Darinka Asenova

Organisation form, scale effects and efficiency in the British bus industry

The British bus industry is examined in light of fundamental reform in ownership and regulation. The industry is divided between privately and publicly owned companies, with the private sector further split between publicly listed owned subsidiaries and private limited companies. The change in ownership structure since privatization is analysed, and Data Envelopment Analysis used to estimate the extent of returns to scale and technical efficiency, as defined by one output and three inputs. Technical efficiency is further divided into managerial and organisational components, and comparisons made of median efficiency levels using a Mann Whitney statistical test.Increasing returns to scale are found for smaller companies, but the size of such returns varies with the company type. A minimum efficiency scale is identified, with constant returns above this point. A high degree of technical inefficiency is found to be present in the industry, which may initially suggest a lack of competition and reflect the oligopolistic structure that has emerged since privatisation. Privately owned companies are identified as more technically efficient, however this is due to significantly less organisational constraints, and considerable managerial inefficiency exists in this group. It is finally concluded that the high level of inefficiency may not reflect ownership, but rather industry characteristics, and rather than a lack of competition may be indicative of wasteful competition. It is suggested therefore there may be a need to make the market contestable rather than openly competitive.

The UK Financial Sector and Risk Management in PFI Projects: A Survey

In PFI transactions the private companies which take on the obligation to build and manage a facility usually provide only a small fraction of the projects capital requirements. Most of the capital is borrowed from banks and other financial institutions. This poses challenges to financial services providers which often have to retain untypical residual project risks. This article describes the types of risks faced by financial services providers and the strategies they use to cope with these risks. Given the often politically-sensitive nature of PFI projects, the authors suggest that financial institutions should investigate a broader set of parameters than they do at present, which relate directly to the political economy of PFI projects.

Partnership, Value for Money and Best Value in PFI Projects: Obstacles and Opportunities:

The Private Finance Initiative (PFI) and Best Value policies were introduced by the UK government as part of a drive to improve public service provision. Both Best Value and PFI focus on harmonising the interaction between the public and private sectors in the context of public private partnerships. Based on 68 interviews with representatives of the main stakeholder groups involved in PFI procurement and development in Great Britain, this paper analyses practitioner views on the problems encountered in implementing these schemes. In this context, it is noted that there is considerable disagreement with regard to the sources of, and solutions for, current difficulties. Amongst public sector respondents, there is a view that PFI procurement has to be standardised further in order to become more cost effective, and to allow for easier manageability. Private sector respondents, meanwhile, emphasise the need for clients to adopt a commercial ethos and to acquire a greater degree of expertise with regard to managing market-based solutions. Both views are indicative of an ongoing uncertainty amongst PFI stakeholders with regard to the levels of risk identification and management that are required for the successful implementation of PFI projects.

Managing Municipal Austerity: Mitigation of Social Risks

Abstract The overarching objective of this article is to stimulate debate about how local authorities could and should manage their austerity measures because the speed, scale and aggregation of the UK public spending cuts risk adversely affecting already disadvantaged and vulnerable groups, exacerbating social exclusion and leading to higher costs for councils in the future. It presents the results of research conducted during 2011–2012 focusing on if and how five Scottish case study councils attempted to mitigate social risks. It found that they were using equalities impact assessment (EIA) procedures in their decision-making. However, EIAs are not fit for purpose as a risk mitigation tool and fail to take account of all groups which may also be adversely affected by service cuts. Hence, this article recommends a more innovative approach in local decision-making processes based on a social risk impact assessment (SRIA) model within a preventative approach to social policy.

Stakeholder Engagement and Compliance Culture

Abstract This research examines the experience of stakeholders of the Private Finance Initiative (PFI). The local authorities’ accounts of engaging stakeholders are compared against the stakeholders’ experience of being engaged. The findings suggest that the increasing procedures and tools used by local authorities to engage stakeholders do not necessarily lead to more positive experiences of the latter. Some stakeholders perceive engagement as merely an exercise by the local authorities to comply with central government policy guidelines and the stakeholders’ views have not had substantial impact on the overall decision-making process. The findings highlight the inadequacy of a compliance culture in public services.

Making widespread use of municipal bonds in Scotland

This article considers the possibilities for widespread use of municipal bonds to finance public sector infrastructure, with particular reference to Scotland. Provided the various control measures recommended in this article are in place, there can be few objections either in principle or practice and they would be a highly desirable secure form of debt, so helping ease the current credit crunch.

The UK's Prudential borrowing framework:a retrograde step in managing risk?

The contemporary understanding of public sector risk management entails a broadening of the traditional bureaucratic approach to risk beyond the boundaries of purely financial risks. However, evidence suggests that in reality public sector risk management does not always match the rhetoric. This paper focuses on the apparent inadequacy of any risk framework in the current Prudential Borrowing Framework (PBF) guidance in relation to that which was developed under Public Private Partnerships and Private Finance Initiative (PFI). Our analysis shows that the PBF and its associated indicators for local authorities adopt a narrow financial approach and fail to account for the full range of potential risks associated with capital projects. The PBF does not provide a framework for local authorities to consider long‐term risk and fails to encourage understanding of the generic nature of risk. The introduction of the PBF appears to represent a retrograde step from PPP/PFI as regards risk and risk management.

Private sector participation in health and social care services in Scotland: assessing the risk

The UK Government faces increased pressure to provide health and social care services more cheaply yet at a high level of quality. Increased private sector involvement in the funding and delivery of services is seen as a major part of the solution. When assessing the relative merits of approaches to private versus public sector provision, risk may be an important differentiator. This article explores some key points of comparison on risk issues and builds a framework for the assessment of risk-related issues. A twin case study approach is adopted: a care home for older people and a Private Finance Initiative (PFI) hospital. The analysis suggests that in the case of both private financing and of private delivery of health and social care services, the increased involvement of the private sector necessitates rigorous risk assessment and management.

Scottish Local Authorities and the Procurement of Private Finance Initiative Projects: A Pattern of Developing Risk Management Expertise?

An increasing share of public services in Britain and its regions are procured through Private Finance Initiative (PFI) schemes. Past research has shown that PFI procurement puts heavy demands on the managerial skills of public sector managers, particularly as concerns the management of procurement and project risks. Although government initiatives have sought to identify and remedy some of the weaknesses of the public sector as PFI procurer, there are strong indications that Scottish local authorities continue to encounter problems in procuring PFI projects. Comparing two large-scale multisite school projects, which were completed as PFIs in August 2001 and October 2002, this article presents evidence of a learning process in which local authorities have developed increased expertise in project management. These improvements concern the way these authorities have understood, assessed, and managed PFI risks as well as their approach to the allocation of risks between project partners.

The Bulgarian pension reform: post-accession issues and challenges

Focusing on the social impacts of the 2000—2 pension reform in Bulgaria, the article examines how Bulgarian pensioners cope with income risk in old age. Reporting that old-age pensions are frequently inadequate to household consumption needs, the authors argue for more generous tax-financed social pensions alongside contributory pension provision, to combat old-age poverty. As the poorest country to date to achieve European Union accession, the article concludes by suggesting that Bulgarias pursuit of fuller integration and development within the EU cannot be divorced from better meeting the social security needs of its ageing population.