The Long Read: Kent County Council’s PFI School Deals Still Cost Millions

The Government says PFI is over. Parliament has spent years tearing strips off it. The Treasury itself admitted the model became “tarnished by its waste, inflexibility and lack of transparency”. Yet in Kent the old deals are not dead, not buried and not even particularly quiet. They are still in the accounts, still in the payment schedules and still shaping what the council can and cannot do.

We went looking for a ghost and found a budget line. The official 2025 Government PFI publication still lists Kent projects in operation, and KCC’s own 2024/25 Statement of Accounts shows these contracts are not some antique accounting curiosity tucked behind a filing cabinet in Sessions House. They are still live, still expensive and still stretching years into the future. In other words, the patient may have been pronounced dead in Westminster, but in Kent it is still sending invoices.

First, a bit of plain English. PFI, or Private Finance Initiative, was the model under which a private consortium financed, built and usually maintained a public asset, while the public sector paid an annual “unitary charge” over decades. The King’s Fund sums it up neatly: instead of the state borrowing to build, government contracted with private firms to finance, design, build and maintain assets, usually over 25 to 30 years. That annual payment was not just the bricks. KCC’s own accounts show it bundling together repayment of liability, interest, service charges and lifecycle costs. So when someone waves a “capital value” around as if that is the whole bill, they are showing you the starter, not the meal.

That matters because Kent’s own numbers are eye-watering enough without any embellishment. In the 2024/25 accounts, KCC shows £163.074 million of scheduled future payments still to come on the six-schools PFI, £122.559 million on the three BSF schools PFI, and £11.007 million on the old Swanscombe schools deal. Together that is £296.64 million still to be paid on school PFIs alone. Across all KCC PFI contracts, the total scheduled future payments come to £484.141 million. Put differently, around 61% of the council’s remaining PFI burden sits in schools. And within one year alone, KCC expects £45.236 million of PFI payments across all its contracts, of which just over £30.2 million is on the three school deals.

That is why this story matters. Kent is not just carrying legacy PFI baggage. It is still making very real, very current payments. KCC’s 2025/26 Budget Book carries a live “PFI Schools Scheme” line with gross expenditure of £32.3397 million, offset by internal income, external income and grant so that the net line comes out at zero. That may look tidy on the spreadsheet. It does not make the underlying obligation disappear. It simply tells you where the money is being shuffled from.

Start with the oldest school deal. KCC says that on 24 May 2001 it contracted with New Schools (Swanscombe) Ltd for Swan Valley Secondary School and Craylands Primary School. The schools opened in October 2002, the unitary charge began that month, and at signing the total estimated contract payments were £65.5 million over the 25-year contract, ending in September 2027. In the 2009 risk report, KCC said the 2009/10 unitary charge would be £2.4 million. In the 2024/25 accounts, the remaining scheduled payments are still £11.007 million. So on a rough, not-audited proxy basis, about £54.5 million is no longer outstanding compared with the day-one estimate.

Then there is the six-schools deal, the big one. KCC says it contracted with Kent Education Partnership on 7 October 2005 to provide six secondary schools: Hugh Christie, Holmesdale, The North, Ellington, The Malling and Aylesford. At the time the contract was signed, the total estimated contract payments were £373.9 million over 28 years. KCC’s 2009 report said the 2009/10 unitary charge would be £11 million. The current accounts show £163.074 million still to be paid. On the same rough comparison basis, about £210.8 million is no longer outstanding against the original estimate. That is a vast sum, and there is still a vast sum left.

Then comes BSF wave 3. KCC says it contracted with Kent PFI Company 1 Ltd on 24 October 2008 for three new secondary schools in Gravesend: St John’s Catholic School, Thamesview School and Northfleet Technology College. The schools opened in 2010/11, the unitary charge began in July 2010, and KCC says the total estimated contract payments at signing were £250.8 million over 25 years. The current accounts still show £122.559 million of scheduled future payments. On the same rough basis, about £128.2 million is no longer outstanding compared with the original estimate. Half the hill has been climbed. The other half is still there, waiting.

There is an important warning label here. KCC publishes the original estimated total contract payments at signing. It also publishes the current schedule of future payments. What it does not appear to publish in one neat, audited line is a cumulative “cash paid to date” figure for each school PFI. So when we compare the original estimate with the current remaining schedule, that gives a useful rough proxy for how much is no longer outstanding, but it is not the same thing as a formally audited paid-so-far total. These contracts are indexed, and future schedules are forecasts. Anyone claiming a mathematically perfect paid-to-date figure from the public documents alone is overselling it.

