Private sector plan turns local

4th December 2009 at 00:00
When the new Falkirk High opened after the summer, all the council's eight secondary schools were in premises opened in the last decade. Although the authority pioneered PPP schools in 2000, its four newest secondaries took a different route

The letters "PPP" have long been a lightning rod for controversy, with critics incensed by private profit garnered from public buildings. The much-hyped successor to public-private partnerships, the Scottish Futures Trust - or SFT - is attracting similar opprobrium after lofty promises led to it being established as little more than an advisory body.

Meanwhile, a more low-key third abbreviation has been responsible for a new wave of secondaries built by Falkirk Council, a coalition of Conservative, Labour and Independents. NPDO, or non-profit distributing organisation, is hailed by adherents as the fairer alternative to PPP.

First introduced into Scotland by Argyll and Bute Council, and now being used in Aberdeen, it sets a fixed return for the private sector and distributes any profits locally.

This model, like PPP, locks a council into a long-term contract with the private sector; 30 years in Falkirk's case. But surplus funds, which a PPP funnels back to shareholders, go instead to a specially-formed charity. It can use them for educational and leisure purposes, on condition they are not spent on anything the council should already be providing. "At least, if there are super-profits, people can see the benefits," says Iain Henderson, who was project manager for the Falkirk schools project.

The limit on profits did not put off the private sector, Mr Henderson reveals. There was much interest in the project and the "Falkirk Schools Gateway" consortium includes two of Scotland's biggest construction companies, the Stewart Milne Group and Ogilvie, as well as the Royal Bank of Scotland. It must satisfy itself with a fixed 6.4 per cent annual return from an initial investment of about pound;90 million.

The Falkirk charity, which will lie dormant until it becomes clear next year whether there are surplus funds, comprises 12 directors, including pupils, parents, its Sports Council, its Arts and Civic Council and a trade union member. Two charity representatives sit on the board of directors - the heads of educational resources and leisure services for now - and an independent director, assigned to ensure NPDO principles are upheld. While these are outnumbered by four private-sector directors, equivalent PPP boards have no outsiders.

Falkirk's four PPP secondaries might look on enviously if the NPDO charity finds itself flush. But, there is a potential loophole: although the charity must focus on projects within the new schools' catchments, one of them is St Mungo's High, which takes in pupils from throughout the authority.

Jim Fletcher, East Renfrewshire Council leader and a non-executive director of the Scottish Futures Trust, is sceptical. The NPDO model "doesn't differ very much from PPP", he suggests. Mr Fletcher, formerly education convener in East Renfrewshire, found it "odd" to divert money to charity; a logical home would be whichever public body "was paying in the first place".

In any case, there should be no "excess profits" in a good PPP project, although he accepted this had not always been the case. "The schools model could be done by traditional procurement, which is likely to be the case with our own in East Renfrewshire." There remains a future for PPP and NPDO. Under the Scottish Futures Trust, Mr Fletcher said, the best model for projects would be decided case by case.


The Scottish Government announced last week which 21 primaries will benefit from its pound;1.25 billion school building programme. They are: Aberdeen: Bucksburn and Newhills

Argyll and Bute: Dunoon, Kirn and St Mun's

Clackmannanshire: St John's and Claremont

East Ayrshire: Gargieston

East Dunbartonshire: Lairdsland Primary

East Lothian: Haddington Infants and St Mary's

Falkirk: a new Catholic primary

Glasgow: Garrowhill, Glendale and one other

Inverclyde: Lilybank and Glenburn (special schools)

Moray: Kinloss

Orkney: Evie

Perth and Kinross: Invergowrie

Renfrewshire: St James

Scottish Borders: Duns

Shetland: Happyhansel

South Lanarkshire: Spittal

Stirling: Riverside

Western Isles: Daliburgh

West Lothian: Pumpherston and Uphall Station

The identity of the 14 secondaries involved in the rebuilding programme was revealed in September, and the chosen primaries means that every authority will benefit - although all the primaries will not be built until 2014-15 and the secondaries only completed in 2017-18. Another 20 schools remain to be unveiled.

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