Financial black holes: The disclosure and transparency of privately financed roads in the UK

This paper aims to examine empirically whether the system of public expenditure reporting is capable of delivering financial accountability, focusing on the UK government's use of private finance for roads.

Publicly available documents from the public and private sector partners for 11 roads contracts are examined, together with a publicly provided bridge paid for via tolls as a comparator.

Reporting by both public and private sectors is limited and opaque, such that accountability to the public is inadequate. The evidence also shows that the scale of the additional expenditure generated by private finance warrants greater disclosure and scrutiny than is currently the case.

These findings, which occur in the roads sector where projects are large and visible, are likely to be replicated elsewhere in the public sector. Accountability issues may be even more problematic in public bodies where reporting is more diffuse. Furthermore, the proliferation of other forms of private finance increases the problems of reporting clear financial information, the lack of which not only makes informed public debate about public and fiscal policy impossible but also may lead to the wrong policy choice.

There has been little ex post facto examination as to whether extant reporting requirements permit understanding and scrutiny of the cost of private finance. The paper presents a desired list of annual disclosure, highlighting an information gap.