According to the new draft Salford City Council accounts, the city is getting absolutely screwed by Private Finance Initiative, or PFI, schemes it has set up to finance new schools across Salford and refurbished housing in Pendleton.
Over various times during the last two decades, Salford Council has entered into PFI agreements for three special needs high schools and six new high schools, plus the refurbishment of housing under the Pendleton Together company, with contracts running for up to 26 years at interest rates up to 12%. And the figures are absolutely mind numbing...
The Council's total PFI liability for the life of these projects is £186,656,000, plus interest of £242,487,000 plus charges for services, maintenance and stuff of £375,788,000 bringing the total cost to £804,931,000.
The Government chips in with grants to part finance these schemes but, for the 2018 financial year Salford Council itself will be forking out £18,725,000. The Council accounts break it down as follows...
For the three special high schools, the Eccles Special High School Company Ltd (ESHSCO) will be coining in an average payment per year of £1.159million from the Council (£2.568million including Government contribution) over the remaining twelve years of the contract.
For two PFI high schools, Salford School Solutions Ltd will be trousering £2.574million per year from the Council (£6.611million including Government contribution) until 2034.
For two other high schools, S&W TLP (Project Co One) Ltd will be paid an average of £3.459million per year from the Council (£9.318million including Government contribution) until 2037.
The same company with a different name, S&W TLP (Project Co Two) Ltd will also be paid an average of £4million per year from the Council (£10.913 including Government contribution) until 2039 for two high schools and one co-located primary and high school.
Meanwhile, the Pendleton Together PFI, which has a thirty year contract to refurbish and manage 1,251 Salford Council properties with 26 years remaining, will be paid an average of £7.533million a year from the Council (£15.055million including Government grant).
That's a total drain of £18.725million a year on Salford Council resources. There's also the city's three Gateway buildings that have similar finance deals by a company called MAST Lift Project Company (Number 2). The Council will be paying £25.254million to lease space in these over the next twenty years.
The financing of these projects has come in for massive criticism with campaigns like PFI v The People calling for their immediate nationalisation, backed by Labour Party Shadow Chancellor, John McDonnell.
Not only are the costs crippling local authorities and public bodies, but these PFI companies are being sold on to offshore investors. Hochtief and Lang O'Rourke, which held an 80% stake in four Salford high schools via S & W TLP (Project Co One and Two), sold out to HICL Infrastructure, an offshore company based in the tax haven of Guernsey recently.
PFI is a national scandal. Full stop.
For a full background see previous Salford Star articles...
Salford Council's £835million PFI debt as Labour Calls For Nationalisation click here
For more details on school PFIs click here
For Pendleton PFI click here
For Salford Royal Hospital PFI click here