With last week’s launch of a programme to build 300 schools, it seems education secretary Michael Gove has finally got wise to the benefits of PFI. So that’s the multiple choice out of the way. But the really tricky stuff is yet to come
When education secretary Michael Gove confirmed a new programme of PFI schools last week, many within the industry, and the education sector, will have breathed a heavy sigh of relief. After years of lambasting the cost and delays associated with some PFI-based school building in the past, notably in the early years of the £55bn Building Schools for the Future programme, and seeking to distance himself from the initiative, Gove finally acknowledged what many commentators had been pointing out throughout a year in which the school building programme was on hold.
When it comes down to it, if you have only £15.9bn of capital funds to spend over the next four years, much of which is already committed, and you have two-thirds of the secondary estate and thousands of primaries to renew or expand - you’ll probably need to rely on some investment from the private sector.
The launch of a programme to build up to 300 PFI schools, with an upfront construction cost of about £2bn has, finally, got that difficult admission out of the way - and introduced a welcome sense of light to the pipeline of education work in England. But if the school building programme is to properly move forward, Gove’s attention now needs to turn to a series of pressing questions raised by the launch of the PFI scheme and the government’s response to the James Review into future school building, also announced last week.
As Simon Lucas, head of education at EC Harris, puts it, “This has to be the right thing to do for our children, future generations, schools and the further stimulation of the construction market in the public sector (and thus the economy). But there are many issues to be addressed if funding and new PFI is to be used as efficiently as possible.”
Here, we look at the next round of tests for Gove, and what he is planning to do about them.
National or local procurement
The test: The government has pulled back from endorsing a powerful centralised procurement process, even though it said it “overall wish[ed] to move in this direction”. Instead, it has stated that it “does not intend to override” effective existing local and regional delivery arrangements. At the heart of this lies the government’s continuing headache about how to balance economies of scale with a desire to give power to local procurers and offer opportunities to local SMEs - and it’s a conflict that needs to be resolved before any coherent building programme can be put in place.
Gove’s rough workings: This is a central aspect of the fresh three-month consultation on the James Review, but from the way the consultation document is worded the government appears to be looking at a model where national frameworks exist for all projects over a certain threshold (yet to be determined). It would be possible for local authorities and other procuring organisations, such as academy chains, to opt out of them if they can demonstrate the efficiency of doing so. The education department has also raised the possibility of having new regional frameworks, which must deliver to government guidance on areas such as standardised design.
Avoiding cost overruns and waste on pfi projects
The test: For a critique of the problems associated with PFI schools in
the past, look no further than Michael Gove himself. The education secretary once described the Building Schools for the Future programme - which involved a heavy PFI element - as “characterised by massive overspends, tragic delays, botched construction projects and needless bureaucracy”. He said last week that his new PFI-based schools programme would be policed to avoid the cost and time overruns associated with PFI schemes in the past. The question is, how?
Gove’s rough workings: A Treasury scheme to improve the efficiency of operational PFIs - announced last week - will inform the long-term aspect of the schools PFIs, implementing savings in areas such as improving energy efficiency and reducing decorating costs. But more immediately, Gove needs to work out how to get the programme off the ground in a way that cuts down on the cost and time of procurement, as well as cutting the costs of schemes themselves. He has specified that schools entering the PFI programme must be prepared to use standardised designs, which will help, provided that such designs are approved in time (see left). The schemes will also be batched together and procured as bundles, cutting down on procurement time across the programme as a whole. But crucially, the government needs to work out a clear line of responsibility for the programme - at the moment, Partnerships for Schools is handling the bidding process from local authorities, but details beyond that have not been finalised.
Working out the condition of the school estate
The test:The government has accepted Sebastian James’ proposal to use the current condition of school buildings, as well as the need for extra school places, to prioritise the distribution of future school funding. However, there has been no mandatory, central government-led collection of data on the condition of school facilities since 2005, and there has also been no central store for holding any information that was collected by schools or local authorities after that date. There is also going to be a significant cost involved in working out the condition of about 27,000 educational buildings.
Gove’s rough workings: The second consultation on the James Review asks for views on what data should be collected, and what existing data is held that could be used to cut costs - suggesting that the government will seek to use existing surveys wherever possible. In the meantime, the government’s PFI programme, which asks applicants to bear the cost of having a survey carried out in order to apply for funds, will provide some information. It also suggests that this model, whereby local authorities commission data that is then passed up to central government, could be used more widely in future.
Producing a set of standardised designs
The test: The government has said it intends to procure standardised designs and specifications “immediately”, but there has been no firm plan laid out for how to do this. With many firms in the industry, including Willmott Dixon and Wates, having already launched standardised school designs, and a body of learning gathered from recent school building programmes such as Building Schools for the Future, the government needs to work out how to get the best designs without wasting work already done or incurring unnecessary expense. There is also the problem that many solutions to creating extra school places will lie in extending existing buildings, a process which is harder to standardise.
Gove’s rough workings: Gove’s officials have repeatedly insisted that the education department is keen to learn from existing work around school design. One option is that, rather than commissioning a new suite of designs, the department instead issues a set of specifications around areas such as classroom size to which new schools need to conform. A further consultation on design will be held shortly, although Gove has not announced when.