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Council PFI partner in crisis |
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Cr Cable points out that Jarvis has been unable to maintain payments to its bankers and the share price has collapsed. The Jarvis contract has involved building new schools - St James', St Mary's and Trafalgar Infants in Twickenham; refurbishing existing schools - St Mary's and Trafalgar; and maintenance contracts. There is a celebration of the new buildings with a visit by Princess Alexandra to the new St Mary's on Thursday 8 July. Dr Cable has written to the council's Chief Executive and to Education Secretary, Rt Hon Charles Clarke, to ask for clarification as to what is the status of the borough schools' contract if Jarvis goes under, as seems likely. He added: "The PFI contract has so far been satisfactory. New schools have been delivered on time and within budget. I have visited each of the new buildings and they are impressive. But a massive new uncertainty has been created. Jarvis were supposed to maintain these schools as well as finish refurbishment of the old school buildings. We could be left in limbo. "There are precedents for PFI companies going broke. This happened with Laings and the new National Physical Laboratory in Teddington. New contracts led to completion but there was a major hiatus. "Parents and teachers need urgent clarification from the council that there will be no disruption or crisis with the schools if the company is unable to continue." A Richmond Council spokesman said on Tuesday 6 July: "The Council and its consultants are monitoring the situation closely and are working with Jarvis and the banks to ensure that the Richmond contract continues to be delivered without interruption. "This is a very large contract which covers both significant building works to schools and the subsequent long-term supply of services such as catering and facilities management. Six of the seven major building contracts have already been completed and have generally been of a high standard. The one remaining building project is Trafalgar Elmsleigh and we currently still expect this to be opening after the summer holidays. "The contract provides significant financial incentives for the contractor and/or its funding banks to ensure that the contract is completed on time and that the ongoing services are maintained. This would remain the case if Jarvis were not to survive their current crisis and this position is reflected in most of the coverage in the national financial press. "The Council is reviewing its contingency plans and all its rights under the contract but remain focussed on ensuring that there is no disruption to children's education. A briefing note has been sent to all relevant schools and we will be seeking to ensure they are kept informed throughout this period. "We are seeking high-level meetings with both Jarvis and the funding banks to obtain further assurances. "The Council has also received several enquiries confusing this contract with a separate PFI deal in relation to care homes. We wish to make clear that the care home contract is with a completely separate company - Care UK Community Partnerships Ltd - and therefore in no way connected." Jarvis plc was said to be struggling to survive after being fined for breaches of health and safety law over a train derailment and as its shares plummeted. The latest financial position - before the news about Jarvis had broken - is given in the newly published council's statement of accounts. Details of the PFI with Jarvis plc, from Richmond Council press release, February 2002 See also news story and background articles on the BBC website: Jarvis "struggling for survival" July 5, 2004
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The
borough's Private Finance Initiative (PFI) deal with Jarvis to build
and maintain primary schools is subject to major uncertainty after
this weekend's revelations that Jarvis is in serious financial difficulty
and could face bankruptcy, states MP Vincent Cable.
