Thursday, 18 January 2018

PFI and Devon

It should not be forgotten that the reason why one of the community hospitals in Devon was 'saved' last year was because it is a PFI project:
PFI contract for Tiverton Community Hospital-FOI-16-004 « Northern Devon Healthcare NHS Trust NDHT

 - and so could not be touched:
Futures Forum: The future of Devon's hospitals: Tiverton cannot be closed because it is run as a Private Finance Hospital - "but the local NHS trust will not own a single brick"

Meanwhile, other lucrative contracts have been put together for public services in Devon:
Six firms shortlisted for South West Devon PFI - letsrecycle.com
Exeter PFI Schools - Sheila Oliver's Campaigning Website
Private finance initiative (PFI) schools facilities management | Access to Information - Devon County Council

Here in Devon there will be fallout from the collapse of the facilities management and construction services company Carillion over its PFI contracts:

How the Carillion collapse will affect Devon - including jobs, Exeter Prison and broadband

Devon councillor Rob Hannaford said that 200 jobs could be affected by the collapse of the construction and maintenance giant

Hannah Finch

15 JAN 2018

A spokesman for Devon County Council, said: “We are confident that Devon has minimal exposure to Carillion’s collapse.“The company is currently a named joint venture partner delivering some civil engineering elements of the full-fibre Gigaclear broadband network roll-out for the Connecting Devon and Somerset partnership. We have been assured that Gigaclear has a range of options available to it to deal with any change in circumstances affecting its contractors. Gigaclear is working to ensure that the publicly-funded broadband network is delivered on time and on budget.”

Cllr Rob Hannaford, Leader of the County Council Labour Group said that he understands that the corporate folding could affect around two hundred staff in Devon. He said: "That’s an important economic consideration. I will be putting down some formal report requests to make sure that we are kept up to date locally with this fast changing situation and also its impact on some of our key partners such as NHS, Prison Service, and the Armed Forces.

"Yet again this situation really challenges the wisdom and propriety of out sourcing vital public services to private companies , often with worse pay and condition and poorer pensions, rather than keeping them in house. Indeed I really do hope that this will trigger a full national debate on reconfiguring how the public sector is generally set up and run in favour of more progressive options.”

Carillion Civil Engineering has a base in Exeter and runs projects involving roads, railways, airports and telecommunications. CarillionAmey provides infrastructure and housing services to the armed forces and has a contract for military bases in the South West.

Carillion was previously involved with the Exeter PFI schools contract but has not been for some years after the maintenance contract was awarded to Sodexo in 2015.

Subcontractors are likely to be the hidden victims in the collapse of construction giant Carillion, insolvency practitioner David Kirk predicts. The affect could be felt far wider through the supply chain and the companies hired by Carillion to carry out its public sector or public/private partnership contracts, including providing school dinners, cleaning and catering at NHS hospitals and prison maintenance.

Mr Kirk, of Exeter-based Kirks Insolvency, said: “This is a very complex case and the largest company in recent years to go into liquidation. The last one was around eight years ago with the loss of Rok. The losses are likely to be far higher than initially anticipated because Carillion uses a lot of subcontractors who may not ever get paid. Even if, say 20% can be recovered by creditors, it can be months if not a year plus before the creditors see that money. The knock on effect can mean lots of contractors who worked for Carillion, with no special rights like employees, not receiving any money at all or very little which could well put them into financial difficulty.”

How the Carillion collapse will affect Devon - including jobs, Exeter Prison and broadband - Devon Live

The EDW blog points to a murky link with another lucrative project:
“Disgraced Carillion chief now director of firm in charge of inspections at Hinkley Point C nuclear power station” | East Devon Watch

For some time now, the national press has been questioning the dubious finances of this  project - which is not a PFI project but is nevertheless proving even more attractive for those involved:

EDF's Hinkley Point returns 'substantially higher' than other projects

Think tank chaired by former energy minister finds investors could earn a return of up to 21pc over the lifetime of the project

The European Commission is investigating whether Britain's support for nuclear complies with European Union state aid rules Photo: Getty Images

18 Mar 2014

Returns for French utility EDF and other investors in Britain's first new nuclear plant in two decades, supported by the Government, are much higher than for other projects, according to a report by a cross-party think-tank.

EDF plans to start operating the first new nuclear reactor at the Hinkley Point C site in southern England in 2023. The Government will guarantee a loan to finance the project as well as a fixed minimum price for the electricity it generates for 35 years.

The investors could earn a return of up to 21pc over the lifetime of the project, Carbon Connect analysts said in a report, which was chaired by former Conservative energy minister Charles Hendry.

"Expected equity returns on Hinkley Point C are around 19pc to 21pc, substantially higher than expected equity returns on Private Finance Initiative (PFI) projects and regulated electricity network assets," the report stated.

By comparison, returns are typically 12pc to 15pc for PFI projects and 8pc to 10pc on regulated networks, it said.

EDF's Hinkley Point returns 'substantially higher' than other projects - Telegraph

And finally, more recently in the Times:

This type of deal always results in the private sector companies taking any profit and the taxpayer covering any downsides ... they're consciously structured that way....Hinkley point C is another white elephant in the same way as all of the PFI schools and hospitals have been. Spot on.

No comments: