We always welcome a Letter to the Editor. This one (which is rather longer than usual submissions) is from Mike Starke, Chale.
If you haven’t come across him before, Mike was central to the uncovering of the Undercliff scandal that rocked County Hall a few years back.
This piece comes in response to news that councillors will be asked to sign off the Highways PFI project this week, committing Islanders to 25-years of payments.
It’s long, so if you’d rather print off and read later at your leisure, click on the Print Friendly button to the right. As ever, your comments in support or against are welcomed. Ed
Appropriately enough, elastic facts and figures about the Isle of Wight’s highway maintenance PFI that have been bounced around by County Hall for the past six years are due to be rubber stamped by the cabinet and full council on Tuesday and Wednesday 21 and 22 August.
All those elasticated facts and figures are there for all to see, if you know where to look and have the time to do so. Sadly, far too many of the councillors who will raise their hands in favour of the 25-year contract have failed to find the time or inclination.
I know this because some have been disarmingly and alarmingly honest enough to tell me so. Equally sadly, a few of my fellow critics have also failed to acquaint themselves with the facts over the years. Happily, though, an ever-growing band of concerned Islanders have taken the trouble to do the necessary research.
“The Emperor’s New Clothes”
Now our councillors are stumbling blindly into the dark alley of the PFI contract and dragging us with them, regardless, using burning bundles of our taxpayers’ cash as a torch to light their way.
It’s too late to go over again all the three box files and several gigabytes of data I have gleaned from official sources to convince me of the folly of the scheme over the years. Instead, I would like to tell you a story, with apologies to Hans Christian Andersen. It’s called “The Emperor’s New Roads” (Sorry; “that should be “Clothes”. Slip of the keyboard”¦)
“PFI” stitch up
Once upon a time, an emperor found that, although his chancellor had been budgeting for suitable regal garments, the emperor had spent some of the money on other things and the moths in his wardrobe had filled his clothes with holes.
The emperor had to act. His closest advisers brought in a firm of fine-sounding out-of-town tailors, Peabody, Effingham and Isaacson – PFI for short.
Unbeknownst to the emperor, PFI were more interested in stitching up his treasury than his trousers and pretended to create the finest raiment from what they said was magic fabric, invisible to anyone stupid or mischievous enough not to be able to see it.
Cruel ruse
Of course, such a “magical” solution to the imperial passion for fashion did not come cheap. No matter, PFI told him, just save a bit by not buying those school books for the prince and princess. And, surely, the emperor’s ageing mother, the Dowager Empress, could wear her threadbare dressing gown for another few years without replacing it as he’d planned?
Eager not to be thought a fool, the emperor and his courtiers admired PFI’s imagined work and paraded it before the people. Suddenly, a child in the crowd shouted in horror that the emperor was naked as the day he was born. The courtiers tried to shut him up by saying he was too ignorant and mischievous to know what he was talking about, but others soon saw through the cruel ruse.
But was it too late”¦
County Hall fairyland
Some 150 years on and Hans Christian Andersen’s story appears to have been re-enacted in the PFI fairyland that is inhabited by the leadership of the Isle of Wight Council and the moral is not lost on those of us who have spent years in the role of the little boy in this modern version of the tale.
Unanswered questions still remain
As the deluded “imperial procession” of the PFI contract is paraded through the council chamber this week, unanswered questions remain, such as:
- The PFI funding was said for a long time to be a done deal. This was proved not to be so. Why was it deemed necessary to be economical with this truth?
- The PFI was said to be a free gift, costing the Isle of Wight Council coffers nothing. This was proved not to be so. Why was it deemed necessary to be economical with this truth?
- The PFI has been presented as having no faults. How has a two-star-rated “providing minimum service requirements” local authority achieved a peak of perfection no-one in the entire history of human endeavour has so far managed?
- The PFI has been proclaimed the only remedy for the disastrous state of dilapidation successive councils have allowed Island roads to get into. This has been proved not to be so. Why was it deemed necessary to be economical with this truth?
- The PFI’s supporters have warned that, once the contract is signed, all other council services will have to trim their budget’s to meet its needs. Figures have been projected to describe spending on the PFI for the full 25-year span but no such detail for the service cuts envisaged. Why? And what where and when will those cuts be?
- Neighbouring Portsmouth City Council has a similar highways PFI arrangement with the runner-up bidder in the Isle of Wight contract race. Their experience is one of spiralling costs and disillusion. What account has been taken of this disturbing, close and contemporaneous experience?
- PFIs of all kinds nationwide have come in for criticism, even from the coalition government, for lacking value for money, among a catalogue of other failings. Why does County Hall cling to the naïve belief that the Isle of Wight experience will be any different?
- An independent civil engineering consultant warns that large PFI consortia will calculate the most and least profitable elements of a complex contract such as the Isle of Wight one. They will then analyse the least profitable ones and set the cost of penalties for failing to deliver them against the savings in the costs of doing so. Thus, this expert in the field told me, as part of an industry norm, some aspects of the Isle of Wight contract will never be even started. Is County Hall aware of which they are?
