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Private-sector pot of gold turns into mirage

Building work deals using PFI are proving problematic and often carry large hidden costs for councils, reports Jon Slater.

A school in Estelle Morris's Birmingham constituency has been forced to close for a week because privately-financed building work has not been completed on time.

The closure is a severe embarrassment to Ms Morris, the former schools minister, who was widely tipped this week to be the new Education Secretary.

One of the key tasks of the role will be to oversee an expansion of the private sector in state education. It comes as a TES investigation has revealed that councils are having to find millions of pounds from their budgets to allow Private Finance Initiatives to go ahead at all.

Staffordshire, Derbyshire and Wiltshire are among those authorities who have had to find extra cash. Wiltshire will pay pound;12m over the next 30 years and Staffordshire has to find pound;100,000 per year for 25 years to make up the shortfall.

Each authority is involved in just one project.

David Gentle, headteacher of Cockshut Hill technology college in Yardley, Birmingham, was forced to extend half-term by a week after a new building work was not finished.

Of its 1,550 students, only those sitting exams have been allowed to attend school. The school is due to reopen next Tuesday, assuming that the building work, which is being funded through a PFI deal with Galliford, is completed.

"Half the school is uninhabitable and the other half is packed up in boxes," Mr Gentle said. "We got everything packed and then it's, 'Oh, sorry it's not finished'. We can't go back to the old building and we can't move into the new one."

"I'm frustrated. It costs more than pound;20,000 a day to run this school. That's pound;110,000 it will cost the public over five days and I'm not delivering the service."

The project will provide the school with a new block including catering facilities. Existing buildings are also being refurbished.

"I don't wat to be too negative. At the time PFI was the only way we could get buildings that were fit for purpose for the school. At the end of the day we'll have something that's brilliant," Mr Gentle said.

However, he complained that the PFI project has been beset by wrangles about what would and would not be provided under the contract.

"We've had to raise money from other sources for some of the things," he said. "The local authority has footed much of the additional bill."

Councils and schools are expected to contribute what they already spend on maintenance and other services which are provided under the contract.

This, plus the "PFI credits" from the Government, are supposed to make up the value of the contract.

However, councils, are finding that more money is needed and are having to dip into their budgets to bridge this "affordability gap".

John Dunford, general secretary of the Secondary Heads Association, said:

"That gap should not exist. Councils should not be expected to make up these sort of funds. If the DFEE thinks that this is a priority then it should fully fund it.

"Heads have to spend enormous amounts of time setting up the bids and many do not think that it is worth it."

Mr Gentle said that the contract for his school did not stipulate whether walls should be plastered and painted. "There was a lot of negotiation about what sort of furniture made a room fit for purpose.

"For instance, there was a discussion about science labs - whether there should be equipment for 20 or 30 pupils. It's been very difficult to broker agreements. As a school we weren't involved in the finer points of the contract," he said.

Under PFI, LEAs sign contracts with private providers to carry out building, maintenance and other services, with the public sector paying a fee to the company each year. The scheme has been criticised by left-wingers for giving poor value for money to the taxpayer.

Briefing, 28

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