Wrexham Council Audit
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PFI
“A PFI contract is an agreement to receive a service, where the responsibility for making available the property, plant and equipment needed to provide the service passes to the PFI contractor. As the Council is deemed to control the service that is provided under its PFI scheme and as ownership of the property, plant and equipment will pass to the Council at the end of the contract for no additional charge, the Council carries the assets used under the contract on the Balance Sheet as part of Property, Plant & Equipment.The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. For the Council’s Waste Management scheme, which became operational during September 2009, the liability was written down by an initial capital contribution of £16.9m.
Non current assets recognised on the Balance Sheet are revalued and depreciated in the same way as property, plant and equipment owned by the Council.
The amount payable to the PFI operator each year is analysed into five elements:
fair value of the services received during the year – debited to the relevant service in the CI&ES
finance cost – an interest charge of 15.3% on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the CI&ES “
If I have understood those paragraphs correctly it looks like the interest rate payable on PFI projects is 15.3%!
If those figures were replicated to borrow £12,000,000 to build a replacement swimming baths, the interest charges would be in excess of £1,800,000 per year. Let’s hope Councillors ask for the total costings of a new build before they decide to demolish Waterworld.
This paragraph from the Wrexham.com article suggests such interest is subject to RPI inflation too. So 1% increase in RPI equals to over a £1,000,000 extra expenditure per year.
” Private Finance Initiative also known as public–private partnerships costs are mentioned with an RPI link, noted as “A 1% increase in the RPI will increase the unitary payments over the next twenty one years by £24.6m.”
Perhaps someone will verify if this is correct .
Since when is the Council a mortgage lender — over £100k loan to the Ramada – interest free for 5 years!! Loan over 20 years pge 27
@99DylanJones 13693 wrote:
Since when is the Council a mortgage lender — over £100k loan to the Ramada – interest free for 5 years!! Loan over 20 years pge 27
“The loan to Commercial Body was to part-fund the development of a hotel on the Wrexham Technology Park, and was advanced in
December 2005, at a fixed rate of interest. It is repayable over 20 years, with the first repayment in December 2006. The repayments during
the first five years are interest only, with the principal, together with the remaining interest, being repaid over the subsequent fifteen years“The pension issue stands out as well with the Council Fund having a deficit of £186 million – page 36 with an agreement in place for the next 20 years to pay full value contributions. With a lower number of employees the percentage required to pay will be more than the 24% per employee declared in an FOI last year
Doesn’t actually say that does it? Selective editing never gives the true picture.
Some years ago, when the economy was more buoyant, the Council was a significant player in the mortgage market and I guess that many people still own their own homes because of it.Private household support is one thing — I know of small businesses in Wrexham however in a variety of trades who have asked the Council for financial loans and have been told ‘we’ cant do these kind of transactions. My point is if they can do it for one then why has that service never been promoted for all.
It may also explain why all Council staff certainly used to (not sure if it is the same now) get discount for meals etc in the Ramada. Also explains why the Council take Council Members there for training sessions rather than using some of their own facilities..
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