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‘End the PFI rip off’ with Partners for Improvement, urges MP Jeremy Corbyn

PUBLISHED: 17:09 21 November 2018 | UPDATED: 17:09 21 November 2018

Jacqueline Cuthbert in her bathroom, where the sink is broken and not attched to the wall, the bath panel is broken and damp, and she has no toilet seat. Picture: Polly Hancock

Jacqueline Cuthbert in her bathroom, where the sink is broken and not attched to the wall, the bath panel is broken and damp, and she has no toilet seat. Picture: Polly Hancock

Archant

Jeremy Corbyn has promised to “end the rip off” that saw Islington Council splash out £42,574,508 for two Public Finance Initiative (PFI) deals in the past financial year.

Labour leader Jeremy Corbyn walks through Downing Street ahead of the remembrance service at the Cenotaph memorial in Whitehall, central London, on the 100th anniversary of the signing of the Armistice which marked the end of the First World War.Labour leader Jeremy Corbyn walks through Downing Street ahead of the remembrance service at the Cenotaph memorial in Whitehall, central London, on the 100th anniversary of the signing of the Armistice which marked the end of the First World War.

The council has two concurrent contracts with Partners for Improvement in Islington, outsourcing 6,440 council homes for letting and management.

The Partners are a private sector consortium made up of Hyde Housing Association, Rydon Property Maintenance, United Living and Halifax Bank of Scotland.

PFI 1, which covers 2,340 homes in Mildmay, Islington and Highbury, was signed in 2003 and expires in 2033. It cost the council £11,287,7960 in “levy and fees” last year.

As reported in the Gazette last month, PFI 2 encompasses 4,100 homes across Islington and expires in four years’ time. This deal cost the borough £31,286,712 over the same period.

Labour leader and Islington North MP Jeremy Corbyn said: “People in Islington contact me regularly about their problems with Partners, which come from the poor contracts the previous Liberal Democrat administration made the grave mistake of signing.

“Unfortunately, until we have a Labour government committed to nationalising existing PFI schemes, the earliest we can terminate the first of these contracts without excessive cost is 2022.

“I fully support the council’s plans to consult residents on all available options when the first contract reaches its break point, but it is very clear that these contracts are not popular and do not provide value for money.

“Labour will end the PFI rip off and bring services back under public control nationally and in Islington.

“Our services must be run for public good, not private profit.”

The Gazette understands it would cost hundreds of millions to end the contracts early – and the legal wrangling could outlast either deal.

According to council stats, the combined cost of both PFIs in “levy and fees” was £43,156,964 in 2016 to 2017. The year before, it was £40,997,305.

The borough’s housing boss Cllr Diarmaid Ward said: “We have looked in to it [the early termination of the PFI contracts] many times over the years.

“But it would be really prohibitively expensive to end the contacts early. It would cost millions and millions and it would not be a good deal for the residents of Islington.

“Given that one contract is ending in 2022, we’d rather start making preparations now.”

The Gazette approached Partners chief exec Tom Irvine for comment but he declined, telling us to speak to the press office.

This paper then asked what it would take for Partners to allow the PFI deals to be terminated early, twice.

But Partners didn’t respond to this line of questioning.

A group spokesperson said: “Partners remains committed to the continued successful delivery and completion of our contracts, maintaining homes to agreed standards and delivering services at or above target performance.

“This includes resident satisfaction with repairs, currently at 97 per cent. We regularly review performance with Islington Council and continue to value and learn from residents’ feedback.”

PFI deals are a means of raising cash for capital investments, where a private company or companies front the costs.

These deals, which were particularly popular during the Blair-Brown years, enable big projects to get started quickly without immediately draining public coffers.

But in the long run PFI deals often cost local authorities and central government far more – think Carillion and Capita – than an upfront payment.

Islington has forked out £126,728,777 in payments in the past three years.

But central government does dish out “PFI credits” to help local authorities cover the cost.

The Gazette understands the government covers roughly half of Islington’s contractual costs, meaning the general tax pot has been raided for tens of millions of pounds over the past three years to subsidise Islington’s deal with Partners.

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