As those following our Tweets and Facebook updates last week will already know, a majority of Isle of Wight council members endorsed the Cabinet decision in relation to the PFI highways contract at their Extraordinary Meeting on Wednesday.
Cllr David Pugh presented the executive decision made the night before by members of the Cabinet. He said the highways PFI project would sit alongside the school reorganisation as one of the biggest decisions in the council’s term.
Vinci and Meridiam special purchase vehicle
Since the preferred bidder, Vinci Concessions, was announced in May 2012, a new 50/50 partner in the contract has emerged, Meridiam (more on this company in Mike Starke’s opinion piece).
A written question from Mr Walters queried what country the Special Purpose Vehicle (ie. Vinci-Meridiam) was constituted and whose law applies, “is it Napoleonic?” he’d asked.
Cllr Giles confirmed that the contract will be under English law and the service provider and the operating company are both English companies, registered with Companies House in England and Wales.
Government grant
Cllr Pugh highlighted the Department for Transport’s grant of £260m (although he referred to it in cash terms of £487m over 25 years) adding that this figure would be six times the current highways capital maintenance grant.
He went on to say that the council must also make their own contribution for services the council currently provides, such as street cleansing, grass cutting, lighting etc. He said that those services were currently costing the council around £8.3m per annum, but that the contribution the IWC would have to make in the first year of the contract would be only £7.3m.
The contribution would be index-linked to the RPI and the final figure would be dependent on the swap-rate on the date of financial close.
“Risks should not be used as a reason not to proceed”
Council leader, Cllr Pugh acknowledged that there are risks attached to the contract, but added that “they should not be used as a reason not to proceed.”
He said the risks were more than outweighed by the benefits highlighted. He was confidence, he said, “that the contract protects the council’s interests.”
Determined critics wrong says Pugh
Cllr Pugh added that, “Despite the number of determined critics on the highways PFI project, claiming that Islanders don’t want it, I firmly believe that this is completely contrary to the reality of what we are repeatedly told by residents on the doorstep.”
He went on to say, “Residents want to see significantly improved roads, they are not necessarily that troubled by which mechanism it’s delivered by, they’ve left us to determine that.”
Call for named vote
Cllr Pugh expressed his desire for a named vote and asked for three councillors to stand and support this.
Six councillors stood in support of the request; three Conservatives and three from the other side of the chamber.
What other councillors had to say
This then gave the other members a chance to have their say.
Vice chairman, conservative councillor Cllr Ian Ward was the first to speak. He has been involved with the project since its inception and spoke of the delays experienced when EU rules changed. He said that despite this and a new government, the project had been given a “clean bill of health”.
He congratulated the PFI team and reiterated that the money from the Government was a grant not a loan. He made the point that the council had never spent £8.3m on roads, that this figure was for a whole raft of areas, including “you could probably say, the whole of engineering services,” he said.
“It’s that diversion of highways budget over the years that got us into the state we’re in,” he said, “I think we learnt a lesson in history there.
Lumley: “I will be voting in favour”
Labour councillor Geoff Lumley explained that he had put his name to the initial bid and that he doesn’t often change his views, but went on to say that he’d been extensively lobbied by people to change his mind and had about two years ago, according to Cllr Giles “started to wobble”.
He said that he’d had major doubts about the PFI, but balanced that against every survey carried revealing that roads were the top issue.
Cllr Lumley said that he was satisfied with what he’d heard. “I don’t think we can reject this,” he said, “I will be accused of being populist.”
He finished by saying it was a pretty rare night that he would be joining the majority group in a vote, but that he hoped others would support the motion.
Welsford: “Listening to my residents”
Independent councillor Chris Welsford said that he had a similar dilemma to Cllr Lumley. If he were voting in isolation, he would probably vote against, but added that he had to listen to his residents.
He said that he didn’t appreciate the way the project had been arrived at (pointing to the expenditure) and that Cllr Pugh had done a good job of putting him off by comparing the highways PFI to the schools reorganisation.
Cllr Welsford felt the call-in being ‘disapplied’ was heavy handed and cutting off democratic route. Cannot get head around why it is more efficient to employ a private company. We should be working out why the authority is so inefficient that needs private finance and initiatives.
He added, “there won’t be much left for us to do as council,” continuing “it’s very sad that road recycling plant isn’t going to be part of this.”
