P3s: "Little more than money-making mechanisms for builders and banks"

Banks and construction companies are ratcheting up vast profits from public private partnerships (P3s) according to a new British study that looked at equity sales for P3s.

A study of p3 projects from 1998 through 2010 by Dexter Whitfield for the European Services Strategy Unit reveals that there are huge profits to be made from the sale of equity once a P3 project is operational.

The study found more than 240 P3 equity sales involving more than 1,000 P3 projects. The sales generated £10 billion. This amounted to an average profit of around 50%. That's not too shabby when compared to an average operating profit for construction companies of 1.5%.

Whitfield said that, based on the findings, P3 projects were "little more than money-making ventures."

"The level of profiteering from PPP equity transactions makes a nonsense of the original value for money assessments," he said. "If these profits had been taken into account at the evaluation stage then few projects would have been approved. PPP projects are little more than money-making mechanisms for builders and banks," he said.

The two highest profiting sectors were health and criminal justice, with averages of 67% and 55% respectively, with transport and education falling below the 50% average for P3s, the report said.

The study concluded that the British Treasury and National Audit Office failed to identify the true scale and profitability of P3 equity transactions

Ontario continues to follow Britain by developing privatized P3 hospitals (which the Ontario government now calls 'alternative financing and procurement').

The study is available here. A report from the Guardian on the study is here.

dallan@cupe.ca

Comments

Ford government fails to respond to 72% increase in COVID inpatient days, deepening the capacity crisis

COVID infections continue to drive up hospital costs and inpatient hospitalizations in Ontario. For the most recent fiscal year (April 1, 2022- March 31, 2023) hospital stays related to COVID cost $1.221 billion, according to new CIHI data. This is about 4% of total hospital spending, creating a very significant new cost pressure beyond the usual pressures of population growth, aging, inflation, and rising utilization. Costs for COVID related hospitalizations increased 22.2% in Ontario in 2022/23 from the previous fiscal year, rising from $999 million to $1.221 billion. That rise is particularly notable as the OMICRON spike of late 2021 and early 2022 had passed by the the 2022/23 fiscal year. The $222 million increase in COVID hospitalization costs came in the same year as the Ford government cut special COVID funding and, in fact, cut total hospital funding by $156 million. In total, there were 60,653 COVID hospitalizations...

The long series of failures of private clinics in Ontario

For many years, OCHU/CUPE has been concerned the Ontario government would transfer public hospital surgeries, procedures and diagnostic tests to private clinics. CUPE began campaigning in earnest against this possibility in the spring of 2007 with a tour of the province by former British Health Secretary, Frank Dobson, who talked about the disastrous British experience with private surgical clinics. The door opened years ago with the introduction of fee-for-service hospital funding (sometimes called Quality Based Funding). Then in the fall of 2013 the government announced regulatory changes to facilitate this privatization. The government announced Request for Proposals for the summer of 2014 to expand the role of "Independent Health Facilities" (IHFs). With mass campaigns to stop the private clinic expansion by the Ontario Health Coalition the process slowed. But it seems the provincial Liberal government continues to push the idea. Following a recent second...

The hospital crisis: No capacity, no plan, no end

While Canada has achieved universal public healthcare coverage, that does not mean conservative forces have given up trying to erode that coverage and expand corporate care where it does not currently exist. The battle has become particularly intense in Ontario under the Ford Progressive Conservative government, which is implementing serious cuts to the level of care and moving to bring in for-profit mini-hospitals. Inadequate Staﬃng. Less and less of hospital spending is on staff. Employee compensation as a share of hospital expenditures has consistently shrunk in Ontario. This is not some immutable law of hospital development. It is in stark contrast with the rest of Canada, where compensation has become a larger share and now accounts for 67.1%. Hospitals in provinces other than Ontario now have 18 percent more staﬀ per capita than hospitals in Ontario. Overall, if Ontario had the same staﬃng capacity as the other provinces and territories, there would be another...

Defend Public Healthcare

Search This Blog