BSF needs extra £1bn a year, says NAO

The government’s Building Schools for the Future programme will need an extra £1bn a year to meet its targets, according to a report from the National Audit Office.

The spending watchdog said government spending on the BSF programme would have to increase from £2.5bn a year to between £3.4bn and £3.7bn from 2010-2011 onwards if it is to complete the targeted construction and refurbishment of all 3,500 schools by 2020, reports Building magazine. The total programme will now cost between £52m-£57bn, around £10m more than the original £45bn budget.

The report blamed the rise in costs on a doubling in building cost inflation and expansion of the BSF remit to cover academies, special needs facilities and carbon reduction measures, added Building Design magazine. The NAO also raised concerns over procurement skills, and whether projects delivered under 10-year procurement deals can be delivered economically.

The news came as The Telegraph reported that Gordon Brown is working up plans to provide billions of pounds of support for PFI projects hit by the recession.

According to a report the paper, which was carried in the online news service of Construction News, the Treasury’s plans could see an infrastructure fund created to provide long term bridging loans from the taxpayer to PFI projects.

Alternatively, government departments that sponsor projects may lend directly. The government would then aim to recoup its outlay when the projects are refinanced part way through their life.

A project in urgent need of a funding solution is Salford and Wigan BSF, one the largest BSF deals, which is already running a year late and will be delayed by a further two months, reports Building. The £350m project has two remaining bidders, Lend Lease and a Hochtief/Laing O’Rourke joint venture.

A source close to the Salford PFI told Building that a preferred bidder would not now be announced until March at the earliest. The decision was originally due in January 2008 and was then put off until last month. The source said procurement issues were probably the source of problems rather than finance.