Leader: ‘PFI contracts may have been sold like a brilliant idea when they were introduced ... experience shows otherwise’

A £60 million contract for works on three Peterborough schools will end up costing taxpayers nearly double that amount due to terms agreed by the city council.

An investigation by JPIMedia, the publishers of the Peterborough Telegraph, has revealed that a deal made 13 years ago to expand and refurbish Ken Stimpson and Jack Hunt schools, and build the Voyager, will end up costing £115 million.

The works were carried out as part of a 30-year PFI (private finance initiative) deal which means repayments of roughly £9 million will continue for nearly two more decades.

Moreover, under the terms agreed by the council the three schools had to sign up with the PFI contractor for all maintenance services during the length of the contract, preventing them from sourcing a better deal elsewhere.

Including the charge for services, taxpayers will end up forking out around £272 million over the 30 year deal to the PFI provider.

Peterborough City Council has defended the arrangement, stating that PFI was the “favoured route of central government” to meet demand for school places.

Peterborough is one of the fastest growing cities in the UK, and between 2010 and 2018 pupil numbers increased by 26 per cent (7,892 extra children).

Leader of the council’s Labour group, Cllr Shaz Nawaz, said: “PFI contracts may have been sold like a brilliant idea when they were introduced during John Major’s premiership.

“Unfortunately, experience shows otherwise.

“PFI contracts are a significant cost to the taxpayer. It will cost taxpayers £55 million over 30 years for three schools in Peterborough. That’s a massive £1.83 million per annum.

“These PFI contracts are poor value for money. What makes it worse is that PFI companies then outsource the infrastructure maintenance which means it makes it even worse from a value for money perspective.”

The PFI deal was signed by the council in 2005 with preferred bidder IIC Bouygues Education.

It led to the building of The Voyager School (now Queen Katharine Academy) in Mountsteven Avenue, Walton, to replace Walton and Bretton Woods community schools.

The £60 million deal also delivered expansion of Jack Hunt School in Netherton to take 175 more pupils, and for Ken Stimpson Community School in Werrington to be extended and refurbished to accommodate 250 new pupils.

Moreover, the deal included covering ongoing costs associated with maintaining and upkeeping the school buildings and delivering the essential services of cleaning, grounds maintenance, caretaking and catering.

In this case, Bouygues UK was contracted by IIC Bouygues Education to deliver those services.

In total, the annual repayments are £8.9 million, of which £3.8 million is for the building works.

Another £2.8 million is for ‘facilities management costs’, while £2.3 million is for ‘lifestyle costs’ – an annual programme to maintain the buildings.

Of the £8.9 million annual charge, a government grant covers £4.7 million of it, while the schools contribute £3.9 million and the council £0.3 million.

At the end of the 30-year period the council will take ownership of the three schools.

A council spokesperson said: “Whether or not the council had made use of the Private Finance Initiative in 2006 it would still have had to borrow and repay capital to have built/refurbished the three schools and the schools would have to pay for the annual delivery of the facility management services from their revenue budgets.”

The three schools have to ask the PFI company– via the council – for permission to make any changes to their buildings.

The council spokesperson said: “The lowest price will usually be successful.

“Local contractors are used to keep costs down and to support the local economy.

“The PFI contractor has been very good and worked with us and we have a very good relationship with them. There have been no significant issues.”

Of the £60 million building works, just under half (£28 million) was spent on Voyager, which opened in 2007.

In addition, £15 million was spent on Ken Stimpson Community School, in Staniland Way, and £12 million on Jack Hunt School in Ledbury Road. The rest was spent on “fees”.

Queen Katharine Academy.