Mike Starke and John Wortham have been highlighting what they see as problems with the proposed Island roads’ PFI for a while.
Yesterday Mike left a comment on the article highlighting the drop in the grant that the Government might give to the Island roads PFI project. As it had a lot of background in it, we thought others might want to read it too – Ed
I’m still blushing from Steve Goodman’s comments, or is it that I’m red with rage over the County Hall spinsters’ latest attempt to hoodwink us about the wretched PFI.
Grant goes to contractor not IWC
Let’s not forget these facts: The PFI bid started in 2006 with an estimate of £325m for the “grant” element (that’s the cash that goes straight to the PFI contractor, not to IW Council).
Then Jay Jayasundara came along and produced a detailed Outline Business Case requiring a grant of £399m. Then the government, after its Comprehensive Spending Review last October, said the IW scheme could only have £364m. Now this has come down to £260m – less by a country mile than Joe Duckworth’s original stab at the thing.
Yesterday’s County Hall spin doctors’ press release says: “The council said it could deliver the full scope of scheme to the new budget.
“This is largely because the scale project is so huge there is much latitude in which to make efficiency savings.”
34.8% “efficiency savings”?
So, that means the budget of £399m was set in the knowledge that it contained no less than a 34.8 per cent (more than a third) element accounted for by what must be inefficiencies, if this amount can be cut as “efficiency savings”.
Let’s all pause, take a breath and consider the alarming implications of this for public service contracting processes.
It seems you cost the job, then bung on a third for good measure. After all, it’s not your own money; it’s the stupid taxpayers’ cash.
Look at it another way, if the ultimately successful bidder for the PFI was also able to do the sums with a £399m price tag and deliver the same job for a third less with “efficiency savings”, that would mean they could walk away with £139m on top of whatever profit margin was built in.
PricewaterhouseCoopers
Perhaps the PFI’s external financial consultants, PricewaterhouseCoopers, should be called in to check Jay Jayasundara’s figures. But wait a minute, his last employers were PwC.
Maybe the council’s internal auditors should cast an eye over the sums. Hang on, though; that’s PwC, too.
The rending noise you may hear now could be down to me tearing my hair. It could also be the sound of Island council taxpayers being ripped off as they have never been ripped off before.
