A Re-examination of the Public-private-partnership Discourse: Was PPP the Way to Upgrade London Underground's Infrastructure?



A Re-examination of the Public-private-partnership Discourse: Was PPP the Way to Upgrade London Underground's Infrastructure?

Authors

M Gannon, University of Winchester, UK

Description

This paper examines the lessons that can be learnt from the public sector's perspective when applying an innovative PPP model to upgrade LU's infrastructure.

Abstract

Public-Private-Partnerships (PPPs), known as 3Ps in the US and Canada, were introduced in to the United Kingdom (UK) by the Conservative government in their 1992. Since then, PPPs in the UK accounted for over £57bn worth of capital expenditure. The Transport sector, whilst not having signed the most PPP deals, accounted for the largest capital expenditure of all sectors; approximately £12.1bn of which urban transit PPPs has accounted for approximately £7bn. When compared with Europe, US and Canada, the UK has led the way with PPP financing however this model is becoming increasingly more popular in these regions.

The application of an innovative PPP funding policy to upgrade London Underground's was shrouded in controversy since its announcement in the House of Commons by the then Labour government in March 1998. After an extended transaction period that resulted in significant transaction costs, three infrastructure contracts were signed in 2002/3. During the operational period of the PPP significant problems began to emerge between London Underground (LU) and its contractors. Four years into the first review period one consortium that was awarded two infrastructure contracts went into administration; and two years later the other consortium reverted back to the public sector operation. In sum the PPP model expected to deliver £15bn of investment into London Underground's ailing system was abandoned.

The aim of this paper is to examine the lessons that can be learnt from the public sector's perspective when applying an innovative PPP model to upgrade LU's infrastructure. This will be achieved by investigating the factors that led to the PPP model being chosen in the first instance; and the series of events that led to its demise with a view to concluding whether it was a failure in the PPP policy or the implementation of the policy.

Publisher

Association for European Transport