We're spending how much on streetlights?

I was recently having a look at the council’s 3 monthly finance reports, which detail the day to day amounts that were being spent by them on various expenses. You can see the latest example at

http://www.sunderland.gov.uk/index.aspx?articleid=4774

   
I’d heard there was a Street lighting contract in place for Street lighting and signage, so I wanted to see how much it cost?

One line intrigued me:- Here it is in the Expenditure over £500 Q1 Apr to Jun 2013 (CSV) document (Excel), Line 2538, under the expenses of the Highways and Transport division. A company called Connect Roads Sunderland was being paid £472,435.54 on 5/4/2013. A further examination of the document showed that on line 2643, a payment of £472,435.54 on 3/5/2013 and on line 2750, 472615.54 were also paid to this company. Could this be right? About £450K/month  for street lighting – equipment/furniture/materials. It wasn’t for electricity, because that’s a separate item of about £200K (seasonally variable) on the document. 

 

Hang on! How much are they paying Connect every year?

 

CONNECT ROADS SUNDERLAND LTD	5121548549	04.07.2012	458,758.74
CONNECT ROADS SUNDERLAND LTD	5121560509	03.08.2012	458,837.92
CONNECT ROADS SUNDERLAND LTD	5121573352	13.09.2012	449,017.68
CONNECT ROADS SUNDERLAND LTD	5121580795	03.10.2012	472,088.08
CONNECT ROADS SUNDERLAND LTD	5121593372	05.11.2012	472,332.04
CONNECT ROADS SUNDERLAND LTD	5121605408	05.12.2012	472,332.04
CONNECT ROADS SUNDERLAND LTD	5121614166	04.01.2013	472,428.79
CONNECT ROADS SUNDERLAND LTD	5121626944	07.02.2013	472,428.79
CONNECT ROADS SUNDERLAND LTD	5121636470	06.03.2013	472,428.79
CONNECT ROADS SUNDERLAND LTD	5121648466	05.04.2013	472,435.54
CONNECT ROADS SUNDERLAND LTD	5121658625	03.05.2013	472,435.54
CONNECT ROADS SUNDERLAND LTD	5121669164	05.06.2013	472,615.54
Annual Total (July 2012 to June 2013)			5,618,139.49

 

The PFI started in 2003 and runs for 25 years according to the Sunderland Council website, so at about £5.6 million a year, that works out at approximately £140 million!!!

So who is this company? Here’s their website

http://www.connectroads.com/street_lighting.html?&tx_ttnews[tt_news]=17&tx_ttnews[backPid]=8&cHash=98328e0b3c

I quote:-

In August 2003 Connect Roads Sunderland was awarded the contract to design, finance, provide and maintain the street lighting and highway signs for 25 years. The existing workforce was transferred under TUPE regulations from the City of Sunderland Council.

The project comprises a 5 year Core Investment Programme and a 25 year Maintenance Programme.

 
The Core Investment Programme involves the replacement of 30,500 street lighting columns and 6,000 highway signs in accordance with the latest European standards.

 
The Term Maintenance Programme involves a planned maintenance approach, replacing lamps in street lights on expiry of a specific time period rather than at the point of lamp failure, thereby reducing the number of overall lights out at any point in time

• Addition of 3500 columns
• 13,600 highway signs, bollards and subway lights
• 45,000 streetlights
• Replacement of 70% of Sunderland's street lights (not ALL)

A company check found:-

The latest Annual Accounts submitted to Companies House for the year up to 31/12/2012 reported 'cash at bank' of £1,501,000, 'liabilities' worth £1,632,000, 'net worth' of £1,751,000 and 'assets' worth £2,666,000.

(and the ultimate parent company was Balfour Beatty Ltd).

However, if you go to the Sunderland Council website, the people you report street-light faults to are Aurora Streetlighting: Balfour Beatty. http://www.auroraltd.com/whose website states:-

Aurora is the appointed Asset Management Contractor for the Sunderland Street Lighting and Highway Signs PFI Project.

The project comprises of a five year Core Investment Programme and a twenty year Term Maintenance Programme.

 

Two companies, or an arrangement for tax?  Anyway, I found from a FOI enquiry that:-  the contract is with Connect Roads Sunderland Limited and therefore any payment due from the Council is payable to that entity. The delivery contractor is Aurora Sunderland Streetlighting Limited hence why they are providing the services.  

One query cleared up. However, why such a hefty cost? My FOI enquiry showed that:-

The principle of a Street Lighting PFI is that the Contractor obtains the finance to fund the initial investment programme, this funding is then repaid over the duration of the PFI, in effect a mortgage. The monthly payment covers this repayment as well as the ongoing planned and responsive maintenance works. Annual faults reported during the last full contract year was 14,481 (this is all PFI faults and represents faulty units, that is, an underground cable fault affecting 20 units is 20 faults) faults are from all sources which include from the public either through the Council or direct to Aurora, faults reported by the Council and faults picked up by Aurora as part of their night-time scouting.