Finishing by saying that the main objective is to make the Island a safer and more attractive place to live, he said, “I have really no choice but to vote as my residents would expect me to.”
Barry: “Too many questions and not enough answers”
Cllr Barry (generally difficult to hear unless sitting directly next to him) suggested that maybe the scheme was not so good for the national tax payer, raising questions about the Special Purpose Vehicle and asking what was the council’s guarantee for the contract and whether it was adequate.
“How will we ensure that variations and work outside the contract is carried out at a competitive price?”
On the subject of minimising the inconvenience to residents and visitors, he added that former transport portfolio holder Cllr Ernie Fox, “got all roads done at night without upsetting anyone.”
He questioned the rate of deviation in costs if there is a dramatic change in the swap rate at the end of the contract.
He finished by saying that there were too many questions and not enough answers so he would abstain.
Fuller: Concerns balanced by views of residents
Cllr Fuller said sitting on the opposite side of the chamber to the ruling party, “you become a little sceptical”.
He added that he had concerns about the PFI scheme but balanced that with the views of a large number of residents on how the council is going to get itself out of the problems of poorly maintained roads.
He asked about priorities and safeguards to ensure all aspects of the PFI are deliverable. He finished by saying that he would support the motion if questions were answered.
Stephens: “We need to protect the Island”
Cllr Stephens started by saying that although it was good to hear from Cllr Pugh that the project had cross-party support, his was the local view.
He said that he could not support the motion as put forward. He referred to the everyday services that had been cut over previous years, TIC, toilets, libraries and redundancies etc.
“Collectively, we need to protect the Island,” he said.
He said that previous lack of inmvestment was the problem and not a lack of know-how on the Island. Concerned about the spare capacity on Island roads whilst the work, which is being front-loaded in the first seven years, he asked how it would be completed without major disruption.
Cllr Stephens finished by congratulating the PFI team and the Cabinet for their hard work, but was still unhappy. This received big applause from audience in the public gallery.
Bingham: Thanks for including the Military Road
Cllr Bingham replied to a previous query about who would be responsible for the pension contributions of those staff who move over to Vinci, confirming that they would be paid by the by new employer.
He gave big thanks to the PFI team on behalf of his constituents (many of whom had been in touch) for the news that the Military Road would be included in project.
Bacon: Limit opportunities to make savings elsewhere
Cllr Bacon by acknowledging that the decision had already been made so any discussion was like “debating what to have for Christmas dinner on Boxing Day.” Pointing out that the aim of the PFI itself was laudable, he added that how it was being done had troubled him.
Cllr Welsford had already mentioned that the primary aim of a PFI is for a private company to make a profit and Cllr Bacon concurred with this.
He explained at the previous week’s Scrutiny Committee meeting the senior financial officer had confirmed that committed PFI funds will limit opportunities to make savings elsewhere – potentially limiting the ability to fund other services.
He said that the information provided seemed satisfactory, but doesn’t deal with wider range of risks of the future. The Local Authority will be asked to be do a lot more for less money in the future.
Cllr Bacon said that he was listening very carefully to what everyone had been saying, but couldn’t endorse the decision. He added that it was a shame that wider debate was not possible prior to the decision being made.
Cameron: Address ferry fares now
Cllr Cameron added that it was “fantastic news” that the PFI contract included geo-technical schemes for Military Road and Bouldner, the two main artery roads to his ward in Freshwater.
He said that it was brilliant that the state of the roads had been addressed and hoped that the ferry fares was another issue the council could address.
Whittle: Remember the interchange
Cllr Whittle expressed his delight at the council receiving a commitment of £486m from Department of Transport, “in the middle of a recession”, all roads need the money he said.
He was brief but ended by saying, “You know what they say, remember the Alamo, well I say remember the interchange.”
Churchman: Councils ‘nick’ money from highways budgets
Cllr Churchman reminded members that for seven years she had been saying, “This is not going to happen, I can’t believe the Government would give little Isle of Wight this money.”
She spoke of how councils across the country, “continually nick money from highways budgets to do other things.” Remembering how (in 2007) the administration spent only £250,000 on Island roads, she added that this is why the roads are in such a state.
“I don’t like a PFI contract, but I also didn’t like having to borrow money to pay for my house and have a mortgage but 30 years on, I’m here with no mortgage.”
