFI/PPP projects as a generic term that includes PF2 projects since they effectively retain the PFI original model. Equity ownership can transfer in two ways – a direct transaction when it is sold individually or as part of a small bundle of projects by the construction company, bank/financial institution and facilities management contractor.
The second type of transaction occurs when an infrastructure fund sells some of its assets, or acquires another fund, and equity ownership transfers to the purchaser. A secondary market infrastructure fund is a company or limited partnership, whose main objective is to acquire equity in PFI/PPP projects. Funds are often a primary investor in new PFI/PPP projects.
New UK controls to restrict offshoring public assets
• Make it illegal to transfer equity ownership of PFI/PPP assets from UK registered companies to offshore infrastructure funds, solely for the purposes of tax avoidance.
• Make it illegal to establish offshore PFI/PPP holding companies of SPV assets such as the Lend Lease Birmingham and Sheffield examples.
• Repatriate equity ownership of PFI/PPP SPV companies to UK registered companies.
• Prevent the flotation on the London Stock Exchange of PFI/PPP infrastructure funds by companies registered in offshore tax havens.
• Amend the standard PFI/PPP contract to restrict the transfer of PFI/PPP assets to registered companies in offshore tax havens.
Improved accountability and transparency
• Establish more rigorous monitoring and contract management arrangements.
• Revise governance arrangements to increase democratic accountability and scrutiny of PFI projects including annual or bi-annual reviews to assess performance, contract management and costs/affordability.
• Public bodies should monitor changes in the ownership of their PFI/PPP projects as an integral part of performance monitoring.
• Each change of equity ownership of PFI/PPP project companies (by SPV shareholders and secondary market funds) must be disclosed with the name of the vendor and purchaser, the date of transfer of ownership, the percentage of shareholding, the cost and the expected profit.
• Companies and Partnerships owning equity in PFI/PPP projects should be required to identify every project and the percentage of equity owned in their annual report.
• Each change of equity ownership of PFI/PP should require the approval of local authorities and such notifications should be required to include the full details of ultimate ownership and place of registration.
• Freedom of Information legislation should be extended to the private sector so it is applicable to private sector and social enterprises engaged in the delivery of public services, infrastructure provision and consultancy services to government, local authorities, the NHS and other public bodies.
MORE INFORMATION ….http://www.european-services-strategy.org.uk/publications/essu-research-reports/the-financial-commodification-of-public-infras/financial-commodification-public-infrastructure.pdf