Council plans to save £40 million through PFI changes

The Isle of Wight Council plans to save £40 million through changes to its contract with Island Roads.

The move could achieve a potential saving of £2 million a year for the council for the remaining two decades of the 25-year deal.

While the local authority recognises the current arrangements have delivered significant improvements to the Island’s highways infrastructure, it believes the savings can be achieved.

Next week, Cabinet members will consider the interim appointment of Jasmine Consulting UK, which has detailed knowledge of the contract through its director and former council employee Jay Jayasundara, to start work on the savings programme.

It follows preliminary investigations carried out by the company earlier this year.

Council chief executive, John Metcalfe, said: “Although the arrangement with Island Roads has delivered great progress to date, it’s right and proper we look at our big contracts, given they are long-term commitments.

“Jay Jayasundara is an expert in this field and with this contract, which he was instrumental in setting up in 2013.

“His work earlier this year was important in identifying possible savings, which would help the council’s finances moving forward.

“Our need to save another £16.5 million over the next three years is well documented and must be achieved.

“It has to be right that we do everything we can to find savings on contracts like these.

“The council has decided this is the best way of kick-starting it, as we move forward with the aim of achieving best value for money.

“We’re also keen to ensure our successful partnership with Island Roads continues because it’s clear to everyone how much our road network has improved.

“We’re confident this work can achieve both of those objectives.”

The existing contract attracted unprecedented government investment into the Island’s infrastructure and has already yielded savings of around £5 million since 2013, compared to previous spending on highways.

The interim arrangements to achieve further savings will cost £70,000 and will be in place while the council conducts an open procurement process for support to deliver the longer-term programme, costing up to £200,000.

The Cabinet meets at County Hall, Newport, at 5pm on Thursday 12 July.