Examination of Witnesses (Questions 60-79)
TIM BYLES
14 JULY 2008
Q60 Mr Stuart: Tim, do you have a
bonus structure for yourself, personally?
Tim Byles: Partnerships for Schools
has one for me, yes.
Q61 Mr Stuart: What factors determine
whether you receive your bonus?
Tim Byles: The bonus is determined
by a committee of PfS, and it is against our business plan targets,
which are to do with the number of projects delivered through
local authorities, the number of academies, the quality of them,
the educational outcomes of young people, sustainability—there
is no shortage of measures, I can tell you, in relation to the
performance of PfS. They are published in our business plan each
year. We are measured against quite a large number of performance
indicators—about 60.
Q62 Mr Stuart: So your personal annual
bonus depends on 60 performance measures, does it?
Tim Byles: Yes, it does. It reflects
the overall performance of BSF as a whole, and the people who
work within BSF are measured according to the areas for which
they are responsible.
Q63 Mr Stuart: So in that context,
what role does sustainability and the carbon footprint play? If
it turns out that these schools are not delivering, will that
stop you getting your bonus or not?
Tim Byles: I suspect that that
would be a question of degree. There is an issue across each of
the measures against which we are managed, and which we publish
on our website. There is quite a large range of targets, and their
proportionality is also set out in the business plan, which is
publicly available: 60% is to do with delivery, 20% is to do with
operating efficiencies and people-related aspects, and the remainder
is to do with—
Q64 Mr Stuart: It sounds incredibly
complex, compared with profit or numbers.
Tim Byles: It is complex, yes.
As an ex-local authority chief executive, I can say that there
are significantly fewer targets than I used to have to deal with
as a local authority chief executive.
Q65 Mr Stuart: What hard data can
you provide us with to monitor the sustainability not only of
the schools that have been built to date but those that will be
built, on the environmental front?
Tim Byles: On the environmental
point, we monitor each school, and that information is publicly
available. There are targets for the progressive improvement in
sustainability, as I mentioned earlier, and we will be monitoring
in each school, through its post-occupancy evaluation, how it
has progressed against those targets.
Q66 Mr Stuart: Do you have collective
numbers—a nice easy set that we can look at?
Tim Byles: I do not have a nice
easy one for you this afternoon, but as I said, we will do our
first post-occupancy evaluation this autumn at Bristol Brunel,
where we will be examining the results on the ground against the
targets that were originally set. The Government's position has
clarified through time, and for each new school we are looking
at a reduction in the carbon footprint of 60%, and we are measuring
that for schools from a particular point in time. I wish that
it were more simple for you, and indeed for me, but it is not.
When we get to 2016, we are targeting a zero-carbon position for
new-build schools. For refurbished schools, of course, different
issues need to be managed, because we are managing a different
thing.
Q67 Mr Stuart: But most of the BSF
schools will at least be heavily under way by that point, 2016.
Is zero carbon by 2016 a bit of a pointless promise?
Tim Byles: No, I do not think
that it is pointless. All of government is committed to 2018,
and BSF has been targeted to do that two years earlier. We need
to work out practical and sensible ways to get to that target.
In some cases, the technology is not available to us now without
paying a significant premium. I am aware of a couple of schools
in this country that have delivered a carbon-neutral result. We
are looking at the most effective way of doing that, in urban
and rural settings. It will take some time for the taskforce to
finalise its recommendations in relation to that. In the meantime,
we are stretching ourselves to do the best that we can with the
resources available to us.
Q68 Mr Stuart: One of the things
we would like to understand is this. Sustainability comes off
the tongue very easily. It is easy to incorporate it, and then
you get to the hard measures a few years down the line and you
find there has been no real change. Can you give us any picture
of the BSF schools built to date? Have they reduced carbon by
60%, or was it too late for those?
Tim Byles: It is too late for
those. Those that are coming through now will be delivering 60%.
Q69 Mr Stuart: As of when?
Tim Byles: The announcement was
last year, so schools that will be up in about 15 to 18 months
from now will be delivering that total. We are measuring those
to date. I have mentioned it a couple of times, but I shall mention
again Bristol Brunel academy. Where we start to get real traction
on sustainability is where we integrate environmental sustainability
into the curriculum. We have energy meters on the walls. We have
young people policing the turning off of lights and the use of
ICT. That creates an upward force, in addition to having a set
of targets. To correct a point that you heard earlier, it is in
the business interest of the consortium to demonstrate high sustainability
and low energy use, because at the bid stage, it is measured on
the extent to which that is achieved. A bid with high energy costs
will be less successful than one with low energy costs.
Q70 Mr Stuart: There is no problem
with the bidding. At the bidding stage, you get a beautiful school
that is very environmental friendly. But as it gets squeezed to
the end and there are cost pressures, suddenly that high-performance,
low-energy pump with a bit of capital cost is squeezed out. All
the other things like that are squeezed out throughout the project.
Tim Byles: That is not our experience,
although I am familiar with the kind of example you give.
Q71 Mr Stuart: So can you assure
us that, for instance, high-performance A-grade pumps only will
be installed in BSF—
Tim Byles: No, I cannot do that,
and the reason is that the decision that is taken at school and
local authority level needs to fit within a framework that is
about improving sustainability and gives the choice about the
means of getting there to that local authority and school. I can
certainly say that if that solution did not pass the sustainability
hurdle of 60% carbon reduction, that would be a significant problem
and it would not be approved.
Q72 Mr Stuart: But at the bid stage,
of course, you have a theoretical school. We have all sorts of
Government targets. I think that the offices of the Department
for Environment, Food and Rural Affairs have seen a 32% increase
in energy use since 1999, which is at complete variance with its
policies. The policies are fantastic, but the reality does not
match. We are worried that the schools will not match.
