The borrowing game

7th February 2003 at 00:00
Raising the cash to build new schools is a complex matter and management skills must be taught, says Ian McDonald.

IT spawned more than 1,000 press articles, along with copious coverage on radio and television. How could a schools' accommodation project generate such heat with so little illumination? It was difficult to escape from the ominous coverage of the progress of the Glasgow secondary schools public private partnership (PPP) project. Yet they came from across the globe to witness this controversial initiative - from Germany, Finland, Australia, South Africa, Holland, Russia, the United States, France, England, Northern Ireland and other countries. Only Wales affected disinterest.

It was reported locally as being a horror story but most departed impressed and returned home to replicate, not avoid. In Scotland, the debate on the virtues or otherwise of PPP projects has been party political. All good fun. When did accuracy get in the way of a penetrating political insult?

PPP is pay-as-you-go, special credit deals, rentals, leasing, a mortgage.

It is how we run our lives. Mobile phones, a new television, a car, a house. It would be wonderful to be able to smack down hard cash for all we require. But without a bit of borrowing by all of us, the economy would stall and jobs would go.

No doubt the Government, local authorities, NHS trusts would also prefer to see hard cash provide quality public services. It would certainly be the choice of haunted local authority officials, tired of dealing with the flood of correspondence complaining about substandard school accommodation, leaking roofs, stinking toilets.

All we can do is inherit the past; no chance to change it. Badly maintained and under-occupied school buildings reinforce deprivation, are unhealthy and demoralising and represent money down the drain. But they will not just go away.

Trusts, not for profit arrangements and PPP are all pay-as-you-go deals.

The differences are more semantic than real. We all search for the lucky midden where the answers to all our problems are painlessly available. Let me know when you find one. No route maps and no hypothesis - just hard fact.

The political hubris which has surrounded the debate in Scotland has prevented a proper analysis of how to make such schemes work efficiently and effectively. Any error or unfortunate setback is leapt on as yet another example of the impending apocalypse. The other side of the debate can be equally blinkered, believing that considering improvements would be a sign of weakness - or, as one influential figure said, "if Glasgow can do it, anyone can do it".

The improved school buildings in Glasgow, Edinburgh and elsewhere are demonstrably better, but what a remaining legacy to be addressed.

Glasgow was a mega deal, the biggest project so far and unlikely to be topped. Being responsible for negotiating a deal lasting 25 years or more is some responsibility. If your boss calls you in and says you are the person to lead a PPP project, get a health dilapidations survey as you will dilapidate during the negotiations. Your health can suffer as you will be locking horns with some of the biggest and brightest in the nation, all highly experienced in closing large, complex deals. They aren't sharks, just good at looking after their clients' interests.

Responsibility in local authorities for negotiating PPP deals varies. To be successful, a project depends on the influence of its project sponsors.

Where they have seniority and influence, a project should go well. But it varies big style. In one major local authority in England, the responsibility for dealing and negotiating with the private sector was left to the headteachers. They should have declined the trust placed in them.

Being responsible for such a project is quite a responsibility - a bit beyond the call of duty of a headteacher.

But now you are in place and given a title - project director or project manager. Feel the pressure. The project must be transparent. Involve the professionals (the teachers) - they know best. Let them design their own classroom.

Of course, you will be reasonable. But at the same time you have to maintain competitive pressure on the competing bidders to get as much value for money as you can. Central to this is commercial confidentiality. Three or four bidders hungry to win your project will squeeze out value for money and a bit of innovation. Blow their cover and they will not spend a penny on innovation.

N you go. Balance transparency with commercial confidentiality. PPP projects need quality management. You can buy external advisers. But who has the experience to manage them? They may be good, but they don't come cheap. As soon as the deal is signed they are off, as your local authority will not want their continuing expense.

Audit Scotland in its report on school PPP projects warned that "hard-won experience" in the public sector should not be lost. Most of the hard-won experience in Scotland has been lost from the public sector. Alan Milburn, the Health Secretary in England, apparently made a similar lament recently about the health service, saying that the necessary skills were in short supply to negotiate complex, long-term deals. Mr Millburn went on to state that a good deal of the hard-won experience in the NHS was often quickly lost to the private sector.

If PPP or a variant of pay-as-you-go is the only realistic option to improve school buildings then all of those involved, including teachers, need access to quality training courses designed for council staff and preferably presented by those who have not only been over the hurdles but managed to climb out of one or two holes.

Ian McDonald is the former director of the Glasgow schools project.

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