Kent County Council (KCC) have three Private Finance Initiative (PFI) Contractors who between them receive payment for 11 schools all of which were built in the noughties. Between them they have received nearly £200 million between August 2010 and April 2018.
PFI was driven by a mixture of questionable ideology (private always does things better), dodgy accounting (it takes debt off the state’s book although the state still has to repay it) and dubious accountants (the fees for advising on these things can be breathtaking).
Governments can borrow at much cheaper rates than private enterprises can, even when the markets view those enterprises as operating with a de facto state guarantee (as with banks). As a result PFI deals are almost always ruinously expensive and poor value for money. Add to that the fact that of the four companies which hold the three PFI contracts, three of them are registered in offshore jurisdictions which are known tax havens.
The most important feature of a tax haven – and it is a defining one – is that local politics is captured by financial services interests (or sometimes criminals, and sometimes both), and meaningful opposition to the offshore business model has been eliminated. Nicholas Shaxson
Moving on, between August 2010 and April 2018 they have received £197.5 million in payments, a very large proportion going offshore to known tax havens. The PFI contracts are made up of Repayments of Liability, Interest, Service Charges and Life cycle costs.
Newschools (Swanscombe) Ltd
On 24 May 2001, the KCC contracted with New Schools (Swanscombe) Ltd to provide Swan Valley Secondary School and Craylands Primary School under a Private Finance Initiative (PFI). The schools opened in October 2002. Under the PFI contract the Council pays an agreed charge for the services provided by the PFI contractor. At the time the contract was signed the total estimated contract payments were £65.5m over the 25 year (termination end of September 2027) contract period. In September 2013 Swan Valley Community School converted into Ebbsfleet Academy.
Newschools (Swanscombe) Ltd, are ulimately owned by Innisfree Group Limited , who in turn are part owned by Coutts & Co Trustees (Jersey) Ltd (Jersey is an offshore Tax Haven). Innisfree received a tax credit of £441,000 according to its latest set of accounts lodged at Companies House on Dec 22, 2017.
KCC have paid £23.9 million for the period stated. How much has been paid during 2002 and the 31 July 2010 is not known.
Kent Education Partnership Ltd
On 7 October 2005, the Council contracted with Kent Education Partnership to provide 6 new secondary schools (Hugh Christie Technology College, Holmesdale Technology College (now Holmesdale School), The North School, Ellington School for Girls, The Malling School and Aylesford School – Sports College) under a Private Finance Initiative (PFI). The development of these schools straddled both the 2006-07 and 2007-08 financial years. Three of these schools opened part of their new buildings during the 2006-07 financial year (Hugh Christie, Holmesdale and The North). The other three schools opened their new buildings during 2007-08 (Ellington School for Girls, The Malling and Aylesford). From September 2009 Ellington School for Girls merged with Hereson Boys School to become Ellington and Hereson School, which is also a Trust. The school has now been renamed the Royal Harbour Academy. The unitary charge commenced in November 2006, PFI credits commenced in June 2007 and were backdated to November 2006. This charge is included in KCC’s revenue budget and outturn figures. At the time the contract was signed the total estimated contract payments were £373.9 million over the 28 year contract period.
Between them they have received £98.9 million. This does not include the money they received from 7th Oct 2005 to the 31st July 2010
Kent PFI Company 1 Ltd
On 24 October 2008, the Council contracted with Kent PFI Company 1 Ltd to provide 3 new secondary schools in Gravesend (St John’s Catholic School, Thamesview School and Northfleet Technology College) under a Private Finance Initiative (PFI) which formed part of the Building Schools for the Future programme. All three schools opened their new buildings during the 2010-11 financial year. The unitary charge commenced in July 2010 upon the opening of the three schools, PFI credits commenced in March 2011 and were backdated to July 2010. This charge is included in the Council’s revenue budget and out turn figures. At the time the contract was signed the total estimated contract payments were £250.8 million over the 25 year contract period.
Kent PFI Company Ltd is ultimately owned and controlled by International Public Partnerships Ltd based in Guernsey a known offshore tax haven. International Public Partnerships Ltd. is a closed ended investment company incorporated in Guernsey. The company’s investment policy is to invest in public or social infrastructure assets in the UK, Europe, Australia, North America. The address where the company is registered to in Guernsey, appears in the Paradise Papers.
Since August 2010 to April 2018, KCC have paid Kent PFI Company 1 Ltd £74.7 million. Only another £175 million approx to pay off.
As we said at the beginning, PFI was driven by a mixture of questionable ideology (private always does things better), dodgy accounting (it takes debt off the state’s book although the state still has to repay it) and dubious accountants (the fees for advising on these things can be breathtaking).
For these 11 schools KCC have paid in excess of £200 million as contracts were signed prior to Aug 2010. The vast majority of it has gone offshore to companies registered in known tax havens. We do not believe this is right or proper use of taxpayer money, however we’ll leave you to decide what you think.
The Shepwayvox Team Journalism for the People NOT the Powerful
There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any people, companies or other entities included in this blog post have broken the law or otherwise acted improperly, unless found so by a court of law.
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PFI scandal, even if you accept the Blair Government was naive or mislead by the bankers and accountancy firms, the tax payer was ripped off yet again. I want a right wing politician to explain how this was a good deal.