Way is opened for private finance to step in
This is the first time that the three-year-old scheme, intended to increase the level of private investment in the national infrastructure, has been extended to schools. Companies will be expected to bid for Government contracts and complete the work - using their own money - in return for annual revenue. After a period of time ownership of the buildings will pass to the state.
The FE sector has already been targeted for a massive increase in private capital. This week's Budget removed some Pounds 100 million from the capital grant for FE over the next three years, a shortfall that ministers believe the PFI will replace. Higher education has already benefited with student accommodation at the University of Greenwich by paid for under PFI.
The two schools in the Treasury's list of "indicative projects" are Pimlico School in Westminster which wants new buildings, and Easthampstead Park School in Bracknell, Berkshire, which is drawing up plans for an extension.
Questions remain about the private sector's willingness to come forward in an area like education where there is no obvious steady source of income to pay for the work - bridge tolls for example.
Sir Christopher Bland, chairman of the Private Finance Panel, which is running PFI, conceded that education would be slower to generate interest than investments with more immediate returns.
In the case of FE the Government has already committed itself to finding private backers but this week Financial Secretary to the Treasury, Michael Jack, was unable to name any likely bidders. But he insisted that the private sector will participate. "There is very clearly the enthusiasm there," he said.
There is also some puzzlement at the naming of the two schools, neither of which were expecting an announcement. At Easthampstead Park, it is understood that full discussions have not yet begun with the education authority.
The two school plans have been listed as category A by the Private Finance Panel which, it says, should mean that they are substantially under way by the 1996-97 financial year.
The Funding Agency for Schools said this week that a number of grant- maintained schools are interested in PFI money, mainly for amalgamation on a single site.