The committee trail is almost as revealing as the numbers. The accessible public papers show Better Homes Active Lives before Cabinet in 2004 and again in January 2007. By December 2005, KCC Cabinet papers were already showing major third-party investment on the schools PFI side. By January 2009, Children, Families and Education papers were setting out the BSF wave 3 capital split and affordability gap. By December 2009, Governance and Audit had before it a paper called “The risks to KCC resulting from the Private Finance Initiative”, which is about as subtle as a brick through a conservatory window.

And that 2009 risk report is a gem, if you enjoy official documents suddenly becoming far more candid than their authors probably intended. KCC listed the advantages of PFI, including service stability and standardisation. But it also set out the disadvantages in plain terms: procurement is time-consuming and expensive; bid costs get recouped through the unitary charge; there can be price increases before financial close; there is potential inflexibility when services change; there are termination payments if the authority exits early; the payment stream is effectively fixed when the authority faces revenue pressure; and there is a perceived loss of control over public services. In short, it is a very long contract for saying, “yes, but have you tried not changing anything for 30 years?”

The really striking paper, though, is the April 2010 follow-up report to Governance and Audit. This is where the council said, in black and white, that “no break point exists” in either the Swanscombe or six-schools PFI contract. It said the Schools Funding Forum had agreed to use the Dedicated Schools Grant to close the affordability gap for Swanscombe, Six Schools and BSF wave 3, amounting in 2010/11 to £1.4 million, £3.7 million and £0.9 million respectively. It also said the authority was entering arrangements that would be “extremely difficult and costly to get out of.” If you were trying to explain PFI to a resident over a pint, you could do worse than that.

That same 2010 paper also handed over a locally sourced value-for-money headache. In a speculative comparison between the six-schools PFI and a traditional procurement route, KCC showed a contribution required from DSG/KCC/Schools Funding Forum of £3.7 million under PFI, against roughly £2.4 million in its comparator. KCC was careful to say this was theoretical because supported borrowing was not actually available and PFI had been, in its phrase, “the only show in town”. That is an important caveat and it deserves to be treated honestly. But the comparison is still uncomfortable because it is KCC’s own paper suggesting the PFI route was costlier in that model.

There was also a nasty little truth hiding in the education politics. By September 2013, KCC’s Education Cabinet Committee was spelling out that academy conversion did not make the PFI bill vanish. The minutes say there were 11 schools rebuilt under PFI, that the cost did not change when a school converted to academy status, and that the affordability gap was paid not from council tax but from the Dedicated Schools Grant, the general schools pot. Worse still, flat DSG and more than 110 academy conversions had reduced the pot available for PFI charges and put more of a burden on maintained schools. The schools changed. The bill didn’t.

That is one of the most important lines in this whole story. It means the debt-like burden outlived the political packaging around the schools themselves. New names, new trusts, new governance structures, fresh logos on the letterhead: none of that tore up the contract. The PFI charge just kept lumbering on like an old boiler in the basement, noisily expensive and nobody quite sure where the instruction manual has gone.

And there are practical consequences. In later school place-planning discussions, KCC officers said they would never look at enlarging Craylands because it was a PFI school and the legal clauses would make enlargement unaffordable. That is what “inflexibility” looks like when it stops being a Whitehall seminar word and starts affecting decisions on the ground. PFI is often sold as a sophisticated transfer of risk. Residents usually experience it more as an elaborate way of finding out that the building can’t easily be altered because a long-forgotten contract says so.

There is another wrinkle in the modern paper trail, and it is a good one. KCC’s 2026/27 Investment Strategy says the council had £2.15 million of loan notes outstanding in Kent PFI Company 1 Ltd as at 31 March 2025, and shares in the same company carried at a fair value of £0.948 million. But that same document is internally untidy. One section describes Kent PFI Company 1 Ltd as the holding company to the contractor who runs six schools for KCC, while the note on the shares says Kent PFI Company 1 Ltd is the special purpose vehicle for the BSF schools PFI contract and that the value is expected to diminish over the remaining contract term. That is exactly the sort of inconsistency that deserves a polite but pointed question from journalists.

To be fair, not every Kent PFI looks equally damning. The adult social care and housing PFIs muddy the picture. Better Homes Active Lives was being progressed through Cabinet in 2004 and 2007, and the 2010 comparison paper said its capital cost was £64.3 million, with annual payments to the PFI contractor of about £5.3 million and PFI credit of about £5.4 million, leaving a net cost to KCC of £nil in that model. The same paper said a prudential borrowing route would have cost KCC far more annually. That does not make PFI beautiful. It does mean the housing deals are less black-and-white than the school PFIs.

