Taxpayers’ bill for school PFIs soars by £100m
Exclusive figures show regional surge
THE TAXPAYER bill for private companies to build and maintain schools across Yorkshire has rocketed by nearly £100m more than projected when the various deals were first struck.
Figures released by JPIMedia Investigations today show that the price of Private Finance Initiatives (PFI) related to schools in a number of areas in the region have hiked by at least £98m, according to Freedom of Information results. JPIMedia is publisher of The Yorkshire Post.
One main reason for rising costs of the PFIs is because inflation (RPIX) has been higher than authorities had envisaged when contracts were first signed.
Calling for all PFI schemes to be brought under public ownership, Russ Ballinger, of the National Education Union in Yorkshire and the Humber, said: “It was believed that the private sector could deliver the build of new schools more efficiently than the public sector, the evidence from your investigation shows this is clearly not the case.”
In Kirklees, Semperian PPP is the equity holder for the PFI scheme for various schools in the area, which has increased by £55m, due to inflation and “contract variations”. Coun Graham Turner, Cabinet Member for Corporate, said: “When the council agrees contracts the cost of inflation is something that we consider and factor in. We would not enter into any agreement in which we could not afford the potential inflation incurred.”
The councillor said contracts are reviewed regularly to ensure value for money, and often save money in the long term.
It’s impossible to predict inflation rates with complete accuracy. Terry Fox, Deputy Leader and Cabinet Member for Finance at Sheffield City Council.
East Riding of Yorkshire Council said falling school rolls, higher than forecast inflation to the retail price index, high energy tariffs and increases to the market price for facilities management have all “contributed significantly” to the £17m increase on what was projected with its PFI deal with Semperian. The majority of the additional costs are being met by the ring-fenced funding from the Department for Education, said the council, adding that it “transferred significant risk to the private sector in terms of maintenance and life cycle replacement for a sizeable part of the schools’ estate”.
In Sheffield various PFI schools schemes – for which the equity holders are Semperian, InfraRed Capital Partners and Innisfree – combined have got £12m more expensive than projected. Terry Fox, Deputy Leader and Cabinet Member for Finance at Sheffield City Council, said PFI contracts were a major part of the way authorities could access government funding at a time the city needed better schools.
He said it is “impossible to predict inflation rates with complete accuracy” and many factors such as the financial crash and associated recession have impacted upon costs.
Calderdale has racked up a bill of £9.5m more than projected to Amber Infrastructure, while in Doncaster inflation on the schools PFI scheme for Edlington and Mexborough, for which Vinci Concessions UK is the equity holder, has increased by £4.7m.