College concludes its buy-out deal

6th April 2007 at 01:00
west lothian College returned to public ownership on Mon-day at a cost to the taxpayer of pound;27.7 million. Ministers had asked for a review of its private finance initiative contract which they said should deliver "best value for the public purse".

The Livingston-based college, built under a restrictive form of the PFI in 2001, concluded its buy-out deal with HBG Projects which transferred ownership back to its board of governors. The college contributed pound;5.54 million and the remainder of the cost was borne by the Scottish Funding Council.

Sue Pinder, the college principal, said: "It had become apparent that the original contract did not offer the college the flexibility it requires. We explored every alternative and agreed that voluntary termination was the way forward."

Ms Pinder in the past has described living with the college PFI as "a nightmare", as it struggled to generate sufficient cash (TESS May 23, 2003). Property costs at that time ate up 35 per cent of expenditure, compared to an average of 9 per cent for the FE sector.

The PFI contract committed it to paying pound;42 million over 25 years, after which it would not even own the buildings and would have had to buy them back at the market price prevailing at the time.

West Lothian's experience led the Scottish Executive and the funding council to relax the rules governing capital expenditure in FE, so that colleges would not have to test their spending plans against the privately-funded route for projects worth less than pound;30 million.

* Robert Black, the Auditor General for Scotland, has presented "section 22" reports to parliament on Inverness and James Watt colleges, a device to highlight issues for MSPs which he believes are sufficiently significant.

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