Even so, the wider Kent burden is still hefty. Beyond the school PFIs, KCC’s 2024/25 accounts show £73.404 million of scheduled future payments on Better Homes Active Lives, £62.896 million on Excellent Homes for All and £51.203 million on Westview/Westbrook. Westview/Westbrook was already costing £3.4 million in 2008/09, with £3.2 million committed for 2009/10, and that contract was said then to run until April 2033. So even if one accepts that some of these schemes were more affordable than the alternatives available at the time, Kent is plainly still living with the long tail of them.

Now zoom out from Kent and look at what official Britain has said about PFI nationally. The Treasury’s own 2012 PFI reform paper said PFI had become “tarnished by its waste, inflexibility and lack of transparency”. In 2015 the NAO said private finance is more expensive than public finance, although it may be justified if the benefits outweigh the higher cost. In 2018 the NAO said there were more than 700 operational PFI and PF2 deals, with annual charges of £10.3 billion in 2016/17 and future charges of £199 billion even if no new deals were signed. That is not a fringe activist critique. That is the British state looking in the mirror and wincing.

Parliament then got blunter still. In 2018 the Public Accounts Committee said it was “unacceptable” that after more than 25 years the Treasury still had no data on benefits to show whether PFI provided value for money. In that same autumn Budget statement, the Chancellor told the Commons there was “compelling evidence” that PFI did not deliver value for the taxpayer or genuinely transfer risk, and he announced that new PFI and PF2 projects would be scrapped. Existing contracts, however, would continue. That last part is where Kent comes in. Whitehall moved on. Kent kept paying.

The warnings did not stop there. In 2020 the NAO said the public sector did not take a strategic or consistent approach to managing PFI contracts as they end and risked failing to secure value for money in expiry negotiations. In 2025 the PAC said public bodies still face £136 billion of unitary charges on 665 ongoing PFI contracts through to 2052/53, with half of those contracts expiring in the next decade, and warned that schools are among the areas where asset condition needs careful management. So the story is no longer just that PFI was expensive going in. It is also that unwinding it badly can be expensive on the way out.

Set against that official record, campaign coverage such as this older openDemocracy piece is best read as a sharper echo of criticisms already made elsewhere. Its language is more polemical than an NAO report and more willing to call the whole model a rip-off in plain terms. But the substance is harder to dismiss than the tone might suggest. The concerns it raises — opacity, commercial confidentiality, decades-long contracts and the public sector carrying the cost long after the political sales pitch has faded — overlap closely with what the Treasury, the NAO, the Public Accounts Committee and KCC’s own papers have all said in more measured language. If anything, that makes the official story more troubling, not less, because it arrives stripped of slogans and still lands in much the same place.

So is Kent’s PFI legacy value for money? The careful answer is that you cannot just compare the upfront capital cost with the long-run payment stream and declare the case closed, because the unitary charge bundles finance, maintenance, lifecycle replacement and services. The less careful, but still fair, answer is that the school PFIs now look very hard to defend as a clear win. Kent still has nearly £300 million left to pay on those three school contracts alone. KCC’s own papers said there were no break points, said getting out early would be painful, and said the six-schools PFI looked costlier than the comparator in its own model. That is not a flattering body of evidence.

The housing and adult-care PFIs deserve a more nuanced verdict. KCC’s own analysis suggested Better Homes Active Lives could be affordable, even cost-neutral to the authority in one model, because of the grant structure behind it. So this is not a sermon saying every PFI in Kent was equally bad, equally foolish or equally indefensible. It is something more awkward than that. It is a story about a financing model whose supposed sophistication made it easier to hide the true political trade-off: get the asset now, accept the long contract, and let somebody else worry about the next twenty years.

And here, finally, is the real Shepway Vox question. If the Treasury says the model became tarnished by waste and inflexibility, if Parliament says government still cannot prove it delivered value for money, if the Chancellor himself (at the time) said there was compelling evidence it did not genuinely transfer risk, and if KCC’s own papers say there were no break points and the contracts would be difficult and costly to escape, why are residents so often expected to treat these deals as if they were just one of those things? They were not one of those things. They were choices. Expensive ones. Long ones. And Kent is still paying for them.

The biggest joke in all this is that PFI was once sold as modern, disciplined and efficient. Two decades on, what it looks like from Kent is a financing model that promised sleek managerial certainty and delivered a series of bills that keep turning up long after the ministers who championed it have moved on to memoirs, peerages or after-dinner speaking. The buildings are real. Some of the benefits were real too. But so is the hangover. And the meter, as Kent’s accounts show, is still running.

The Shepway Vox Team

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