Search Results

Private equity funds contribute heavily to the performance of the firms in which they invest beyond the provision of capital. Through detailed examination of seven case studies of private equity funds and portfolio companies, this chapter shows how private equity funds provide ‘commercial savvy’ and international connections to the companies in which they invest, as well as sector-specific knowledge. The funds may involve themselves in areas traditionally considered as matters of concern to investors, such as corporate strategy, and in matters normally considered the province of managers, such as innovation and employee skill development.

This chapter discusses a series of forward‐looking issues: methods of bringing private finance into tertiary education; student loans in the context of international labour mobility; extending loans beyond higher education; and developing individual learning accounts.

The chapter describes the changing financing of higher education in the BRIC countries and challenges the interpretation that the trend toward increased reliance on private tuition is primarily the result of an ideological shift. The chapter argues rather that “privatization” is mainly the result of the state's need to respond to political pressures for higher education enrollment increases under resource constraints in the context of rising payoffs to completing university. Such rising payoffs give the state the logical economically efficient option of charging families directly for more highly valued educational services. The chapter also challenges the notion that charging tuition creates greater inequity in the distribution of higher education public investment subsidies. It argues that a more important determinant of greater inequity in the distribution of higher education investments in the BRIC countries is the increasing differentiation in how the state finances elite and non-elite institutions.

The first part of this chapter introduces the different types of government contract currently in use in central and local government. It identifies the three broad types of contracting activity that will be the focus of the book: procurement, contracting out, and the Private Finance Initiative and other Public/Private Partnerships. The chapter also identifies some other types of government contracts (employment contracts, ‘internal’ contracts) and explains why they are not to be examined in detail in the book. In the second part of the chapter, some key sectors of government contracting activity are examined: defence, information technology, transport, health, housing, and social care. The aim is to give an overview of how government uses contracts and some of the problems to which they give rise.

This chapter presents a case study of a recent water public–private partnership (PPP) in Rwanda, which has many of the hybrid features discussed in earlier chapters, including the use of blended finance. But the extensive use of blended finance needed to make this PPP commercially viable raises questions about how that blended finance was justified. How much subsidy in support of private finance is too much? Is it possible that a project like this may exceed a threshold beyond which it would be less expensive and more sustainable if implemented as a public project supported by concessional lending, rather than as a PPP with a relatively small measure of private finance (but all the costs and complexities that come with PPPs)? Are there more traditional contracting mechanisms that might work better than PPPs? Countries like India are experimenting with such alternatives to PPPs for less commercial projects in poorer regions.

This chapter introduces the controversial background and evolution of the PFI model in public housing regeneration. A first section outlines the basic workings of PFI and how it emerged as part of the wider corporate takeover and financialisation of public services. A second section debunks official claims that the inflated cost of private finance is justified by the superior ‘value for money’ delivered through PFI’s ‘risk transfer’ and ‘payment by result’s model. A third section provides an overview of the origins and evolution of PFI as the ‘only game in town’ for local authorities during the 2000s that wanted to retain ownership of public housing and access the desperately-needed finance for home and estates in need of major regeneration and refurbishment. It introduces the twenty public housing PFI regeneration schemes now operational in England, introducing the three London local authority case studies which form the evidence base of the book: Islington’s Street Properties, Camden’s Chalcots Estate and Lambeth’s Myatts Field North estate. A final section reveals the controversy on the ground that met the undemocratic imposition of many housing PFI schemes – sometimes in the face of resident opposition – and the problems that engulfed the procurement of these contracts.

This chapter analyses how the pattern of total spending, including both consumer and tax-financed expenditure, has evolved since 1979. Using the three dimensions of public and private finance, provision and decision, and looking across and within the areas of education, health, personal care, income maintenance and housing, it reveals that the growth in consumer spending has outstripped the growth in public spending, and that there has been an on-going shift within publicly-financed services from the “pure public” (publicly provided and centrally decided) towards more varied forms, including contracted out services, and voucher-type schemes. The analysis suggests that the period of the Coalition government did not mark a step change, although some pre-existing trends were accelerated.

This chapter examines the general taxation funding of the NHS, one of the distinctive organisational feature of the NHS. It explains that the principle of funding health services from general taxation is redistributionary, under which the richer in society are helping to subsidise those who might not otherwise be able to afford healthcare. The remains are funded primarily from general taxation, but there is a significant move towards utilising private financing for capital expenditure and incorporating private providers to create competition for care contracts.

Recent decades, shaped by powerful neoliberal forces, have witnessed a significant encroachment on the UK state sector with privatisation advancing over many social and economic sectors. The extension of private sector involvement has implications for the effective public accountability of UK ‘public’ services. This chapter examines, through case studies drawn from the past ten or fifteen years, selected aspects of this diminished accountability. The three case studies concern the availability of data in relation to different dimensions of privatisation in the NHS: performance data in the provision of care when NHS-funded care is provided by private companies; financial and ownership details in infrastructure procurement; and technical data allowing an assessment of the character and implications of proposals in the policy process.

