Payment will be due

Seán Flynn, in The Irish Times, picks up on the Value for Money Report on Grouped Schools project (full report) from the Office of the Comptroller and Auditor General, published 28th september 2004, focusing on the real cost of Grouped Schools Pilot Partnership Project (summary) for the Department of Education and Science. Rather than the predicted savings to the public of 6% from the Public Private Partnership contract, the C&AG’s Office predict costs to run 8-13% above the cost of state funded and built projects.As the Irish Times reports – “[The Irish Comptroller and Auditor General] is critical of many aspects of the Department [of Education and Science]’s management in his findings, which include:
The Department did not at any stage set a budget or spending limit for the project. This meant that, at the time it went to the market seeking proposals, the Department had no reliable benchmark against which to judge the affordability of what the bidders were offering.

Before the deal with Jarvis was finalised, the Department estimated that it would result in a cost saving to the State of around 6 per cent when compared to the traditional approach. Our analysis found shortcomings in the Department’s estimation. It is likely that the final deal with Jarvis could be between 8 per cent and 13 per cent more expensive than conventional procurement and operation.”

The Minister for Education and Science, Mr Dempsey, defended the Irish Government’s position, pointing out that “the five schools in the first PPP were built within 3½ years, compared to up to five years for traditional construction.”

Other are not so convinced – “Responding to the report, Mr Jim Dorney, general secretary of the Teachers’ Union of Ireland, said the miscalculation by the Department of the cost to the State was worrying.
‘Like all the major education partners, we believe it vital that not a cent of Exchequer funding for education is wasted, especially when the latest OECD report showed that we spend a lower percentage of GDP on education than all our EU neighbours.'”

The private company involved in the contracts under scrutiny in the Irish Republic, Jarvis Ltd, is also a preferred bidder and holder of many PFI contracts here in the north. Jarvis Ltd seem to be increasingly aware of their own bad press and appear under different monikers in PFI contracts, a policy that they argue is standard industry practice.

Worth noting in all this is the last NI Audit Office report for 2002-2003 released in June this year. The press release in June that accompanies the full report (pdf format) highlights both the predicted level of payments from existing signed contracts here and the ongoing battle to increase transparency in relation to PFI.

“The report records that estimated payments on signed PFI contracts in Northern Ireland over the period 2002-03 to 2027-28 will be in the region of £666 million and that this figure is likely to increase as Northern Ireland’s £2 billion strategic investment programme rolls out.

However, despite a call from the Assembly’s Finance and Personnel Committee in 2001 for the long-term spending implications of PFI to be made visible, and being a requirement of Department of Finance and Personnel guidance from 2000, the Audit Office found that no report on financial commitments had ever been made to the Assembly.

The Audit Office report highlights the action being taken by Treasury to increase transparency in relation to PFI in England and encourages the adoption of a similar approach in Northern Ireland.”

Whether that transparency will be helped or hindered by the creation in April 2003 of the Public Private Investment Unit, within the Office of First Minister and Deputy First Minister, and how the reported proposals from the DUP to decouple the First Minister and Deputy First Minister may affect that PPI Unit, remains to be seen.