Giles: Addressing points
Cllr Giles responded firstly to Cllr Churchman’s reference to the mortgage and added that the money from the Government was a grant not a loan that needed to be repaid.
He said that Cllr Stephens had missed the point. He confirmed that the annual expenditure of £7.3m (in the first year then index-linked) would be paid not to the Government, but into the PFI contract, adding this this included street lighting, cycle-ways, cleaning, CCTV, public realm, etc.
He confirmed that the contract will have penalties if the contractor does not perform, if they stay too long on the roadway, if the tarmac is not up to standard, etc and that an independent assessor would “sort this out”. There would be regular market value reviews. It was, he said, “a very robust contract”.
In response to a written public question that had already been replied to, Cllr Giles explained that
72 posts would transfer under TUPE regulations to the PFI provider. He added that the number is not not exact, and would form part of the final negotiations prior to the commencement of contract in April 2013. He added that this had received support from staff and the union explaining that there would be no redundancies – the jobs would just exist in other organisation.
Cllr Pugh: Summed up
Leader of the council, Cllr Pugh was asked to sum up. He touched on Cllr Bacon’s concerns over affordability and committing over a defined period, but said that the considerable benefits that come from the scheme outweigh the risks associated. He added that the Section 151 officer (senior financial officer) had confirmed the project is affordable.
He reiterated that he was happy to compare the PFI highways scheme to the schools reorganisation and urged all members to support it.
Named vote
A named vote was taken, those who voted in favour of endorsing the contract were;
- Cllr Barry Abraham | Ward: Wootton Bridge | Political Group: Conservative
- Cllr Peter Bingham | Ward: Central Wight | Political Group: Conservative
- Cllr George Brown | Ward: Cowes North | Political Group: Conservative
- Cllr George Cameron | Ward: Freshwater South | Political Group: Conservative
- Cllr Vanessa Churchman | Ward: Havenstreet, Ashey and Haylands | Political Group: Independent
- Cllr Dawn Cousins | Ward: Newport North | Political Group: Conservative
- Cllr Rodney Downer | Ward: Godshill and Wroxall | Political Group: Independent
- Cllr Paul Fuller – Ward: Cowes West and Gurnard | Political Group: Independent
- Cllr Edward Giles | Ward: Whippingham and Osborne | Political Group: Conservative
- Cllr John Hobart | Ward: Carisbrooke | Political Group: Conservative
- Cllr Richard Hollis | Ward: Parkhurst | Political Group: Conservative
- Cllr John Howe | Ward: Totland | Political Group: Liberal Democrat
- Cllr Heather Humby | Ward: Sandown North | Political Group: Independent
- Cllr Tim Hunter-Henderson | Ward: Lake South | Political Group: Conservative
- Cllr Stuart Hutchinson | Ward: West Wight | Political Group: Conservative
- Cllr Julie Jones-Evans | Ward: Newport Central | Political Group: Conservative
- Cllr David Knowles | Ward: Ryde East | Political Group: Liberal-Democrat Group
- Cllr Geoff Lumley | Ward: Newport East | Political Group: Labour
- Cllr Roger Mazillius | Ward: Cowes South and Northwood | Political Group: Conservative
- Cllr David Pugh | Ward: Shanklin South | Political Group: Conservative
- Cllr Colin Richards | Ward: Arreton and Newchurch | Political Group: Liberal-Democrat Group
- Cllr Arthur Taylor | Ward: Ryde North West | Political Group: Conservative
- Cllr Gary Taylor | Ward: Ryde South | Political Group: Conservative
- Cllr Ian Ward | Ward: Sandown South | Political Group: Conservative
- Cllr Ivor Warlow | Ward: Binstead and Fishbourne | Political Group: Independent
- Cllr Chris Welsford | Ward: Ventnor East | Political Group: Independent
- Cllr Jerry White | Ward: Lake North | Political Group: Conservative
- Cllr David Whittaker | Ward: Newport West | Political Group: None
- Cllr Wayne Whittle | Ward: Ryde North East | Political Group: Conservative
- Cllr David Williams | Ward: Shanklin Central | Political Group: Conservative
Against/abstained
Cllrs Bacon, Joyce and Stephens voted against the endorsement and Cllr Barry abstained.
Absent
Cllrs Dixcey, Peacy-Wilcox, Stewart, Sutton and Webster were all absent from the meeting.
Image: (Matt) under CC BY 2.0
