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ppp Friday, 31 August, 2001, 15:23 GMT 16:23 UK
PPP - a glossary of terms
THE AUDIT COMMISSION - Independent body that monitors the performance and efficiency of local authorities, health authorities, police and fire authorities.

BEST VALUE - Since April 2000 local councils, police and fire authorities have had a legal obligation to deliver a continuous improvement in the standard and efficiency of their services, bringing in outside contractors where appropriate.

'Best value' replaces Compulsory Competitive Tendering (CCT), which, it is thought, placed too much emphasis on cost-cutting at the expense of quality of service.

Local councils are required to draw up an annual Best Value Performance Plan (BVPP) and their progress is measured against Best Value Performance Indicators (BVPI), which is monitored by the The Audit Commission

COMPULSORY COMPETITIVE TENDERING (CCT)- In the 1980s local authorities were forced to open up in-house services, such as refuse collection and road maintenance, to private competition in an effort to cut costs and improve value for money. Compulsory Competitive Tendering has largely been replaced by Best Value.

CITY TECHNOLOGY COLLEGE (CTC) - Introduced by the Conservatives in the 1980s, CTCs are an early example of public private partnership in state education.

Typically, private companies 'sponsor' a new CTC, buying or leasing the school building and nominating members of the governing body. Funds are provided directly by central government rather than the local education authority.

DESIGN BUILD FINANCE (DBF) - A form of Private Finance Initiative (PFI) in which a company will design and pay for a project, such as a hospital or prison - but not run it.

DESIGN BUILD FINANCE OPERATE (DBFO) - The most common form of PFI, in which a private company is involved in the day-to-day running of the completed project.

DESIGN BUILD GUARANTEE OPERATE (DBGO) - A PFI model in which a financial institution will guarantee the completion of a project on time and to budget.

EDUCATION ACTION ZONES (EAZ) - Introduced in 1997 to improve educational standards in deprived areas by encouraging co-operation between local education authorities, businesses, parents and community groups.

Businesses were meant to take a leading role in EAZs, providing management skill as well as funding, but take up has been disappointing.

HOUSING ASSOCIATION - Non-profit making (voluntary) bodies which build and manage affordable rented accommodation.

The government is keen that they take over the management of public housing from local councils.

Partly funded by government grants and rents, they also raise cash from banks and other private sector sources via the Housing Corporation.

HOUSING COMPANY - Joint venture companies set up by local authorities with tenants and private partners to manage existing housing stock.

Like housing associations, they would be able to borrow money from banks to pay for repairs - but might have to raise rents to do so.

IMPROVEMENT AND DEVELOPMENT AGENCY (IDeA) - central agency set up by government to promote best practice among local councils.

JOINT VENTURE COMPANY (JVC) - A company in which public and private bodies both have a stake.

LEARNING AND SKILLS COUNCIL - Replaced Training and Enterprise Councils (TEC) and the Further Education Funding Council to fund and plan all post-16 education and training except higher education. Operates through 47 local committees, with strong business involvement.

LOCAL MANAGEMENT OF SCHOOLS (LMS) - The delegation of funding to local schools, introduced by the Conservatives in 1988.

LOCAL STRATEGIC PARTNERSHIP (LSP) - A single body that brings together public and private bodies to tackle local issues such as housing, crime or education.

NATIONAL AIR TRAFFIC SYSTEM (NATS) - Labour has overseen the controversial part-privatisation of Britain's air traffic control system.

It recently awarded preferred bidder status to the Airline Group, which includes British Airways and Virgin Atlantic.

The plan, which is strongly opposed by trade unions and some Labour MPs, is expected to attract investment of 1.4bn over the next ten years.

THE NATIONAL AUDIT OFFICE - Public spending watchdog. Audits the accounts of government departments and reports to Parliament.

PRIMARY CARE TRUST (PCT) - The government is in the process of devolving control of primary health services from local health authorities to Primary Care Trusts, which are made up of GPs and other healthcare professionals.

PRIVATE FINANCE INITIATIVE (PFI) - Introduced by the Conservative government in 1992 as a way of generating new investment in public services without raising taxes.

When companies enter into a PFI agreement, they agree to build large-scale capital projects, such as hospitals and schools, and lease them back to the public sector over a period of 30 years or more.

PRIVATISATION - The full transfer of publicly-owned assets into the private sector through a sale or flotation on the stock market.

PUBLIC PRIVATE PARTNERSHIP (PPP) - Sometimes seen as a more voter-friendly term for PFI, coined by Labour in the late 1990s, Public Private Partnership (PPP) is generally used to describe any collaboration between the public and private sector.

It is also used in a more narrow sense to describe a joint venture between a public body and a private company, where there is a shared financial risk - unlike PFI, where projects are simply contracted out to the private sector.

PPPs can also cover the management of services and small-scale projects, while PFI is normally just associated with big capital projects.

PUBLIC PRIVATE PARTNERSHIP PROGRAMME (4Ps) - Government agency set up to help the public sector link up with private investors.

PARTNERSHIPS UK (PUK) - A private sector led initiative to encourage private investment in public services.

RISK TRANSFER - the essence of PFI. Transferring financial risk from the public to the private sector. Private companies supply a public service at a fixed cost and absorb the cost over-runs - but are entitled to any profits it can generate.


A government plan to transfer the management of council housing estates from local authorities to housing associations.

Begun under the Conservatives, mainly in smaller rural councils, Labour is now encouraging the process in big urban authorities like Birmingham and Glasgow.

The idea is to use private finance to pay for the 19bn backlog of repairs and modernisation in the public housing sector.

TRANSPORT FOR LONDON (TfL) - An executive body of the Greater London Authority (GLA) reporting to London Mayor Ken Livingstone, who is also Chair of TfL's board.

TfL is responsible for delivering the Mayor's transport strategy, in partnership with the London boroughs and the Strategic Rail Authority.

It will take over control of London Underground on completion of the Public Private Partnership revamp of the network.

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