Private provider of schools is docked £115k by Scottish Borders Council

editorial image

Scottish Borders Council imposed financial penalties of £115,000 last year on the ad hoc private company which built and now services three secondary schools in the region.

Despite that sanction, the Scottish Borders Education Partnership SBEP) made an annual operating profit of £769,000.

The figures are revealed in the newly published 2016 financial report of the SBEP which is part of the giant Bilfinger Berger organisation.

SBEP delivered the schools in Earlston, Duns and Eyemouth in 2009 under a public private partnership (PPP) agreement with the council.

“Financial penalties are levied by the authority [SBC] in the event of performance standards not being achieved,” admits the SBEP report which reveals that the council levied deductions, for similar reasons, of £25,000 in 2015.

Since the three schools were opened, the partnership has racked up profits of over £6m.

Under the terms of the 30-year PPP agreement, the council paid SBEP an annual unitary charge of just over £6m last year, along with interest payments of £2.6m.

These payments will increase as the contract term progresses and, by 2039, the council will have paid SBEP total unitary charges of £219m and interest of £38m.

The SBEP report explains that interest on the finance debtor (SBC) is charged at 5.47% and that the principal activity of the company is the provision of operational and maintenance services, including “related financial arrangements” for the three Borders schools.

Despite the financial penalties, the report states: “The project continues to perform generally in line with expectations and management of the scheme, both logistically and financially, remains under control.”

The accounts statement also sets out the corporate structure of the SBEP – a wholly-owned subsidiary of Scottish Borders Education Partnership (Holdings) Ltd.

All the latter’s share capital is held by BBGI Investments SCA, which, in turn, is an indirect and wholly owned subsidiary of BBGI CAV SA, a Luxembourg investment company.