County council is drowning in £1.35 billion sea of private company debt, claims Northants anti-cuts group

The Save Northants Services group say the council is paying the price for funding schemes through Private Finance Initiatives.
The Save Northants Services group say the council is paying the price for funding schemes through Private Finance Initiatives.

Northamptonshire County Council is being forced to make massive cuts because of a £1.35 billion private finance hole of its own making, a campaign group has claimed during a public meeting today.

Save Northants Services, which intends to hold two public protests in the coming weeks, launched its campaign against the £82.9 million round of cuts being proposed by the county council in 2016/17 as the group believes the savings can be made elsewhere.

Leading a meeting at the Dostiyo headquarters in Dunster Street, The Mounts, yesterday, campaign founder Paul Crofts, said the authority was having to take the axe to a range of services because of years of “neglect” and “mismanagement”.

He said: “There has not been an increase in council tax for 10 years, this is trumped up by the current administration as a success story - but, in fact, it amounts to a neglect of duty to the people of Northamptonshire.

“You cannot freeze council tax for 10 years and claim it is not going to have an effect on services.”

Mr Crofts, a seasoned campaigner with a number of anti-austerity movements, said the council also found itself in financial trouble because of years of hiring agency staff, some of whom earn double their directly employed counterparts,

In total, the council has cut £224 million since 2010 and plans to save a further £148 million between now and 2020 through outsourcing its services to four mutual organisations.

In 2016/17 the authority is proposing to axe the Nourish school meals service, close two care homes and trim £27 million from adult social care.

But speaking at the meeting Save Northants Services campaigner Dave Green, a former engineer, added that the council is in this predicament because of a £1.5 billion Private Finance Initiative debt black hole.

PFIs allow councils to finance major schemes such as building schools, care homes and replacing street lights more quickly by entering into deals with private companies to front some of the initial costs.

But often they result in paying back much higher rates of interest and was described by a 2011 select committee as an “extremely inefficient way of financing projects”.

The council is currently paying back five PFI contracts over lengthy terms, the largest of which being the £900 million Northampton Town Schools PFI.

The capital costs totalled about £230 million for the building of 41 schools, but the council will end up paying back £918 million over 30 years.

“PFI spending has been shown to be a rip-off, and in some cases contracts cost 70 per cent more than they should,” Mr Green said.

In 2014, Northumbria Healthcare Foundation borrowed £114 million from its local council to pay off private contractors who built and ran Hexham General Hospital. The move saved the trust £3.5 million each year for the next 18 years.

Mr Green says Northamptonshire should do the same - and claims the council is spending £600 million more for those five contracts than it would have had it borrowed the money through the Public Works Loans Board.

“Their lawyers should be doing everything they can to re-negotiate these contracts,” he said.

Save Northants Services will be holding demonstrations before the council’s cabinet meeting on February 18 and the full council meeting on February 29.

A Northamptonshire County Council spokesman said there were clear cases for using PFI to fund schemes, one of which is the £217 million contract with Balfour Beattie to replace county street lights.

The spokesman said: “Our current financial challenge has arisen due to an unprecedented surge in demand for public services due to Northamptonshire’s growing population, coupled with a reduction in funding from central government.

“These PFI schemes, several of them long-standing, were supported by strong business cases and enabled us to deliver projects such as new schools and adult care services that would not otherwise have been possible.

“Our street lighting PFI will, in fact, save Northamptonshire money as the new lighting is more modern and energy-efficient, therefore resulting in savings in energy and maintenance costs.”