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This research presents a cross-national comparative review of the institutional arrangements for how local public service partnerships are regulated and governed in Finland and Scotland.Both legal and administrative differences of partnership policies are analysed in order to explain the nature of the incentives and obligations for local governments to collaborate with external partners. Institutional theory and conceptual partnership approaches are utilised in the analysis. The Scottish institutional framework provides defined requirements for public-private partnerships. The partnership term is not recognised in the Finnish legal framework;instead it operates with the general concept of co-operation. Both Scottish and Finnish municipalities have more institutional obligations than incentives for partnerships or collaboration. The Scottish institutional framework requires municipalities to partner with external organisations, while in Finland, the legislature has not been proactive in promoting or encouraging public-private partnership. While the political incentives for partnerships are stronger in Scotland, Scottish municipalities have limited financial incentives to look for budgetary savings from partnership arrangements. In contrast, in Finland such financial incentives exist. However, the fixed forms of municipal-municipal collaboration may inhibit the search for more effective forms of partnerships.

During recent years, a wide spectrum of research has questioned whether public services/infrastructure procurement through private finance, as exemplified by the UK Private Finance Initiative (PFI), meets minimum standard of democratic accountability. While broadly agreeing with some of these arguments, this paper suggests that this debate is flawed on two grounds. Firstly, PFI is not about effective procurement, or even about a pragmatic choice of procurement mechanisms which can potentially compromise public involvement and input; rather it is about a process where the state creates new profit opportunities at a time when the international financial system is increasingly lacking in safe investment opportunities. Secondly, because of its primary function as investment opportunity, PFI, by its very nature, prioritises the risk-return criteria of private finance over the needs of the public sector client and its stakeholders. Using two case studies of recent PFI projects, the paper illustrates some of the mechanisms through which finance capital exercises control over the PFI procurement process. The paper concludes that recent proposals aimed at “reforming” or “democratising” PFI fail to recognise the objective constraints which this type of state-finance capital nexus imposes on political process.

The refinancing of PFI (Private Finance Initiative) projects currently represents one of the most contentious aspects of Public Private Partnership in the UK. The negative publicity associated with UK PFI refinancing deals is associated with two main factors, namely evidence of massive private sector profit making in connection with past refinancing deals, and the ‘failure’ of private sector financiers to share refinancing profits with public sector organisations in line with government recommendations. This paper examines the ongoing ‘dance of non-regulation’ associated with PFI refinancing on the basis of traditional Marxist notions of ‘contradictions of capitalism’. Our analysis commences with the argument that PFI represents a prototypical case of an alliance between finance capital and the state, which has been created with the principal purpose of establishing a new source of profits for the private sector. A Marxist analysis of state-business relationships would predict such an alliance to show tendencies towards instability which could arise from a number of factors. These include, among others, the inherent lack of legitimacy of such an alliance vis a vis established policy goals and the stakeholders associated with them; a lack of a credible regulatory framework which, as a systemic prerequisite of private sector profit making, further exacerbates existing problems of legitimation; and, perhaps most importantly, the potentially self-defeating attempt by capital to maximise gains from the exploitation of the existing alliance without concern for the possibility of a political or regulatory backlash. Examining the recent history of PFI refinancing we find evidence of most of these destabilising tendencies which we expect to trigger calls for a greater regulation of PFI projects in the future.

The BSE crisis represents one of the worst policy disasters experienced by a UK government in recent years. In material terms, it led to the slaughter of 3.3 million cattle and an estimated economic loss of £3.7 billion. In administrative terms, the crisis led to the dissolution of the Ministry of Agriculture, Fisheries and Food (MAFF), an institution that was heavily criticised by the Phillips Inquiry for its lack of openness and transparency. Although far less severe in terms of its economic impact, with estimated losses of between Euro 0.8 and 1.05 billion, the German BSE crisis resulted in extensive political fallout, leading, inter alia, to the resignation of two government ministers. This paper compares the handling of the crisis in the UK and Germany and the regulation put in place in its aftermath. It explores the reasons for the failure of both governments to manage this crisis in a credible, timely and proactive fashion. Examining the institutional contexts in which decisions about scientific evidence on BSE were made, the paper argues that, in both countries, a centralised system, in which government agencies controlled “science for government”, was vulnerable to expert-interest group alliances which undermined the potential for a credible assessment of public health and safety risks. Looking at the policies adopted in the aftermath of these crises, the paper notes that, although being far less affected by BSE, Germany paradoxically adopted far more rigorous measures for the prevention of future incidents, which included the strict administrative separation of the risk assessment and management functions. Our paper concludes that the extent of administrative reforms which are initiated in response to crises is more likely to correspond to that general receptiveness of the political environment to these reforms, than the ‘objective’ impact of the crisis itself.

Within Scotland the bus industry has played a key role in the public transport system, with substantially higher bus journeys and bus kilometres per head of population than in any other part of the UK. Specific reasons for this are difficult to identify, however low levels of car ownership and massive population relocations in the 1950s and 60s are both possible contributory factors. The importance to Scotland of transport as a whole, has been recognised in the fact that it is to be one of the areas of devolved power for the Scottish parliament. Much has been published on individual changes to the industry over the last ten years, particularly from the Department of the Environment, Transport and the Regions (DETR), and these are relatively well documented elsewhere (see for example DoT 1997). To very briefly summarise, since 1990 in real terms prices have risen and unit costs fallen, passenger numbers substantially declined and total bus kilometres increased. Given the importance of mobility to the economic and social welfare of communities, particularly the role of bus transport for those on low incomes (Farrington 1994), this paper uses data in the public domain to examine the effects of privatisation and deregulation on the Scottish industry within a British context Where possible, Scottish figures are compared to the rest of Britain outside London, although some variation will exist within these areas. Nevertheless, it is the overall trends which are considered, with some of the wider ranging effects of rising prices, falling costs and increased output also identified.