£100million Loss of Public Funds
08/01/2018 – Reported by CleanHighways:
How a £17 million by-pass will end up costing us £118 million
In 1996, Road Link (A69) Ltd – Road Link (A69) , signed a Private Finance Initiative contract with the DfT to maintain the A69 trunk road from Carlisle to Newcastle for 30 years. They receive “shadow tolls”* based on road traffic levels. In return they had to construct a by-pass at Haltwhistle costing £16.9 million. The company’s owner, Henry Boot plc, only invested £1.8 million. Road Link obtained the rest of the finance by borrowing £15.4 million from a bank.
They contract out all the heavy lifting and only employ 6 admin staff.
By 2000 they were able to pay their first dividend of £1.5 million. This was just the beginning. Total dividends of £69 million have been paid to date. Not bad for an investment of £1.8 million in a company with 6 staff and whose revenues are underwritten by the government.
The bank loan had been paid off by 2015. Of the shadow tolls of £11.1 million received in the last accounting period year of £5.5 million (49%) went straight out of the back door in dividends.
If this rate of payments continue for the remaining 9 years of the contract the cumulative dividends paid will climb be a staggering £118 million!
If the government had borrowed the money themselves on the same terms, and used the same construction and maintenance contractors, then the that £118 million would simply have been saved.
This means that a £17 million by-pass will end up having cost us £118 million!
*Shadow Toll – The traffic levels are measured. Instead of the drivers paying a real toll HE pay the operator the money e.g. £x per car