Cost of PFI project in Kirklees goes up by £87 million

The price tag of privately-financed public infrastructure in a local authority area of Yorkshire has ballooned by £87m more than what council chiefs thought it would cost when the deals were struck - but the council has said it would not have agreed if it "could not afford" the inflated costs.

Thursday, 17th October 2019, 1:26 pm

Payments for four separate private finance initiatives (PFI) involving schools, waste management and housing in Kirklees have seen increases because of "contract variations" and inflation, JPIMedia investigations can reveal.

But Kirklees Council has said that the "changes would not be made if they were not necessary", arguing it would not agree to them if it "could not afford" the inflation and says they often save money through renegotiations "in the long term".

A response to a Freedom of Information request to Kirklees Council shows that the authority's Kirklees Schools Group Project - signed in the late 1990s with a capital value of £58.7m - has costed more than £55m over the projected £418,170,000.

Russ Ballinger, regional secretary for the National Education Union in Yorkshire and the Humber, said: “Schools have been chronically underfunded by the current Government and PFI schemes further compound this.

“This means school leaders are having to make tough choices to balance their books, which normally means making staff redundant. This ultimately means higher class sizes, a narrower curriculum (as certain subjects are cut), less SEND provision for vulnerable pupils and less pastoral care.

“All this impacts on children’s education and life chances, while private companies make financial gain from the taxpayer. Children and their parents should expect a good quality education system, but unfortunately due to chronic underfunding and PFIs, many have been sold short.”

The Kirklees Waste Management Project is also more than £30m over what the council thought when the deal was struck in the late 1990s.

Coun Graham Turner, Kirklees Council Cabinet Member for Corporate, said: “We require contracts to help us deliver the large scale and complex services we are responsible for.

“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 current contacts are reviewed regularly to ensure that we are getting value for money, and changes are negotiated from time to time. These changes would not be made if they were not necessary. Changes are often made to save money in the long term, improve service delivery or comply with new legislation.

“These are long term deals and there can be many changes during the life of the contract that can affect the payments and maybe the delivery of services covered by the PFI.”