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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