LEEDS: LIVE IT, LEASE IT

Ever thought it would be a good idea to have a doctors' surgery owned by a bank? Or a school run by a construction company? It's all happening in the wonderful world of the private finance initiative (PFI). By Claire Fauset

Leeds, the city that paid a PR firm £150,000 for their 'Live it Love it' slogan only to find out Hong Kong had been using the phrase for two years already, is now the hotbed for corporate outsourcing[1]. According to one local councillor Leeds is the 'PFI capital of Europe'[2]. The city has a whopping £804 million of PPP/PFI projects in progress, more than anywhere in the UK[3]. Research suggests that in Leeds local region, Yorkshire and Humber, there are currently 75 PFI projects, worth more than £4bn[4]. This is despite what the council itself admits is a shortage of staff trained to effectively manage these type of projects[5]. Leeds' PFI explosion, touching every area of council activity from housing, education and health to street lights and leisure centres, is driven by its pro-privatisation Conservative/Liberal Democrat led city council executive, who are rubbing their hands at the thought of more PFI credits from central government.

So who are the beneficiaries of this massive cash injection? The patients? The schoolchildren? The council house tenants? The local squash and badminton club? Or, more cynically, the law and accountancy firms? As Yorkshire business journalist Jim Simpson suggests, 'the structure required might almost have been devised as a job creation plan for lawyers and accountants.'[6] PFI contracts are predicted to bring in fees of £10 million for Leeds law firms this year alone. Lawyers DLA Piper have five partners specialising in PFI, each acting for projects totalling more than £1bn. The rest of the big six Leeds law firms are expected to have similar portfolios. DLA Piper have a contract with Leeds City Council to provide legal advice for all their PFI contracts[7].

PFI is also a major boon for the construction industry in the city. Leeds based construction company, Bluewater, has predicted a major rise in their sector, particularly in healthcare, education and leisure: 'Overall, we are expecting 2006 to be a good year for construction in the North East'[8]. With many of the contracts running to 25 or 30 years, including operating and maintenance, companies such as Mowlem[9], Carillion[10], Bovis Lend Lease[11], and Wates Construction[12] are cashing in.

However, for taxpayers the deal doesn't look so great. The supposedly state-of-the-art schools constructed by Mowlem as part of the £35 million Leeds 7 Schools Project[13] were built without kitchens[14]. 'Nutritious', pre-cooked, frozen food is therefore shipped in each day from Mowlem's catering facilities at a hospital near Middlesbrough[15]. Mowlem has a contract to run six schools for at least seven years of the 25 year contract, with the 'majority of non teaching issues handled professionally by Mowlem'[16].

With at least 20 schools in the city now run under various PFI contracts[17] - the largest PFI programme of any authority in the country[18] - facilities management of schools might soon be totally privately run, with non teaching staff having their employment transferred to the contractor[19]. This is not particularly surprising since the management of education in the city has been contracted out to a council-owned not-for-profit organisation, Education Leeds, which is run by Capita[20].

In healthcare, the new £220 million cancer treatment centre is being built by the Catalyst Healthcare consortium on a 30 year contract[21]. Catalyst’s work on the Calderdale Royal Hospital was dogged with controversy over building work and high costs. Leeds is also one of the first cities to pioneer the new Local Improvement Finance Trusts (LIFTs) which will be the major vehicle for investment in GP surgeries in Leeds for the next 25 years[22]. Through LIFT 'super-surgeries' are being built to house a range of healthcare providers such as GPs, therapists and social workers under one roof[23]. Three of these centres have already been constructed in Leeds with more in the pipeline[24]. The corporate partners in the Leeds LIFT company are Miller Construction and Barclays Capital. Yorkshire Forward, the regional regeneration agency, sees major benefits for business in new investment in the NHS: 'The NHS is set to spend £5.5bn in this region alone and it’s important we take advantage of that extra spend.'[25]

In housing, there has been a major campaign against 'comprehensive regeneration' in the Little London area, with one third of the estate signing petitions against the £90 million PFI contract. The scheme will mean a net loss of 312 council homes and force hundreds of residents to leave the neighbourhood[26]. Similar projects are set to go ahead in the Seacroft, Beeston and Holbeck areas[27], and work has already begun in the Swarcliffe area, where tenants are up in arms about the poor quality of the repair work done by the contractor[28].

It’s not all bad, though. In Swarcliffe, Mole M, Mowlem's cuddly six foot mascot, treated school children to lessons in road safety and not playing on building sites.[29] Cute.

