Kent County Council have 14 Private Finance Intiative (PFI) Contracts on their books. 11 of them are schools. Who owns these schools, because it is not KCC, they just stump up vast quantities of cash to these private companies.
You could never tell just by looking, at the 11 schools listed below that over half of them are headquartered offshore in Jersey and Luxembourg. Strange, no? The 11 schools are Hugh Christie Technology College, Holmesdale Technology College, The North School, Ellington School for Girls, The Malling School and Aylesford School – Sports College. Swan Valley Secondary School, Craylands Primary School, St John’s Catholic School, Thamesview School, Northfleet Technology College
In the life time of the PFI Contracts we the Kent Taxpayer will pay £726,124,000 according to page 59 of KCC’s accounts 2014/15.
What is PFI?
“The idea is that it’s like a mortgage, you pay in installments rather than a lump sum. Except that this kind of mortgage comes with an exclusive contract and the maintenance contract means you’ll need to ask permission, and pay a fee, every time you want to put a picture up on the wall.
Then you get the complicating factor that chunks of the contract can be sold off on an open market for public infrastructure.
The difficulty with private finance is that it is more expensive than public borrowing. Exactly how going with the supposedly pricier option is justified is a long and complicated story about the problems of financial modelling, better told by the National Audit Office, but the reason why PFI comes out cheaper is quite simple.
In theory, the answer to your value for money calculation should decide who pays for the school/s: the private sector or the public purse. But realistically, everyone knows that the government are never going to pay for it. If PFI doesn’t end up cheaper, then Kent doesn’t get new schools.
To get the calculation to work, you’re relying on two sets of assumptions that need to stay true for the next 25 to 30 years. On the School/s side, it needs to meet a set of stringent performance targets to make sure that it can keep pupils flowing through a school with less pupil numbers. And on the contractor’s side, all the finance and service costs need to be accurate enough for the School to afford it.”
When and by whom PFI was introduced
PFI deals were invented in 1992 by the Conservative government led by Sir John Major, but became widespread under Labour after 1997.
The schemes usually involved large scale buildings such as new schools, hospitals, or infrastructure projects which would previously have been publicly funded by the Treasury.
The projects are put out to tender with bids invited from building firms and developers who put in the investment, build new schools, hospitals or other schemes and then lease them back.
Lease arrangements for PFI projects are long term, often 25 years or longer.
Repayments are made over a long time scale, usually between 25 and 30 years but occasionally as long as 60 years, but at a high rate of interest.
That meant that large debts were stored up for future taxpayers – which now have to be repaid.
Under a Treasury sleight of hand, PFI debts do not form part of the deficit balance sheet.
Who owns the 11 PFI Schools In Kent?
Swan Valley Secondary School (now Ebbsfleet Academy) and Craylands Primary School are owned by Newschools (swanscombe) Ltd, who are ulimately owned by Innisfree Group Limited , who in turn are part owned by Coutts & Co Trustees (Jersey) LTD who own 72.2% of Innisfree according to companycheck and companies house.(Jersey is an offshore Tax Haven)
Innisfree, with only 25 staff, is the largest single player in the PFI market, owning or co-owning 269 PFI schools and 28 hospitals.
Kent PFI Company 1 Ltd provided 3 new secondary schools in Gravesend – St John’s Catholic School, Thamesview School and Northfleet Technology College appear to be ultimately owned by Orangetone Ltd based at 2 London Bridge, London, SE1 9RA, where KENT PFI Company 1 Ltd is also based along with 201 other companies
Kent Education Partnership Ltd Hugh Christie Technology College, Holmesdale Technology College, The North School, Ellington School for Girls, The Malling School and Aylesford School – Sports College. These schools are 50% owned by Bbgi Investments S.c.a. whose Registered Address is Aerogolf Centre, Heienhaff 1a, L-1736 Senningerberg, Grand Duchy of Luxembourg (Offshore tax haven)
The other 50% is owned by Infrared Capital Partners (Management) LLP registred at 12 Charles Ii Street, London, SW1Y 4Q For readers of Private Eye see Issue 1340 pg 19-24 to see what they say about LLP’s
So as far as we can identify, over half the schools mentioned are owned by companies registered in offshore jurisdictions. That’s where Kent Tax payers money will end up, in the hands of people we will probably never know.
Thanks to People v PFI and Sid Ryan for their help and assistance