Private finance schools' bill soars

26th March 2010 at 00:00
Money worries grow among local authorities as Government figures suggest cost burden may become unmanageable

The bill for privately-financed schools is growing year on year - with some authorities paying about pound;1 in every pound;10 spent on education.

Some pound;0.25 billion had to be found by councils in 2008-09, and directors warn that coffers are not being filled quickly enough to keep pace with the growing burden.

Government figures show private finance initiative (PFI) or public private partnership (PPP) repayments accounted for 3.8 per cent of local authorities' education spending in 2007-08, the most recent year for which figures are available.

But the figure was far higher in some authorities, including: Stirling (11.6 per cent); East Renfrewshire (9.3); Falkirk (9); East Lothian (8.7); and Glasgow (8.6).

More than 275 school building projects have been completed using PFIPPP since 2000, for which payments by councils amounted to pound;244m in 2008-09 - pound;61m more than in the previous year.

One former education director, who asked not to be named, told The TESS he believed some authorities had drawn up contracts without factoring in the potential impact of a financial downturn.

John Stodter, general secretary of the Association of Directors of Education in Scotland, cited the "significant impact of increased costs and non-avoidable financial burdens on councils" - particularly PPP costs and staffing costs - which had "exceeded any budget increases in recent years".

A spokesman for the Educational Institute of Scotland said teachers had not been properly consulted in early PFIPPP projects, and that the union had had "serious reservations" about long-term costs.

But he said PFIPPP had brought new schools to areas where they were "greatly needed", in contrast to the Government's much-vaunted Scottish Futures Trust, which had "so far failed to deliver any new schools".

Education Secretary Michael Russell decried the Labour Party's "ideological obsession with PFI", which he argued had put private profit ahead of pupils' interests.

"The reality of Labour's PFI is that councils are obliged to pay these bills before they give any thought to other priorities in education," he said.

He was particularly concerned about councils which were paying around 10 per cent of their budget, which they could "ill afford" in a time of recession.

Labour's education spokesman, Des McNulty, accused Mr Russell of "staggering hypocrisy".

"Had it been left to the SNP and their Scottish Futures Trust, there would have been no new secondary schools in Scotland and many fewer new primaries," he said. "The SNP turn up at the opening ceremonies of schools they opposed being built, and have the cheek to try to claim the credit."

Andy Oliver, who is PPP project manager at Moray Council and previously had a similar role at Aberdeen City Council, said the figures were not surprising.

He said disparities around Scotland might be explained by individual councils' approaches to PPP but there could be other reasons, such as the variable conditions of school estates. He does not believe prior knowledge of the credit crunch would have changed many minds about how to pay for new schools.

"If you asked any council if they'd prefer to use their own money to design, build and open a school - pay for it in the traditional way - they would," Mr Oliver said. "But that kind of money isn't available currently to the public sector."

A spokesman for East Renfrewshire Council said the authority had "no regrets", and that officials had factored in the potential impact of a financial downturn.

Henry Hepburn, henry.hepburn@tes.co.uk.

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