By Jon dean 17 November 2011
Residents will pay almost £1billion into the hands of big business and banks as a result of expensive contracts agreed by Islington Council.
Treasury figures obtained by the Gazette show £358million was borrowed from Private Finance Initiative (PFI) schemes, which will rocket to £1.3 billion – almost four times the initial outlay – by the time it is paid off in 2037.
This means £943million extra will be paid by Islington taxpayers, though this figure does include maintenance on the projects for the length of the contracts.
To put the debt in context, Camden owes £400million in PFI projects, Hackney £170million and Haringey £310million.
Ken Muller, of Islington Hands Off Our Public Services and the National Union of Teachers, said: “I am shocked – this is a monumental waste of money at a time when cuts are being made everywhere and it’s outrageous.
“It’s just another way in which fat cats are ripping off the British public. PFI was meant to improve public services, but has ended up mortgaging our future”. Islington council, under the Liberal Democrats, commissioned six PFI projects from 1998 to 2010, including street lighting, improving schools and housing.
Dr Brian Potter, chairman of the Islington Leaseholders Association, said when PFI was first proposed in Islington, residents voted 600 to one against it. He said: “It’s crazy. We had no choice and we are going to be paying for it for generations.”
£15 for street lighting
Final cost £56.9m
£23.4m for depot services
Final cost £228.3m
£77.6mil to refurbish Schools
Final cost £237.8mil
£242m for street properties
(Refurbishing 6,350 homes)
Final cost £778.3m
Cllr Terry Stacy, Lib Dem group leader, said: “Labour left us with decades of disrepair which we had no money to deal with. PFI was the only option on the table that the council could take.”
Cllr Richard Greening, Islington Council’s deputy leader and executive member for finance, said PFI had brought much needed investment to the borough.
He said: “While we may now prefer to rely on conventional public borrowing, these refurbishment works were long overdue and there have been significant benefits to our community.”
Chancellor George Osborne announced an overhaul of the PFI system on Tuesday.
Last year £63million of Islington taxpayers’ cash went to PFI repayments. Meanwhile, the council slashed £52 million off the budget for the same period to deal with a £100 million shortfall in funding from Government between 2011 and 2015.
PFI schemes see private funding given to a public body for a big project like a hospital.
A much higher sum is paid back over a number of years, but the private company takes on some management of the project.