Page 2: Partnerships between the private and public sector
The UK is a mixed economy, in which most goods and services are produced by the private sector, with the Government responsible for the public sector. In the past, major decisions concerning the public sector (e.g. building and maintaining a motorway) were always supported from individuals by capital that was publicly owned and raised through taxation like income tax and corporation tax (from companies). However, in recent years successive governments (the public sector) have increasingly involved the private sector in the delivery of public services. They have taken the view that the knowledge and expertise of both sectors could be shared to deliver high quality, cost-effective public services, while reducing the burden on taxation.
PPPs allow the public sector to obtain or 'procure' significant services from the private sector and share risks across both parties.
There are a number of different types of PPPs where the government body sets up a contract with a private company which uses a separate funding vehicle to buy, build and service the asset (e.g. a new hospital). The Government enjoys the asset or service for the period of the contact, and at the end of the period the government owns the asset in return for a payment. In this study the PPP is funded directly by the private sector partner and supplies services.