Jobless may cut repairs backlog

16th May 1997 at 01:00
Publicprivate partnerships will improve the condition of school buildings, said Labour's manifesto.

But just how will partnerships between cautious, cash-strapped local education authorities and cautious, hard-nosed banks and construction firms solve the problem of an estimated Pounds 3 billion backlog on school repairs and maintenance?

At the heart of Labour's plans to tackle the country's crumbling schools lies a policy introduced by the last government: the Private Finance Initiative. Launched by Kenneth Clarke, the former Chancellor, in 1992, it aims to inject private finance into the public sector, to the benefit of both. But the initiative has been slow to get going in local government and especially in the schools sector.

Councils have clung nostalgically to the old method of Treasury-sanctioned borrowing to finance building . But that source has been squeezed and squeezed and the new Labour Government is sticking to the old spending plans in that area, too. Private money is now the answer to leaking roofs and shabby classrooms.

Geoffrey Robinson, the Paymaster-General and minister responsible for the PFI, made it clear last week that the new government would be emphasising schools projects within the initiative, which Labour wants to "reinvigorate . . . streamline and . . . make more effective". He has already launched a six-week review to see where improvements can be made (and quietly removed Alastair Ross Goobey, the Conservative chairman of the PFI panel, who was already streamlining the scheme - but that's politics).

One or two major school rebuilding projects are already well on their way. The most advanced is the Pounds 11.5m plan to rebuild the Colfox School in Dorset, where contracts should be signed next month and building should start in July. Plans for rebuilding Pimlico School are making progress (see picture, right). The three bidders are the McAlpine Osborne Consortium, the St George's Square Partnership, and the Mowlem Consortium.

Westminster City Council will narrow the field to two bidders next month and the final choice will be made in October. Major works could start on site next summer, although the new school is not expected to be fully ready much before 2002.

But these large, one-off projects, where the private sector enters a contract to "design, build, finance and operate" a school in exchange for regular payments on completion, do not meet the most pressing need - for repair, refurbishment and maintenance. It is in this area that Labour is hoping to make a difference by promoting schemes covering groups of schools.

This idea, first put to David Blunkett two years ago by the merchant bankers Hambros, gets round the problem of smallness of scale by grouping the schools into a scheme large enough to be commercially attractive to the private sector. On the schools side, the contract has to be signed by the local education authority on behalf of school governing bodies. Local grant-maintained schools could be included or they could form their own grouping.

Under such a scheme, the private sector borrows the money to refurbish and maintain a group of schools over a period of, say, 25 years. The local authority pays a monthly, quarterly or annual fee for the service.

The money to pay the private contractor comes from three sources: from the LEA's central budget for structural maintenance, from the element in schools' delegated budgets for day-to-day maintenance (governing bodies therefore have to agree to surrender the required amount) and from the extra revenue councils receive from central government for costs linked to PFI projects (an extra Pounds 200m in the current financial year).

The scheme becomes more attractive to the private sector, and costs the local authority less, if it involves an element of "dual use". For instance, the private contractor could keep the proceeds from letting a new sports hall out of school hours and reduce the fee charged to the local authority.

In the London borough of Brent, officials are putting together aPounds 30 million scheme covering the repair and refurbishment of all 68 of the London borough's schools - and the nine GM schools too, if they wish to join in. Birmingham has drawn up no fewer than three PFI schemes covering groups of schools. The first, with a total value of some Pounds 100m, involves the total or partial rebuilding of the city's 10 most dilapidated schools. The other two involve the repair and maintenance of about 50 further schools.

And in Kent, a project to replace and maintain the heating systems of some 20 GM schools is being sponsored by the Funding Agency for Schools.

The new Government will be keen to see such schemes go ahead in order to provide "templates" for others. It may also try to boost the PFI by promoting "joint ventures" between local education authorities and the private sector, under which the LEA might take a stake in the private consortium, sharing the risk in return for paying less cash . And it may decide to spell out in legislation that authorities have the right to enter into PFI contracts, to overcome the kind of uncertainty that has hampered the clinching of deals with hospital trusts.

But major changes to the scheme are unlikely. What local authorities and contractors need above all is to see successful projects get off the ground.

One impatient merchant banker said this week: "It could all be done now if the LEAs would get their act together".

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