The final case study returns to the theme of financing for development explored in chapter 5. Yet where this first case study chapter explored the macroeconomic architecture surrounding debt relief, chapter 7 examines the link between the welfare reforms that Gordon Brown introduced in the UK, and the ‘Global New Deal’ that he sought to promote abroad. The centrepiece of Brown’s ‘Global New Deal’ was his much-vaunted International Finance Facility (and, latterly, International Finance Facility for Immunisation). The IFF, it is argued here, was very much in keeping with Brown’s ‘golden rule’ to ‘borrow only to invest’ and his enthusiasm to use Private Finance Initiatives and Public-Private Partnerships to fund public goods. With overseas aid viewed as a form of global welfare, the IFF would frontload the finance needed for development and distribute it to those recipient countries that met the responsibilities demanded of them. Ascribing aid with the same contractual obligations of ‘rights and responsibilities’ however, served only to obscure the structural causes of inequality faced by many countries in the global South. Moreover, Brown’s own form of ‘conditionality’ would restrict still further the already-limited economic autonomy of those nations urgently in need of this aid.

This chapter discusses the relevance of neo-liberalism as both an ideology and as a pragmatic approach, defined as a re-making of the state, where the state is not rolled back as such but is re-shaped, re-configured to better serve the demands of capital. Neo-liberalism represents an attempt to replace political judgement with economic evaluation, including, but not exclusively, the evaluations offered by markets. Writers on this subject such as Davies, Gough, Garrett, Peck, Mirowski and Shaxson are referred to where they address globalisation and audit culture, the logic of markets and economic evaluation. It was believed that the economic pressures generated by neo-liberal globalisation would inexorably lead to welfare state entrenchment or its dissolution and replacement by a lean ‘competition’ state. Yet the global rediscovery of poverty and the challenges to territorially-based conceptions of social rights posed by the increasing flow of migrants have put social policy issues on the social agenda.

This chapter examines the relationships between governance capacities in London and future planning practices in the wake of economic austerity agendas. It describes the complex public-private sector entanglements that now exist in the city and the legacies left by earlier rounds of reform that have seen the wide-scale privatisation of welfare assets and services. It discusses the structural limitations that privatisation and private financing have placed on state capacities, and the broader implications of change for the future governance and management of London. It concludes with some reflections on wider understandings of localism, and the importance of asset ownership and management to the future of London's sustainability.

Chapter Seven focuses on efficiency of administration and the mixing of morals and mathematics in the context of the financialisation of everyday life. They examine the development and scope of Social Impact Bonds (SIBs), a policy instrument designed to extend the role of private finance in welfare provision and delivery, following in the wake of previous efforts to outsource public services and expand the mechanisms for ‘payments by results’. As the authors demonstrate in the UK SIBs represent more than just an expansion of existing privatisation measures; they are part of the financialisation of service provision and delivery, bringing venture capital and the risk calculations and hedging of welfare outcomes to the financial market in an effort to shake up the assumed public sector inertia. As the authors discuss, the assumptions of risk, cost-saving attributes and the measurability of outcomes are all problematic in the financialised framework.

In 1979, when Margaret Thatcher came to power, publicly owned companies produced roughly 12 percent of GDP in the United Kingdom. By the time of the election of the Labour government in 1997, this figure had fallen to 2 percent. At least in the United Kingdom, public ownership seems to have been discredited. What were the origins of privatization in the United Kingdom? Was the policy the natural outcome of Conservative thinking, or was it a decisive break from the past? Why has privatization proved so enduring? Why is renationalization off the agenda? Did privatization raise productivity in the companies concerned? If it did not, what future steps concerning privatization or the privatized companies can be taken that might improve performance? This chapter addresses these questions. It looks at the privatization of utilities in the country and reviews the evidence on the effects of privatization on productive efficiency, product quality, public-sector labor unions, and attitudes toward privatization. It also examines contracting out and the private finance initiative.

This chapter draws on core data from a multiyear case study of the workforce consequences of the Private Finance Initiative (PFI). The hospital in this case, which was called in the pseudonym Greenbelt, was viewed as a flagship hospital project by policymakers, investors, and some union representatives. Unlike some PFI hospitals that had serious operational problems from their inception, this hospital was widely perceived to be a success story, representing a smooth transition to public-private hospital financing. One of the first PFI projects completed after the Labour government took power in 1997, it gained a high public profile, and it was a frequent reference point in ongoing discussions of the value of the PFI.

Chapter 11 discusses subsidies to the supply of rental housing. The traditional approach has been to subsidise first local authorities and then housing associations to produce additional social housing. Later the emphasis shifted to introducing private finance and recycling past subsidy to provide a range of affordable housing products. Additionally, the planning system was modified to make it possible to require the provision of affordable housing on residential development sites. Allocation principles have also changed, moving away from accommodating lower-income working households to emphasising provision for vulnerable households of all types. Here we examine the impact of changing financing mechanisms on the capacity to add to the housing stock; the types of provision; and the rents that are charged across the country. We also consider the impact of Right to Buy and other approaches to transferring accommodation between tenures. Finally, we look to comparable international experience.