With a huge financial deficit, construction activity in the education sector is predicted to reduce by nearly 50% by 2014

Investment in the schools estate has been a hotly debated topic since the effective abolition of the Building Schools for the Future programme in July last year. CPA/Barbour ABI indices for both BSF contracts and PFI education - a large element of the BSF programme - highlight how significant that announcement has been. Both indices stood at less than 10 in August, the lowest level since these series began, and a significant deterioration from the highs of 2007 when the PFI education index peaked at more than 700 and in 2009 when the BSF index exceeded 500. Relative to this, the amount of publicly financed work in education has remained reasonably stable. The CPA/Barbour ABI publicly financed education index stood at 53 in August, around 12% down on July and 14% lower than in August 2010 but, with capital funding for the Department for Education taking a severe hit in the Comprehensive Spending Review, this relative stability can only be temporary.

The Budget 2011 confirmed a 30% fall in the education department capital budget, ahead of 18% and 21% contractions in 2012/13 and 2013/14. Despite its abolition, BSF programmes will continue to attract a sizeable proportion of the £3bn to £5bn funding pot over the next couple of years. Factor in free schools and academies commitments, then subtract spend on ICT and the remainder is meagre and unlikely to do more than scratch the surface of even the estimated £22bn maintenance backlog.

The outlook for education construction is weak and the CPA’s latest forecast predicts that by 2014 activity would have reduced by nearly 50% to a little under £5bn a year. The majority of work undertaken is likely to be refurbishment, conversion and maintenance work where savings due to economies of scale are far more difficult to achieve.