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Open the books on public projects, says ICAS

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9th Mar 2009
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The lack of clear and consistent financial information on public-private partnerships (PPPs), which are used to deliver public infrastructure, is preventing taxpayers from understanding where public money is being spent, according to a new report by the Institute of Chartered Accountants of Scotland (ICAS).

Its research found that increasing expenditure outside the direct control of public bodies is creating additional reporting problems that are making scrutiny, control and accountability difficult.

One of the report’s authors, Professor Jean Shaoul of the University of Manchester said: “The explanation often given about the higher cost of private as opposed to public finance is that the private contractor is taking on some of the project’s risks.

However, the lack of information and disclosure on PPPs means it is difficult to assess whether this additional cost is of benefit to the public. Given the scale of the PPP programme and the additional costs involved, it merits far more disclosure, transparent reporting, appraisal and scrutiny than is currently the case”.

The report recommends a number of specific steps to improve accountability, including the development of new guidelines to encourage greater routine disclosure of information, and legislative amendments to ensure that private companies share as much information as possible with public sector bodies.

It also suggests that the Treasury should collect and publish information on key risks and potential further costs, which would make it easier for public sector bodies to determine future expenditure, and also reveal the true extent of public debt.

The report focuses on the roads sector, but its authors say the recommendations should also apply to other UK private finance projects, including schools and hospitals.

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