References
[1] BBC website, 'Row over second hand city slogan' October 2005,  http://news.bbc.co.uk/1/hi/england/west_yorkshire/4319162.stm
[2] Pers comm with an anti privatisation campaigner.
[3] Leeds Liberal Democrat Council Group press release,'£804 million Leeds investment continues apace despite national skills shortages'19th Apr 2006,  http://leedslibdems.org.uk/news/342.html?PHPSESSID=801ceb21
[4] Jim Simpson, 'A Feast for All', Yorkshire Business Insider, Mar 06: www.newsco.com/productsandservices/archive/ybi/2006-03/afeastforall
[5] See note 3
[6] See note 4
[7] DLA Council's PFI Choice', 07 April 2003, Yorkshire Post, www.yorkshiretoday.co.uk/ViewArticle2.aspx?SectionID=56&ArticleID=382723
[8] 'Building company is predicting a big rise', 23 May 2006, Yorkshire Evening Post, www.leedstoday.net/ViewArticle2.aspx?SectionID=40&ArticleID=1519506
[9] Mowlem have won contracts to build PFI schools: See Mowlem website, 'Leeds 7 Schools PFI Project', www.mowlemaqumen.com/case_studies/cs_leeds_schools.htm
[10] Carillion are the construction and design partner in the Inverstment in the Community consortium which won the Leeds Combined Schools PFI Project: See Investors In the Community website, 'Leeds Combined Schools PFI Project, Leeds' www.millgroup.co.uk/index.php?id=133
[11] Bovis Lend Lease are the construction partner in Catalyst Healthcare, which won the Cancer Treatment Centre contract: See Leed NHS Trust website: "Cancer centre deal completed: 'Holy Grail' £220million PFI scheme signed off by treasury", www.leedsth.nhs.uk/news/newsitem.php?newsID=123
[12] Wates Construction are part of the QED consortium which won a contract to build 10 PFI primary schools: See HBS website, 'New schools deal for Leeds', May 2004: www.hbs.uk.com/hbs/content/Pr_leeds_may2004_p1.asp
[13] See note 9
[14] Emma Dunlop, 'School meals to make 100-mile trip', Yorkshire Post, 03 August 2005 www.yorkshiretoday.co.uk/ViewArticle2.aspx?SectionID=1084&ArticleID=1103199, see also note 8
[15] See note 9
[16] See note 9
[17] See notes 9, 10 and 12
[18] Education Leeds Strategic Plan 2004-7, p17. Available at: www.educationleeds.co.uk/listfiles.aspx?section=17&type=31
[19] 40 school staff have transferred to HBS, the facilities management (FM) member of the QED consortium (see note 11). With all of these PFI contracts containing an element of facilities management it is likely that similar has happened with other schools.
[20] Education Leeds, 'Our Organisation', www.educationleeds.co.uk/DisplayText.aspx?section=17&pageno=195
[21] Mike Waites, 'Building to start on cancer centre', 20 October 2004, Yorkshire Evening Post, www.yorkshiretoday.co.uk/ViewArticle2.aspx?SectionID=55&ArticleID=873583
[22] Miller Group website, 'Another Successful close for Primaria', th October 2004, www.miller.co.uk/news_article.asp?ID=501&division=homes
[23] Claire Greenshields, 'Wealth of Health', Yorkshire Business Insider, Nov 05,: www.northwestplc.com/archive/ybi/2005-11/wealth
[24] See note 22
[25] See note 23
[26] Save Little London site, 'About the Campaign': www.savelittlelondon.org.uk/
[27] Swarcliffe: Robert Sutcliffe, '£100m homes scheme begins', Yorkshire Evening Post, 21 March 2005, www.yorkshiretoday.co.uk/ViewArticle2.aspx?SectionID=1084&ArticleID=977114, Beeston and Holbeck: Joanne Ginley, '£90m plan to tackle deprivation wins go-ahead', Yorkshire Evening Post, 25 April 2006, www.yorkshiretoday.co.uk/ViewArticle2.aspx?SectionID=1084&ArticleID=1462303
[28] Per comm local campaigner 24/5/06
[29] Swarcliffe Public Private Partnerships Scheme website, 'Mole M visit to local schools', 5 April 2006,  http://www.swarcliffeppfi.co.uk/latest_news.php?newsitem=11
&PHPSESSID=97dc45291138e083fc2d43a6377a6f6f