No bog standard solution

8th July 2005 at 01:00
Schools do not have to rely solely on the private finance initiative to refurbish their buildings. Fran Abrams reports.

Carolyn Roberts, head of Durham Johnston school, has been happily making plans for the future. Architectural plans, that is: her school will soon have new purpose-built computer suites, facilities for teaching practical skills such as hairdressing or plumbing, and bigger science labs. After 26 years of commuting between two crumbling buildings, two and a half miles apart on opposite sides of Durham city, the school's pupils deserve this break.

"It's fantastic news for us," says Mrs Roberts. "The children of this city need a safe building on one site, and the local authority has worked very hard to make sure they get one."

Such good news stories are becoming more common as the Government's Building Schools for the Future programme - designed to rebuild or refurbish every secondary school and half of all primaries in the next 15 years - gets under way. But what it might surprise some observers to learn is that the project does not involve a private finance initiative deal.

Just under half the pound;25 million cost of rebuilding Durham Johnston will come from the sale of one of the school's sites. The rest will come from central government capital funding and from Durham County Council.

Despite the huge amount of publicity and debate over PFI - in which a private consortium builds a school and then leases it back to the state sector - conventionally-funded schemes like this one are not as rare as some might think. As it happens, this is the second time in just a few years that Mrs Roberts has supervised a non-PFI school building project.

She came to Durham from St Hild's school in Hartlepool, which opened in 2001 and moved to a brand new building in 2004. St Hild's, a Church of England school, was rebuilt using capital funding from central government.

The truth is that although most people perceive PFI as the only game in town for major school building projects - and for some, it certainly is - the picture is far less clear-cut than most people believe.

Unusually, the Government seems to have been hiding its light under a bushel, for schools capital funding has in fact rocketed under Labour.

During Labour's first two terms PFI education projects accounted for just a quarter of spending on major projects such as new schools, extensions and refurbishments.

PFI has grown, certainly - from pound;35m in the first year of this Government to a planned pound;1.2 billion in the current financial year.

But at the same time, traditional capital spending has also risen, from around pound;700m in 1997-98 to more than pound;4bn this year.

Indeed, the Government has been generous to schools. According to a recent study by the College of Estate Management (CEM), the proportion of gross domestic product spent on public-sector capital investment remained steady at around 2 per cent during Labour's first term. But in education it almost doubled, to 0.2 per cent, rising again during the Government's second term to 0.3 per cent.

In other sectors the picture has been quite different. In health, for example, 85 per cent of building work begun since 1997 has been under PFI.

But schools are at a disadvantage in this game. The most efficient projects, according to the CEM, are large-scale ventures run by big organisations with knowhow, such as the prison service or the Department of Transport. Schools, or rather their local authorities, were less wily in dealing with private-sector negotiators.

According to John Dunford, general secretary of the Secondary Heads Association, there may have been a further reason for the slow take-up in education. Schools may not have wanted to commit to the long-term contracts for catering, cleaning and other services which are usually associated with PFI.

"I think there's a bit of reluctance to mortgage future school funding and to be in a situation where you know there are big items against the school budget for many years to come," he said.

But the perception remains that for many crumbling schools, it is the private sector or nothing. If the roof is leaking and the window frames are falling out, most are prepared to overcome their squeamishness in pursuit of a practical solution.

Take Brian Rossiter, for example. This month he expects to sign contracts for a pound;270m PFI deal to rebuild his school along with four other secondaries and a special school in Bassetlaw, Nottinghamshire. The project will also produce a new post-16 centre and two new leisure centres for the local community.

After six years of planning and negotiating, he has a right to feel satisfied. But he bridles slightly when asked if he would have preferred a traditional capital funding deal. "I don't think that's a fair question," he says. "There was no choice. The political will would not have been there to rebuild this school as a one-off capital project, and the Government would not have allowed us to borrow the pound;20-odd million we would have needed. I just don't think the option existed."

Others echo his view. And yet, when circumstances demand, the political will has been there. In Norfolk, for example, a proposed pound;92m PFI project to upgrade 36 schools collapsed last November when the preferred bidder, Jarvis, failed to find a contractor to do the work.

Norfolk just happens to be the home of the former education secretary, Charles Clarke. And he stepped in to help. The Department for Education and Skills has now offered a traditional loan of pound;56m, plus a grant of pound;8.5m to fund work at five voluntary-aided schools. Along with additional grants and land transactions, the council is now confident the work can go ahead.

But not everyone has friends in high places. And for those who do not, there may be trouble ahead.

Malcolm Trobe, head of Malmesbury school in Wiltshire and the co-author of a SHA book on managing PFI projects, says there is increasing concern among local authorities about the affordability of these deals.

"We went into a new building in March 2002 as part of a PFI scheme for three secondary schools. The whole project will cost pound;125m over 30 years," he said. "The annual payment to the contractor is pound;4.2m, of which the schools pay about pound;1m and the Government pays pound;2.8m.

That leaves a gap of pound;400,000. And every year for the next 30 years, the local authority has to top-slice that off its education budget."

As a proportion of a local authority budget, that may not seem a huge amount. But a problem may arise, he believes, when councils begin to contemplate the need to fill much larger "affordability gaps" on bigger projects under the Building Schools for the Future programme.

"If the local authority has to talk about another PFI for other schools, it will become an issue," he said. "And there are some urban authorities which have got affordability gaps and which are already having to take on more PFI programmes under Building Schools for the Future. In fact, I don't know of a scheme where there hasn't been an affordability gap.

"It's going to be a major problem - schools can't afford to pay."


1992 Private finance initiative was first suggested by Norman Lamont, Conservative Chancellor

1999 Victoria Dock primary in Hull was the first PFI school to open.

2002 Opposition to PFI within Labour was revealed when unions defeated the leadership at the party's annual conference.

But The TES reveals the Government's determination to press ahead with plans to rebuild or refurbish every secondary school in the country. PFI will play a key role.

2003 The Audit Commission public spending watchdog finds PFI has resulted in poor quality schools and has not saved money.

2004 Ministers backtrack on promise by admitting not all secondary schools will be refurbished by 2015, despite a pound;6.3 billion investment.

2005 Gordon Brown, Chancellor, pledges to rebuild or refurbish half of all primary schools in next 15 years.

There are now 48 operational PFI deals covering 378 newly built or refurbished schools. Another 337 schools are under construction with many more deals in the pipeline.

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