Private
finance
Debt
Tax
justice
Aid
Financial
architecture

Auditors expose the failure of public-private partnerships (PPPs) and slam EU’s support

Added 20 Mar 2018

The European Court of Auditors today slammed Public-Private Partnerships (PPPs), stating that they were ‘not always effectively managed and did not provide adequate value-for-money’.

The report, entitled “Public Private Partnerships in the EU: Widespread shortcomings and limited benefits” looks at PPPs in several EU countries. Inefficient spending was identified in contracts worth 1.5 billion euros, out of which 0.4 billion euros were EU funds.

The report recommends that “the Commission and the Member States should not promote a more intensive and widespread use of PPPs until the issues identified in this report are addressed (…) in particular, increasing assurance that the choice of the PPP option is the one that provides most-value-for-money.”

Maria Jose Romero, Policy and Advocacy Manager at the European Network on Debt and Development (Eurodad) said: “We strongly welcome this report. The failings of PPPs have been clear for many years yet governments and institutions like the EU and World Bank go on promoting them.

“When we look at the mounting evidence, PPPs are often the most expensive way to finance a project and they are notoriously opaque. For instance, the rules surrounding these projects allow them to be kept out of government financial reports, which is why the debt they accrue and the sudden collapse of major projects comes as such a shock to the public purse.”

More than 150 organisations from around the world signed onto a campaign manifesto in October 2017 calling for the World Bank and similar bodies to stop promoting PPPs. They identified the same problems identified in the ECA report – including examples of poor value-for-money and lack of transparency.

Maria Jose said: “We have seen numerous scandals across Europe associated with PPPs which have done huge damage to some public sectors. Even worse, we have seen the same happen in some of the poorest countries in the world where governments have been advised to take on risky and expensive projects and have paid a high price.”

Xavier Sol, Director of Counter Balance, added “This critical report comes as a reality check: a more cautious approach towards PPPs is needed as they are not a silver bullet. It raises doubts about the blind focus on PPPs promoted by the European Commission and its financial arm the European Investment Bank – which has supported several of the weak projects audited by the Court. This should be a lesson learnt for the future budget of the European Union for the post-2020 period: public funds should target sustainable projects with concrete added-value for European citizens and territories rather than subsidizing gains for private promoters .”

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: jravenscroft@eurodad.org or +32 486356814

Notes to Editors:

The EC examined 12 EU co-financed PPPs in France, Greece, Ireland and Spain in the fields of road transport and Information and Communication Technology (ICT). These accounted for around 70% of the total project cost (29.2 billion euro) of EU-supported PPPs. The objective of the report was to assess “whether the audited projects were able to exploit the benefits PPPs are expected to deliver, whether they were based on sound analyses and suitable approaches and whether the overall institutional and legal frameworks within the visited Member States were adequate for the successful implementation of PPPs.”