Tim Byles: I can understand that.
I can give you one illustration that may help this afternoon.
We are seeing the consortiums taking these kinds of things seriously.
One of the advantages of an integrated approach between construction
and ICT is that we are seeing more money coming—in at least
one case I can think of, from a construction consortium—to
invest in low-energy ICT precisely because that reduces the energy
bill for the school and therefore reduces the unitary charge.
The local authority will benefit from that. It also ensures that
there is a more contained energy problem, as it were, for the
facilities management provider. We are trying to create an environment
in which the objectives of the provider are aligned with those
of the user and the Government. That was quite an interesting
example. The consortium did not have to do that. It invested in
the ICT to keep the overall footprint down.
Q73 Mr Stuart: Okay. The fear has
to be that the bid fits with the 60% reduction but the actual
school does not. What happens in that case?
Tim Byles: In the case of PFI,
you are setting the price at the point of concluding the transaction.
That means the risk transfer—that is why PFI is working
for us in the area of new build—to the private sector that
is affected at that point. Let us say that facilities management
is not included and energy provision is not included within that
package. Even in design and build solutions, more and more risk
transfer is happening, but where it is not and the risk remains
in the public sector, that creates the potential for the circumstances
you have described. We are trying to design that out by creating
a risk transfer to the private sector so that the bid sets the
pattern for operation.
Q74 Mr Stuart: Okay. You are trying
to design that out. Can you just explain to us precisely how it
would work? I am trying to work out and understand, in respect
of the contractor—as Warren Buffett would say, it is all
about incentives—exactly how it would work at that point.
Can you explain that to us?
Tim Byles: If you are going for
a price for the provision of a range of services to a batch of
schools and you are setting that price against all the variables
that are set and you deliver that through a risk transfer to the
private sector, that is the point at which you have set your course.
It is then in the interests of the private sector to get the cheapest
possible solutions. As a former board member of Constructing Excellence,
I believe that this view is shared—quite rightly—and
that more people want to see whole-life costing introduced and
that they do not simply want to get the purchase price right,
never mind the maintenance. People are looking at it as a package.
In the case of PFI, that is contained in the overall transaction
and, for design and build, more and more local authorities are
creating a fund locally to enable them to maintain the facilities
through the life of the project. We have to keep an eye on that,
because unless it is nailed down at the transaction level, it
is a risk that needs to be managed.
Q75 Mr Stuart: What guarantee do
we have on that front? Do we have your personal guarantee that,
from now on, this will be built in and there is no way that we
will have—
Tim Byles: No, I cannot say "No
way". I can give you examples where authorities can choose
a "no way" risk-transfer solution, and I can tell you
that we will be managing and measuring these issues in relation
to each school.
Q76 Paul Holmes: May I ask the same
question that I put to the two witnesses from Barnsley? When we
were first looking at this matter in respect of the first report,
schools we visited and evidence we got said that sustainability
was squeezed out on ground of cost. The Barnsley people said that
that is not happening there, because they are putting extra money
in over and above what the Government provide. How do you square
that with your confidence that sustainability is going to be there?
Tim Byles: I live in three worlds,
as I alluded to earlier on. First, there are the early schemes—Barnsley
is an example of quite an early scheme in BSF, where sustainability
was not figuring as highly as it does now and the authority in
Barnsley has invested more fully in some areas than other authorities
early on. Secondly, there are those that we have already made
changes to following on from wave 4—those authorities that
have come in since November 2006—where, increasingly, sustainability
has been quite specifically targeted in relation to the degree
of carbon reduction that needs to be achieved for schools. That
started with the announcement by Alan Johnson in spring 2007 about
60% reduction. Thirdly, we have the progress to get to the 2016
target. There have been several moves: those in the past, where
some authorities have invested more and when, frankly, sustainability
was not as high up the Government's agenda as it is now; those
who are coming through the system now; and those who will be getting
us up to 2016.
Q77 Paul Holmes: So are the extra
costs of achieving sustainability up front being met by taking
something else out? Did you make £130 million extra available?
Tim Byles: There is additional
funding being made available now—
Q78 Paul Holmes: But spread across
all schools. That was not enough to make the difference.
Tim Byles: It is being made available
for all new-build schools that hit the 60% target, and there is
a calculation that generates extra money for all schools going
through the system now that achieve that. The Barnsley scheme,
I believe I am right in saying, was before that. I expect there
to be further developments later for schemes taking us to 2016.
Q79 Mr Chaytor: I want to ask about
travel and transport, because it seems that, at exactly the moment
when the price of oil and the impact of climate change targets
is encouraging people to travel less, national education policy
is assuming that young people, particularly between the ages of
14 and 19, will travel more. How is school transport and the impact
of the 14-19 curriculum being built into the schemes that are
coming forward so far? What guidelines, if any, are you issuing
about how schools should account for the carbon effect of increasing
travel?
Tim Byles: In-curriculum transport
is not a new issue to BSF. It was a huge issue for us in Norfolk,
when I was chief executive there, where moving between a secondary
school in Swaffham and the further education college in King's
Lynn was a regular feature of life for pupils. It is highly differentiated
according to the locality that you are putting it in. The sustainability
figures that I have given you are to do with the building itself
and its operation. Local authorities have separate travel-to-learn
plans, which take into account the sustainability cost of travel.
They need to be balanced between opportunity and the sharing of
curricular activities—vocational and academic—between
institutions in localities, and the need to keep costs to a minimum.
That balancing issue is something that local authorities manage.
It is not something that we impose from BSF. We ask them to take
it into account. It is a balance, and it is a challenging balance
for any local authority.
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