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Wednesday, 25 August 2021 07:49

£360 million has gone to 3 Kent County Council PFI contractors

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Perverse & absurd, but KCC keep paying their offshore PFI contractors
The above headline appears at the top of a recent article by the campaigning website Shepwayvox, which had its genesis in several articles I wrote in 2013, setting out the basis for the scandal. I have returned to the issue several times, notably here, which shows that the escalating debts on the various contracts are predominantly owed to offshore companies, who only have to sit back and rake in the profits from the KCC education budget. Remarkably, company accounts show that not one of the six profiting companies has any employees!
 
My original article identified a capital cost of £100 million for six schools rebuilt with money borrowed through PFI and looked at the enormous interest rates payable over the next 30 years. According to Shepway Vox, even the Department for Education's latest estimates predict that the ten KCC schools at the centre of this scandal will cost about 70% more than if they had used non-PFI borrowing
 
I became involved when the first of the Kent PFI schools controversially became an academy in 2013. This was Swan Valley School, which became Ebbsfleet Academy, producing the anomaly that KCC is still paying for the cost of the loan to provide premises for an academy that is independent of the authority. Other academies bear no such financial cost for the Authority.
 
As a result, Paul Carter, then Leader of KCC, placed an embargo on allowing any further PFI schools to become academies, which has remained in place until this year. Two county secondary schools, Holmesdale and The North, both managed by Swale Academies Trust for KCC are expected to become academies shortly, with the government finally agreeing to take over responsibility for the ongoing loan, along with Royal Harbour Academy (not an academy!) managed by the Coastal Academies Trust as explained here. If this is indeed the case, then Aylesford, Hugh Christie, Malling, Northfleet Technology, St George’s CofE School (Broadstairs), St John’s Catholic schools would be able to follow suit if they wished, releasing KCC from millions of pounds of debt.
 
The PFI schools still have contracts with their providers, which extend over the thirty-year period, to supply services and equipment which often come at inflated prices, adding further burdens onto the system.  
The Shepwayvox article contains considerably more financial analysis for those interested in the details. This includes 'According to KCCs recent estimates in their latest accounts 2020/21 show £210m outstanding loan agreements with PFI contractors, onto which £166.5m of extra interest charges will accrue between now and 2040, plus £156.3 million in service charges and £70.7m in lifecycle costs, meaning the estimated cost to repay all KCC PFI contracts was £603m.KCC paid their PFI contractors £43.1m in 2020/21, but just 18% or £7.9m was to pay off the outstanding loan arrangements. The other £35.2m, or 82%, was for interest payments, service charges and lifecycle costs'. I understand that these last calculations include other PFI schemes outside the schools, but underline the massive and penal costs of the interests payments. 

 

 
 
 
Read 196 times Last modified on Thursday, 26 August 2021 13:45

1 comment

  • Comment Link Tuesday, 31 August 2021 06:08 posted by Andrew Miller

    This looks an absolute scandal. Why aren't the media interested? Why have you buried it away on your blog page? PETER: I have been banging away about this for eight years. I have sent the story to each of our local news outlets over that time, but there has been no interest. I suspect it is too complicated for the media to tackle so they look for easier stories, which is true about an increasing number of education matters. This time as it is not my story, but reporting on one from ShepwayVox, I am afraid it doesn't make my front page. Feel free to try and make waves yourself.

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