- Despite the fact that the PFI contract has been awarded and the contract is due to be signed, significant details remain described as “commercial in confidence”. Since these secrets can be of no use to failed bidders, or any other business interests, come to that, the only ones being kept in the dark are the Island taxpayers, who are paying for it. Given that a respected national commentator warned this month that post-contract “confidentiality” over PFI deals is, in reality, a way of keeping uncomfortable facts from the public, how does the council justify this secrecy?
- “¦ And the process must be done and dusted immediately with the usual scrutiny process cast aside in the indecent haste for contractor Vinci to get on with sucking the golden udder County Hall is presenting them with”¦ at our expense. Why so much last-minute hurry after so many years of costly (£7.6m and counting) calculations?
There is one further uncomfortable question that has occurred to me after six years poring over all those PFI files; what is really behind this monumental act of folly?
The conclusion I have come to is that the Island’s decrepit roads are not the real reason for the PFI, merely the excuse for it.
Need for profit
From the regime of John Major, through Tony Blair, Gordon Brown and now David Cameron, PFIs have been imposed on public services by central government as a method of achieving capital projects without having to show them on the Treasury’s books in Whitehall, while satisfying the need for profit of major financial institutions, many of which bankroll the three main political parties.
In the case of the Isle of Wight, County Hall did not dream up the PFI; it was offered – like the emperor’s new clothes – by Whitehall, wrapped up as a Highway Maintenance Pathfinder Scheme.
Organ grinder rather than the monkeys
I have said I do not intend to go back over all the publicly available documents, but here’s one that’s not yet in the public domain. Exasperated by County Hall’s inability and/or unwillingness to give straight answers to straight questions on the issue of the PFI, I bypassed the monkeys and went to the organ grinder; the minister in charge at the time, Lord Adonis.
His office was most forthcoming in a response of 15 April 2009 and took just over a single A4 page to describe how the proposed PFI worked. A significant passage reads: “To produce a robust outline business case we expect local authorities to recruit and employ competent and experienced staff and advisers. It was a condition of the Department (for Transport’s) selection of the (pathfinder project) that it employ an experienced project director as soon as possible.”
Not the best choice
You do not have to be an expert in reading between the lines of political pronouncements to realise Lord Adonis was conveying the clear government message: “You will have the PFI, as long as you only do it through the people we tell you to.”
Thus the financial advisers, appointed in October 2009, turned out to be the favourites of successive governments, PricewaterhouseCoopers (PwC). The PFI director appointed by County Hall a month later turned out to be a (just) former employee of PwC, whose previous job had been in Downing Street, no less, involved with PFIs.
We could argue that PwC, as auditors for the doomed Northern Rock and having come in for criticism from House of Lords watchdogs and industry regulators, might not have been the best choice for the Island, but the firm was a proven Whitehall favourite.
Shooting fish in a barrel
As for the PFI director, Jay Jayasundara, I have never said otherwise than that he is eminently qualified for his role as a super salesman for PFIs. It may have been a bit like shooting fish in a barrel pitting his undoubted intellect against County Hall’s finest, but he has achieved success in his objectives.
Don’t take my word for it. He appears to think the same. A reporter told me Mr Jayasundara, ruffled by what he seemed to perceive as an impertinent question, bluntly retorted something to the effect he had dealt with more PFIs than the hapless hack had had hot dinners.
As a council employee, at considerable expense to us all, Mr Jayasundara might have been expected to say something along the lines that he was dedicated to serving the Island community as best he could. Instead, he emphasised his national credentials in the national PFI field.
No fairytale ending (or Catastrophic collapse)
Maybe I’m wrong, but all this feeds my belief that the Great God PFI is the priority here. The needs of the Island’s highways department are incidental.
The clincher for me was the recent announcement that when (not if) the PFI contract is sold on (eh?), the council might (subject to Whitehall rewriting the rule book just for County Hall) let the Isle of Wight taxpayer buy some shares.
The awful stick of truth behind this apparent carrot of inducement was that the Island’s PFI is no more nor less than a financial instrument to be bought and sold in the frenetic open market of the failed financial industry.
Such transactions were the cornerstone of the catastrophic collapse of the edifice of casino investment banking for which we are all (except the culprits) now paying in a double-dip recession with, probably, worse to come.
And, lo and behold, at the last minute County Hall has announced that Vinci Concessions is in 50:50 partnership with a French investment bank, Meridiam, for the Isle of Wight PFI contract as Vinci-Meridiam.
Is it mere coincidence that almost exactly three years ago, 27 August 2009, Vinci-Meridiam clinched a 1.2bn euro highways PFI deal in Slovakia. So they’re old pals?
No fairytale ending to this Island PFI version of “The Emperor’s New Clothes” then; just another example of naked greed at the public’s expense.
