Building projects funded by the private finance initiative look set to cost North Yorkshire Fire and Rescue Service almost £5 million more than originally expected.

The fire service, which is preparing to shed four Harrogate firefighters to save £210,000 a year as part of wider cost-cutting, signed a 25-year 'buy now, pay later' PFI deal with asset managers Semperian in 2001.

It will soon be paying more than the sum it will save from axing firefighters in Harrogate purely to service the extra inflation costs on its PFI repayment costs. The contract price increases each year in-line with the retail price index, which has soared over the last 12 months.

The fire service's 25-year deal with Semperian, which runs from 2022 to 2027, funded a fire station at Huntington, near York, and a fire station and training school at Easingwold.

The contract was initially estimated to cost £27.16 million to repay by 2027. But it is now expected to cost £31.8 million — £4.64 million more than the original figure.

A spokesperson for the Office of the North Yorkshire Police, Fire and Crime Commissioner said the figure had risen due to the high level of inflation.

Total payments remaining to be made to Semperian from April 1, 2024 are estimated to be £5.8 million.

However, the fire service is having to budget an extra £195,000 in 2024/25, £240,000 in 2025/26 and £300,000 in 2026/27 just to cover the rising costs of inflation.

PFI controversy

PFI deals have proved controversial because of the way they saddle organisations with long-term loans to repay.

Conservative Chancellor Norman Lamont first implemented PFI in 1992 and it was later widely used by the Labour government between 1997 and 2010 to fund building programmes.

Semperian, which is a major funder of PFI deals, agreed to design, build, finance and operate the fire stations and training centre on behalf of North Yorkshire Fire and Rescue Service.

During the contract period Semperian and its contractors are responsible for maintaining the training centre and providing services such as cleaning,  grounds maintenance and pest control. Fees are deductible if minimum standards are not met.

The two parties could agree to extend the contract or the fire service can purchase the land and buildings at a nominal cost of £10 in 2027.

The latest PFI inflation figures are contained in a report by Conservative Zoe Metcalfe, the North Yorkshire Police, Fire and Crime Commissioner to the police, fire and crime panel that scrutinises her performance. The pressure on fire service funding was discussed at the panel meeting.

Ms Metcalfe's office provided further details on the figures after the meeting but has declined to comment further. The PFI deal was signed 20 years before she became commissioner.

The fire service is having to dip into its reserves to avoid the need for further cuts to frontline services. However, the axing of Harrogate firefighters, first revealed by the Stray Ferret in 2022, is still due to go ahead despite union opposition.

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