The gravy train that could run out of control

PUBLIC Private Partnerships have always looked like a triumph of Government self-interest over common sense.

In an attempt to avoid spending public money on vital projects, the Government has launched with dangerous abandon into a stunning 400 contracts that are supposed to shift the burden of investment - and the risk - to private companies.

Even though governments can borrow far more cheaply than even the most highly regarded companies, putting such large projects in private hands was supposed to have benefits. One was that these bastions of capitalism drove their workers hard and extracted every ounce of cost savings.

But PPP deals are fiendishly complex. The Ministry of Defence is, for instance, still trying to finalise the wording on its private finance contract to build roll-on, roll-off ferries 18 months after nominating a preferred bidder, and with the vessels already sliding down the slipway.

And in the protracted negotiations, private companies have appeared to be remarkably adept at making sure that if everything turns to custard on their particular project, they will walk away and the Government will be left carrying the can.

If, as is more usual, the projects limp on ever more expensively, the private groups also seem likely to emerge as winners. They charge for cost over-runs and are fined only nominal amounts if they fail to deliver on time. No wonder investors have, until recently, rubbed their hands with glee as contractors boasted of 30% returns with practically no downside.

But the tide is turning. There has been a rout in the shares of many companies involved in PPP projects because of worries over their accounting - as well as the increased political risk involved in such deals following the Government's quasi-renationalisation of Railtrack.

Last week, the Parliamentary Public Accounts Committee said that of the 400 contracts so far agreed and worth £100bn, nearly one in four were now giving worse value than when they were signed.

With the flagship of all PPP schemes, the London Underground, dogged by political controversy and delays, this particular Government gravy train looks perilously close to being derailed. That could imperil many of Tony Blair's most cherished public spending programmes.

Taxpayers will then lose on two fronts - they will have poorer quality public services and will eventually pick up the tab for the wayward PPP programme.

Pension prejudice
ALAN Pickering may or may not have a wife or daughters. But his proposals for the future of British pensions could hardly be designed to be more prejudicial to women.

The idea of removing survivors' benefits will undoubtedly hit women far more harshly than men. Women live longer and are more likely to outlast their partners. They are also likely to have been in lower-paid jobs, have taken career breaks to give birth to and look after children, or have sacrificed their own careers altogether to support ambitious partners.

Even women who do work stand far less chance of building sizable nest-eggs for their old age. At present, women earn nearly 20% less than their male colleagues - part-timers fall 41% short.

Pickering is not suggesting that survivors' benefits are removed immediately. But unless there is radical change in the workplace, older women - who already make up three quarters of the poorest pensioners - risk being condemned to penury by his misguided recommendations.

Pace pickle
ANOTHER week, another couple of profits warnings from Pace, the maker of TV set-top boxes. These came on top of three or so others in the past 12 months - all handled with a greater or lesser degree of ineptitude.

Chief executive Malcolm Miller cannot be blamed for all the woes that have beset the company he leads. He probably could not be castigated for failing to predict the collapse of ITV Digital or the virtual demise of NTL and Telewest.

But Miller dramatically overestimated his prospects in the US this year and was also far too ambitious in his hopes for the growth of digital TV in Britain. Now, he will sell boxes to BSkyB at below cost with some kind of 'jam tomorrow' promise.

There may be no obvious way out Pace's pickle, but the bungling way it has communicated with shareholders, the pig-headed failure to read the market runes and a lack of any long-term vision of where profits might come from should prompt shareholders to question Miller's longevity with the group.