MILESTONES not met by Island Roads in regards to the Highways PFI contract had meant the Isle of Wight Council had exceeded its debt limit — by £13.6 million.

At a recent meeting of the council's audit committee, it was announced that due to the 'complexity of accounting' and the failure to meet set milestone deadlines, the authorised limits for the amount of PFI and finance lease debts had been exceed by £13.6m between April and September.

The council have said that because the PFI contractor, Island Roads, had not achieved its agreed milestones, capital payments 'have been substantially delayed' — witholding payments from the company.

Speaking at the meeting, Dave Evans, the council’s strategic manager for highways and transport, said the council agreed to extend some milestone completion dates to ensure standards were met.

He said: "The milestones are substantially complete we just have not had the appropriate people dotting the I's and crossing the T's to make sure we can actually pay those milestones."

Cllr Stuart Hutchinson, cabinet member for finance and resources said they did not anticipate some of the milestones not yet being certified.

He said: "If we think the work may be acceptable, we will pay them straight away. But if we think the work is not acceptable we will wait until we have an independent certifier look at it and say they have hit that milestone.

"We would be failing in our duty if we paid the money without that assurance — so that is why we are holding more money back perhaps — but we will have to pay it out at some point."

It was approved at the committee meeting to increase the operational debt limit from £101.2m to £125m and the authorised limit from £110m to £135m.

Since the audit committee however, Island Roads have met its remaining target for 2019, with one now remaining in the Core Investment Period that ends in 2020.

An Isle of Wight Council spokesperson said: “Accounting for PFIs is a complex matter.

"Unlike more traditional capital investment arrangements where external borrowing is undertaken by the council to finance the investment, no external borrowing is undertaken by the council to finance the investment into the Island's roads under the PFI arrangement.

“However, the investment made by Island Roads into the highways is to be repaid back to them annually through the contract payments over the next 20 years.

"Until such time as all of those contract payments are made, it is accounted for as a debt even though no external borrowing has been undertaken by the council.

“The exceeding of the debt indicator mainly reflects a change in the profile of the contract payments to Island Roads."

The Highways PFI Contract has come under fire recently, having slashed £608,000 from its budget in a bid to save £11 million.

However, the Council bought back consultant Jay Jayasundara, who initially helped design the PFI contract, to identify the cuts.

The council said last July he would be paid £70,000 for the work and would remain on the payroll until April. However, between July and October 2019, Jasmine Consultancy was paid more than £70,000 for four months' work.

In the report, the council said "the level of reduction in service standards will be a balance between the need to achieve the required savings and maintaining an acceptable standard of service delivery."