We’ve known for some time that AssetCo, the company responsible for the leasing and maintenance of London’s fire engines, was in financial trouble. Yesterday, it sold the part of its company running contracts with London and Lincolnshire fire authorities to a private equity firm called AB&A Investments for £2.
On the face of it, that’s pretty shocking. But it’s interesting to note that this isn’t the first time the contract’s been sold – it is, in fact, the third (PDF). Nor has ownership of the fire engines changed – they’re actually owned by Lloyds Bank, and AssetCo (now AB&A) held what we can think of as a mortgage on them. Staff and management remain in place; what’s important is the performance, and we understand that there had been a small drop in availability of vehicles over the last 6-12 months (from very high targets). A change of ownership – removing AssetCo’s troubles from the equation – could help that.
The Fire Brigade Union says the sale risks public safety, but London Fire Brigade Commissioner Ron Dobson has said
The sale of AssetCo’s UK interests has no effect whatsoever on the London Fire Brigade or its fire engines, which continue to be maintained and available as usual. I have met with the new owners of AssetCo London, AB&A Investments Limited, and received every assurance that it is committed to maintaining and improving the service the London Fire Brigade receives.
Perhaps the biggest question is: who is AB&A? Nobody at City Hall seems to know much about the company, and Google knows even less. It’s taken on a business carrying significant liabilities (hence the £2 price tag; AssetCo basically begging someone to take it off its hands). Presumably AB&A thinks it can make a profit where AssetCo failed. This game of contract pass the parcel is a part of PFI that we shouldn’t forget; just because something’s sold off to one company, doesn’t necessarily mean it stays with them.