Select Committee on Education and Skills Minutes of Evidence


Memorandum submitted by 4ps

SUMMARY

  There are two key points which 4ps, local government's project delivery specialist body, wishes to make to the Inquiry, as follows:

DELIVERY AND FUNDING

1.   How well is the BSF delivery and procurement model working to deliver sustainable schools and best value, including through Partnerships for Schools and Local Education Partnerships?

  The original intention of the BSF programme was to have a clear split between new build schools which would be created and maintained under PFI contracts, and refurbished schools which would be the subject of DBOM contracts (Design, Build, Operate and Maintain- in other words PFI without the private sector investment). This would have meant that all BSF schools would be properly looked-after under long-term facilities management contracts integrated with the risk transferred to the private sector.[4]

  The reality is that DBOM has become just "Design and Build", with possible non-mandatory and quite separate facilities management (FM) contracts. In addition, many of the schools that were expected to be procured under PFI are now to be conventional capital projects using Design and Build contracts.[5]

  The consequence of this is that BSF is going to produce a generation of schools that are split into—on the one hand- those that are procured through lifecycle contracts (PFI) where the contractor has the responsibility of maintaining the school as well as designing and constructing it, and—on the other hand- those that are procured without any requirement for the design/build contractor to look after the facilities. This may be the responsibility of a separate FM contractor where funds permit, but even where they do the term of such contracts will be much shorter than the 25-30 years typical of PFI.

  One of the best features of PFI as a procurement route is that it requires clients (local authority and schools) to budget to look after the facilities over the long-term, and incentivises the private sector to invest in reducing running costs. Less than half of the BSF programme will now benefit from this, whereas the majority of BSF schools will now be returned to the pre-PFI world of uncertain levels of care, with a likely result that schools in poorer areas will deteriorate in much the way that they used to do. This is not considered to be an overstatement, as both local authorities and schools find themselves increasingly unable and unwilling to fund long-term contracts where they have the choice not to.

  Partnerships for Schools, with whom we are working as partners on the national programme, are of the view that LEPs can solve this problem, through an expectation that they will enter into FM contracts for all the schools, but there is no certainty of this and in any case LEPs are not universal.[6] BSF is intrinsically weaker at delivering lifecycle provision for English schools than the "pure" PFI programme which it has replaced. The Audit Commission and NAO have warned of this `maintenance time-bomb', and this lack of sustainability could turn out to be a most unfortunate consequence of the "mixed economy" approach which BSF espouses.

  A suggested solution is for DfES and PfS to require the Authority and schools to sign-up to a pre-funding agreement over repairs and maintenance, involving an agreed funding stream going into a Sinking Fund, to be applied to future maintenance. The Sinking Fund funding streams need to be protected, rather like the income streams for a PFI contract. The amount to be put in sinking funds can be calculated within a framework (on rates per sq m) or by such other method as the schools and Authority may determine.

FUTURE LEARNING NEEDS

2.   How are the strategic needs of Local Authorities balanced with the needs of schools communities and learners within BSF?

  Transformation has a chance of succeeding in some Authorities, but the inclusion of Academies is already getting in the way of a strategic approach to BSF for some Authorities. This is particularly so where Academies were not originally part of the strategy but have become mandatory. The impact of Academies, and in the future of schools that choose to become Trust/Foundation schools, on the success and overall pattern of the local secondary sector may in some cases be adverse, because of the unpredictability of their effect on the popularity of the other schools.

  As a result, we believe that Government should suppress any further major educational initiatives while Authorities are developing and implementing their strategic approach to secondary school transformation through BSF. Sustainable solutions, whilst recognising the need for future flexibility, need to be grounded on clear and stable objectives, for a defined group of schools whose status is not in doubt.

ABOUT 4PS

  4ps is local government's project delivery specialist organisation, a central body of the Local Government Association. 4ps works in partnership with all local authorities to secure funding and accelerate the development, procurement and implementation of PFI schemes, public private partnerships, complex projects and programmes. 4ps' multi-disciplinary team provides hands-on support, gateway reviews, skills development and best practice know-how. DfES has provided funding for 4ps to provide an "Expert Client Programme" in support of BSF Authorities, and the schools team is heavily engaged in this alongside Partnerships for Schools.

June 2006








4   Schools PFI projects have successfully demonstrated that such risk transfer works well, and that facilities of schools already 6 years into their operational period of 25 years are better looked-after than equivalent non-PFI schools: Treasury and Partnerships UK reports on PFI published 2006, and 4ps publication on Operational PFI projects, 2005. Back

5   London Boroughs of Lewisham, Lambeth and Hackney, amongst others, have been told by PfS that the schools in their BSF programme for which they had expected to receive PFI credits, will now instead be funded by conventional capital, and therefore procured through Design and Build contracts. Back

6   At the present time, out of 38 BSF projects, it has been agreed that 8 will not have LEPs; 20 of those remaining are definitely on course to form LEPs, leaving a number yet to decide. Back


 
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