In August 2012, the Conservative-led Isle of Wight council voted in favour of entering a 25 year highways PFI contract with Island Roads, a subsidiary of Vinci Meridiam.
At the time, stalwart scrutineer of local government, Mike Starke, said there were many unanswered questions about the contract, telling councillors via OnTheWight, “Don’t say I didn’t warn you”. Current leader of the council, Jonathan Bacon and former leader, Ian Stephens were two of the three councillors who voted against the contract (see the named vote).
Management company to review PFI contract
Jump forward two years from the start of the 25 year contract and its shortcomings are starting to appear.
Last week, Isle of Wight council announced they were contracting Atkins, a respected design, engineering and project management consultancy, to oversee the contract until a permanent contract manager could be sought. They’ll be asked to review certain elements of the contract.
Council in dispute with Island Roads
In response to comments left on the County Press by former Conservative councillor Roger Mazillius, Cllr Jordan (the Executive member now in charge of the PFI contract) confirmed the council are in dispute with Island Roads over a number of issues relating to the contract.
He set out some of the shortcomings, saying,
“The contract does NOT clearly stipulate many things. That is part of the underpinning issues and whilst I am not going to debate those here you can rest assured that we are in dispute over some of the most basic and fundamental contractual clauses.
“Your [the Conservative-led] administration decided to transfer (TUPE) all highways staff…a very big mistake… leaving the Authority with NO highways experience or engineering capacity.”
Contract NOT fence-to-fence
He went on to say,
“Your administration sold this to our residents as the all singing, all dancing, fence to fence solution to our problems. You omitted to tell the electorate that we have never spent £9M per year on our highways, yet that is what this contract enters us into.
“You did not tell the people of this Island that the contract was NOT the all singing fence to fence solution … not without substantial EXTRA financial investment.”
Gov funding tied to 2.5% interest rate .. for 25 years
Cllr Jordan continued,
“You did not tell *us* the serious shortcomings with the government portion of funding.
“That funding is predicated on interest rates of 2.5% over 25 years. Any interest rate rises above that level during the term will mean an equivalent shortfall to the funding that could run into millions of pounds extra to be found by the Authority.”
Missing elements
Due to the change in the pre-contract fence-to-fence arrangement, many areas across the Island that you’d think would be the responsibility of Island Roads, are starting to be revealed as not covered by the contract.
Cllr Jordan explained,
“You [the Conservative-led administration] did not explain to residents how part of the fabric and assets of this Island’s highways network were actually left out of the project network mapping and are now contentiously being argued over because they are not (apparently) covered under the main contract.
The unexpected cost of repainting lines
If you’ve noticed lots of newly painted white and yellow lines across the Island, this clarification about adding new lines from Cllr Jordan should interest you.
He said,
“You [the Conservative-led administration] failed to tell residents that this contract would not provide for any new lineage works (think disabled bays and yellow lines) without further payment and then, having made that further payment we would continue to pay further maintenance costs to the unitary monthly charge for the rest of the contract to upkeep that lineage.
“Ditto any other asset added…or in the case of dropped kerbs…taken away.”
Millions of pounds of additional costs
What’s most worrying about the revelations by Cllr Jordan is the fact there is now a list of 1,000 outstanding new works, accrued since the start of the contract, that is implemented would run in the multi-millions.
He explained,
“You also failed in securing any new works to be carried out under the contract unitary charge…instead agreeing those would be paid for in addition….plus their maintenance charge for 25 years…
“We now have a list of 1,000 outstanding *new* works that are need of carrying out (accrued within the past two years) that runs into millions of pounds (in addition to the contracted unitary charge).
“You failed to tell people that you passed the ability/authority of reducing lighting levels over to the contractor and that with that, any financial savings accruing from reduced energy costs being kept by the contractor alone.”
