Exploring the Private Finance Initiative (PFI) in the UK’s transport sector of roads: a governmentality perspective
This thesis is chiefly concerned with a better understanding of why and how successive UK (central) governments over the last two decades have adopted and developed PFI (Private Finance Initiative) as a major procurement programme for public infrastructure, and how central government’s policy objectives (in PFI) are operationalised within the UK’s transport sector of roads through the PFI contracts. At a macro-level this thesis analyses the UK central government’s policy discourse on PFI as contained in the policy documents published by the relevant central government bodies from 1992 when PFI was formally launched until 2012 when it got reformed into PF2, as well as seeks the perceptions of senior PFI policy-related (UK government) officials, in order to better understand: the UK government’s rationales for pursuing PFI; shifts in the policy objectives over the two decades of PFI’s use; and the technologies of government used by successive governments through which policy objectives in PFI have been operationalised. At the micro-level this thesis analyses an operational road case study PFI project under the UK’s Highways Agency in order to develop our understanding better about the localised practices and processes, particularly management control systems (MCS) and trust, through which the macro-level (i.e. central government) policy objectives in PFI are enacted. As a theoretical framework this thesis adopts governmentality as it allows to unbundle the specific rationales, the ends sought and the governing technologies that underlie the researched policy (PFI in the present case), and provides a conceptualisation about the micro-level practices and processes through which the macro-level policy objectives (in PFI) are enacted by the localised (project-level) actors. This thesis specifically focuses on fiscal and Value for Money (VfM) rationales for PFI as often advocated by UK government and argues that an under-invested government infrastructure amidst tight borrowing restrictions on government departments is the main reason for introducing PFI in the UK, even though a more prominent emphasis was placed on VfM which evolved over time in the policy discourse. This thesis highlights that under the existing UK government’s accounting and budgetary rules for the public sector, PFI carries a fiscal appeal for government departments as signing-up to a PFI project would not cause an upfront use of the public sector’s capital budgets. However, given the current economic situation of recession and spending-cuts for the public sector, affordability for PFI deals could be a major concern for the government departments. Government therefore might have to continue to offer substantial financial incentives, such as capital contributions for new PFI projects if they were interested to attract market’s participation for new deals. Nevertheless, such incentives would have implications on the risk transfer (and hence VfM) mechanisms in new projects. From a macro perspective this thesis indicate that governance of PFI was not exercised through direct controls from a power centre (i.e. UK central government), but several individual and collective identities, accounting rules, market incentives and technologies of self, collectively shaped PFI operations in the direction of the government’s aspirations, and together these heterogeneous (macro-level) technologies of government were a source for developing system trust for PFI. This thesis points out that dominant claim by successive UK governments about VfM in PFI deals cannot be ascertained, as the idea is based on assumptions that have significant limitations in practical terms. Particularly from the analysis of the road case study PFI project this thesis provides evidence that performance-based MCS particularly the payment mechanisms have been failing to offer adequate incentives for the private sector, which is a fundamental source of tension between the contracting public and private sector parties. Such tensions between the contracting parties could impede the operational PFI projects from achieving the government’s objectives, and therefore there is a need for developing trust between the parties in order to address the causes of the tensions and achieve the project objectives through collaborative working. This thesis concludes that there is still a lack of a clear body of knowledge both with the public and private sector about generating VfM in the operational PFI contracts, and therefore future research on the management of operational PFI contracts might provide opportunities for learning lessons about the effective forms of MCS and trust-based relationships, that could improve the VfM potential of these schemes.
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