So as well as maintenance, there was an initial investment by Connect, to replace street furniture etc. A document from Sunderland Council – the Street lighting Progress Report of 2/4/2012 says that:-

In the first five years of the contract Aurora invested over £30m in providing the city with nearly 31,000 lighting units and 4000 highway signs. Since the completion of this work, Aurora has focused their resources on the operation and maintenance aspects of the service as well as assessing the requirement, based on risk, for a future replacement programme.

So Connect spends £30 million, does maintenance on the brand new items for 25 years and gets paid £140 million. Sounds like a good return! There is a proviso that, “Whilst Aurora’s report highlights its performance against the contractual standards, there is more focus on innovation and the examination of more energy efficient technology which if adopted will assist in reducing the city’s carbon footprint and energy costs.”

Note:-  Maintenance consists of “visual inspections” and “ a rolling 4 year replacement cycle.” In other words, replacing all bulbs, even if they are still working. Some people might call that wasteful! This doesn’t even cover electrical faults:-  “an area of concern was the response to lighting faults caused by electrical supply failure which is the responsibility of Northern Powergrid (formerly NEDL).” (Street lighting Progress Report of 2/4/2012)

So in summary, Sunderland is paying £140 million for their street lights and signs in a fixed contract for 25 years. This contract was drawn up under the heady spend, spend, spend days of New Labour, and there is no possibility of getting out of it. No austerity there then! No consideration that in the years following, there may have to be financial savings made by the council. No chance of that with this contract! Not a single light bulb will be cheaper. Not a bulb will be left alone because it's working and doesn't need replacing.

I throw this final thought into the mix:-

Some streetlights weren’t replaced, such as those in Allendale Road, Farringdon, and these are now “crumbling.” The latest St Chad’s Labour Party newsletter proudly announces that our trusty Labour councillors claim they have finally obtained the go-ahead for their replacement! Who pays?

 Performance Standard 1- related to installations of new columns during the Core Investment Period (Applicable years 1 to 5 of the project).There is therefore no requirement to measure performance against this standard.  (Street lighting Progress Report of 2/4/2012)

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Here’s a copy of my FOI request.

Dear Sunderland City Council,

1. Could you please confirm that the holder of the PFI contract for street lighting and signage in Sunderland is Connect Roads Sunderland Limited, a member of the Balfour Beatty group of companies, as they claim on their website (see link below).

The company Aurora Sunderland Streetlighting Limited, another of the Balfour Beatty group, also claims to hold this contract on its website, and is referenced on the council website under street lighting information. Could you please therefore clarify which company is the legal holder of the PFI contract?

Response

The contracted supplier for the PFI Contract for Street Lighting and Signage is Connect

Roads Sunderland Limited. Aurora Sunderland Streetlighting Limited are their project delivery contractor.

2. On the council website, under the transparency section: Payments over £500, it appears that Connect Roads Sunderland is in receipt of large payments for street lighting services. For example in document “Expenditure over £500 Q1 Apr to Jun 2013 (CSV): Line 2538 (street lighting),” Connect Roads Sunderland Limited is in receipt of £ 472,435.54 for Equipment/furniture/materials.

In every month dating back to October 2010, which is the limit of the available public records, a sum of the order of approximately £450,000 is paid to this company. In the example document cited,
Aurora does not appear in the street lighting section. Am I therefore correct in assuming that this is the PFI payment? Why the use of two separate legal entities for fault repair and payment?

Response

As referred to under the response to question 1 the contract is with Connect Roads Sunderland Limited and therefore any payment due from the Council is payable to that entity. The delivery contractor is Aurora Sunderland Streetlighting Limited hence why they are providing the services.  

3. Since the replacement of the majority of the street lights in Sunderland occurred in the first 5 years of the contract which began in 2003, according to the Connect Roads Sunderland Limited website, what costs £450,000 a month? Is it just bulbs and the occasional replacement due to accident, or other failure? (I am led to believe that wiring is the responsibility of the electricity supplier, and power costs are a separate entry in the expenses document.) What is the failure rate of street lights in Sunderland? (The annual number of street light failures reported via the council website will be acceptable).

Response

The principle of a Street Lighting PFI is that the Contractor obtains the finance to fund the initial investment programme, this funding is then repaid over the duration ofthe PFI, in effect a mortgage. The monthly payment covers this repayment as well as the ongoing planned and responsive maintenance works. Annual faults reported during the last full contract year was 14,481 (this is all PFI faults and represents faulty units, that is, an underground cable fault affecting 20 units is 20 faults) faults are from all sources which include from the public either through the Council or direct to Aurora, faults reported by the Council and faults picked up by Aurora as part of their night-time scouting.

4. Has there been any Sunderland investigation into whether it is value for money to replace lamps in street lights on expiry of a specific time period rather than at the point of lamp failure? I don’t require a copy of this, but just to know whether it was considered at any point?

Response

All replacement options were considered as part of the business case for the PFI.

https://www.whatdotheyknow.com/request/pfi_contract_for_street_lighting2

 © Sunderland City Council. This procurement data is licensed under the Open Government Licence