How much do PFI contracts cost DCC?

“A Labour pledge to bring “wasteful” PFI contracts back in the public sector would cost a massive £671m in Devon, it has been revealed.

Shadow chancellor John McDonnell told the annual party conference last month the contracts were set to cost the taxpayer £200bn over coming decades and private companies were making “huge profits”.

The cost to the county for all the buildings, such as schools, hospitals armed forces’ accommodation, funded by private finance initiatives was estimated to be around £2.4bn just four years ago.

Newly released figures by the county council show that Exeter Schools would cost £210m to buy out with £322m for an energy for waste (EFW) plant and £139m for a Devonport EFW scheme. …

… Private companies carry out the construction work and maintenance, in exchange for regular payments from the taxpayer.

It has proved controversial with criticisms that it is overly generous to the private contractors.

Some schools, including in Exeter, have said the quality of parts of their new buildings have been poor.

Other public bodies, such as hospitals, have complained that large debt repayments, over long periods of time, make it difficult for them to balance their books.

However, defenders of PFI said it provided new infrastructure which would otherwise be unaffordable.

The biggest margin on a project in Devon came with a deal for new accommodation for services’ personnel at Devonport Naval Base in Plymouth.

Its estimated cost of £554m, which will also include service and maintenance charges, is more than 12 times the initial building price. …

… Devon County Council said it could not “accurately” estimate the cost of terminating contracts without going into negotiations.

Cabinet member for finance John Clatworthy said the schools PFI contract in 2005/6 was £348m.

He wrote: “Set against this was a grant of £248m that would be received from central government – of the balance, £75m would be met from the delegated schools budget and the remainder (£75m) would be met by the council.”

http://www.devonlive.com/news/devon-news/cost-labour-pledge-cancel-pfi-583063

One thought on “How much do PFI contracts cost DCC?

  1. As usual a wild generalisation made in order to scare people that a Labour government would bankrupt us by assuming that they would buy back every PFI contract ever written regardless of the cost. However, nothing could be further from the truth.

    The Labour Party Press release on buying back PFI contracts said Labour would take the contracts back in house “if necessary”. (https://www.theguardian.com/politics/2017/sep/25/john-mcdonnell-labour-would-bring-pfi-contracts-back-in-house)

    What this means is that the costs of bringing it back in house would be weighed up against the savings to be made, and if it would be beneficial it would be brought back in-house. This is a practical and pragmatic approach – one which seems to me to be sane and sensible. (And which should be compared against a Conservative Party dogma to have as small as possible public sector by giving contracts to the private sector regardless of whether it is financially beneficial to us, the taxpayers.)

    It would have been a fair, balanced and sensible statement by the DCC Ruling Conservatives if they had not calculated the costs of bringing all contracts back in-house regardless of the benefits, but instead calculated the amount that would be saved if they did so only where it makes financial sense.

    Instead they played party politics (yet again) by trashing a perfectly sensible suggestion, partly because it has been made by the opposition and partly because it is (of course) the Conservative leadership at DCC who has entered into these financially disadvantageous contracts at OUR (the council tax payers) expense and so the Conservative DCC leadership that would be embarrassed if it turns out that there are savings to be made by bringing services back in house.

    Conservative Party – Party before Citizens every time.

    Like

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