If you were at the last Cabinet meeting or following the live coverage of the meeting on VB, like us, you might have been surprised by Cllr Edward Giles’ claim that the, “estimated benefit to the Island economy is well over £1bn,” for the road PFI scheme (see below for the details of what he said).
Readers may remember that three companies (two mainland and one all European), Colas Ltd, Vinci Concessions and Amey Ventures were named as the preferred bidders for the 25-year scheme last April, so we were curious as to how so much benefit (well over £1bn according to Cllr Giles) would make its way into the Island economy.
How do you reach £1bn value?
One billion pounds is large amount of money, so we thought the council’s press office may be able to help. We asked, “A number of times cabinet members have referred to nearly one billion worth of value that the PFI will bring to the Island. Can you send through the details of how that number is made up please.”
Their response (see the full detail below) didn’t really make it any clearer, so we sent them a re-worded the question, “What we’re keen to know is, what the council estimates the financial benefit to the Island economy will be over the 25 year period?”
Delayed responses
After the usual tedious cat and mouse antics of dealing with Simon Butler in the press office (first question asked 7 March, answer received 15th, second question asked 15th March, answer received 22nd), we finally received this reply.
Jay Jayasundara, Isle of Wight Council PFI Programme Director said “There are many benefits that combine to make the actual value of PFI schemes significantly greater than the actual value of the grant, in some cases up to three or four times.
These factors would include the local employment the scheme will bring as well as the opportunities such a massive engineering project will create both directly and indirectly to companies across the Island’s business sector.”
Straight to the source
This still didn’t relate to a £1Bn+ benefit for the Island economy, even after 15 days of us asking our original question, so we changed tack and wrote to Cllr Edward Giles, so he could clarify.
That was yesterday morning, but as of publishing this article over 30 hours later, we’ve still received no acknowledgement of our email (below) or an answer to the following question.
At the cabinet meeting on 1st March when questioned about the highways PFI scheme you stated that “The estimated benefit to the Island economy is well over £1bn.”
Following the meeting, we requested a clarification from Jay Jayasundara about the £1bn value figure. He told VB that it “relates to the total expected investment on the Highways PFI project”. Given the preferred bidders are mainland companies, the “total investment” and “total value to the Island economy” are different things.
Please send us the detailed figures that you used to come to your statement.
Given he made the statement in a public meeting, it’s important that that Cllr Giles clarifies the claims he made.
When we hear back from him, we’ll be sure to update you.
Rather than try and cram all of the detailed info below into the article, we’ve separated it out below.
How is £1bn value figure made up?
As mentioned above, having heard the figure of £1bn value to the Island economy being frequently used, we posed the following question to the press office a few days after the Cabinet meeting.
We asked, “A number of times cabinet members have referred to nearly one billion worth of value that the PFI will bring to the Island. Can you send through the details of how that number is made up please.”
Eight days later we received this response.
Jay Jayasundara, Isle of Wight Council PFI Programme Director said “The reference to ‘nearly one billion worth of value’ relates to the total expected investment on the Highways PFI project for the upgrading and maintenance and operation over the 25-year contract period.
“The investment is funded by the PFI grant and Isle of Wight Council’s existing (pre PFI) highways maintenance budget contributions, payable annually and linked to inflation over the life of the project.
“The value of this investment will be far greater still when you factor in other benefits including economic regeneration, apprenticeships, use of local material, labour and other resources and the use of wider Island based supply chain”
The original Outline Business Case can be found at (link) and, whilst the project is currently awaiting confirmation of the level of PFI Credits it will receive from the DFT, this value will still be in the realms of £1 billion.
What Edward Giles said in the Cabinet meeting
We do our best to get the general gist of what’s being said at the meetings when providing live coverage, but are not able to take everything down. This is why the recordings of the meetings are so valuable.
According to the recording of the meeting, on 1st March, here’s what Cllr Edward Giles, Cabinet member for Environment and Transport said in response to a question from a member of the public on the highways PFI.
Highways PFI will bring immense value to the Island, but there still seems to be this myth going around that the money provided by the Government is a loan.
I’ve said so many times that I’ve lost count, the money is not a loan, it is a government grant that we do not have to repay.
It will be a very substantial sum, we do know that the original amount is going to be cut down, err, but it will still be a substantial sum, probably between £10-£15m per year over a 25 year period.
The estimated benefit to the Island economy is well over £1bn. In those circumstances I cannot understand why people persist in saying that this is the Island taking on something which is .. conflicts its interest.
It’s my view that er, the view of this administration that the PFI when it goes ahead will bring immense benefits to this Island, it will set up an industry in road maintenance which we haven’t seen before. We are aware that the condition of the roads is a number one concern for residents and this administration is determined to do something about it.
If we let the PFI fall through our fingers we will continue to leave the road network in poor condition which it now is which is the result of decades of under-investment.
Image: Smiley Stew under CC BY 2.0
