PRESS RELEASE
13 December 2007
PN 08/07
Public Accounts Committee Report
Land Deals in the PFI Pathfinder Schools Projects
The NI Assembly Public Accounts Committee published its report on the Transfer of Surplus Land in the PFI Pathfinder Schools Projects at a press conference on Thursday on 13 th December at 10.00am in the Press Conference Suite, Parliament Buildings.
Committee Chairperson John O’Dowd said:
“This report details shortfalls in the recovery of potential receipts and highlights lessons which the whole of the public sector can learn from at a time when the public purse is under increasing pressure and it is imperative that the income generated from our surplus assets is maximised.
“The Committee recognised that since these were pathfinder projects, there was a need to pioneer and develop the contracts through complex negotiation with the private sector developers and that much needed new facilities, appropriate to the learning needs, were long overdue.
However, the Committee is concerned that, in the Wellington and Balmoral projects, the developer was more interested in securing the maximum amount of land for development, with all the negotiations being centered on the value of the land and what more could be squeezed from it.
“It found that the projects were under-resourced, that the Departmental team was too small, and did not seem to have had the skills to match the private sector negotiators, resulting in the heavy use of consultants.
“The Rosetta site was transferred to the developer without being measured, resulting in the developer gaining an extra half acre of prime land for residential development worth an estimated £400,000. The excuse given was that in the heat of discussions and negotiations such things are overlooked, demonstrates, in the Committee view, a lack of judgment bordering on negligence.
“It is clear to the Committee that the clawback arrangements put in place for the Tillie and Henderson sites were defective. The Department had valued the site at £750,000; two years later, it was transferred to a developer without any re-valuation and was then sold on within weeks, for £925,000, delivering a profit of 23% to the developer and a nil return to the Department.
“There were fundamental flaws in the Surplus Land Agreement and the transfer of land in the Wellington/Balmoral contract to a connected party enabled the developer to outflank the Belfast Board thereby removing any potential gains for the public sector that may have accrued from the ongoing development of the sites.
“The Committee is dismayed by the closure of Balmoral High School only six years after it opened in 2002. It is evident that the Department faces a major challenge in managing school provision in the context of reducing enrolments across Northern Ireland. However, it is vital that finding a solution to this problem remains high on the Department’s priorities and that the lessons from the Balmoral experience are learned”.
Notes to editors:
1. Between June 1999 and October 2000 five contracts were let for six Education PFI Pathfinder projects comprising four schools and two further and higher education colleges.
2. Four of the five contracts contained clauses dealing with the transfer of surplus assets from the public sector to PFI operators. The value agreed, through negotiation, for these surplus assets was over £23 million.
3. Wellington/Balmoral was the most significant of these contracts and formed the basis for most of the Committee’s evidence session.
4. The PAC Committee members are:-
Mr John O’Dowd, (SF) Chairperson
Mr Roy Beggs, (UUP) Deputy Chairperson
Mr Trevor Lunn ( Alliance)
Mr Jonathan Craig (DUP)
Mr Simon Hamilton (DUP)
Mr David Hilditch (DUP)
Ms Dawn Purvis (PUP)
Mr Mickey Brady (SF)
Mr Mitchel McLaughlin (SF)
Mr John Dallat (SDLP)
Mr Patsy McGlone (SDLP)
5. Standing Orders under Section 60(3) of the Northern Ireland Act 1998 have provided for the establishment of the Public Accounts Committee (the Committee). The main statutory function of the Committee is to consider accounts and the reports by the Comptroller and Auditor General for Northern Ireland (C&AG) laid before the Northern Ireland Assembly.
6. The C&AG is head of the Northern Ireland Audit Office (NIAO) and is empowered to investigate any area of expenditure and has a statutory right of access to all files and papers in Departments and public bodies.
Media enquiries to:
Kieran Dougan,
Information Office, Parliament Buildings, Belfast. BT4 3XX
Tel. 028 90521642 Mobile 07825146794
Email: kieran.dougan@niassembly.gov.uk
Website archive.niassembly.gov.uk