Report No.
EPC31
FOR INFORMATION
COMMITTEE:
Secondary
REPORT OF:
Siôn Humphreys
SUBJECT:
Building Schools for the Future
RECENT REFERENCES:
EXECUTIVE SUMMARY:
The appended paper examines recent reports and developments
surrounding BSF
RECOMMENDED:
To receive
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BSF: CURRENT STATE OF PLAY
LEST WE FORGET……
The BSF programme was announced in 2003. The aim was to renew all English secondary
schools by 2010 in ‘waves’. About half the schools would be rebuilt, 35% remodelled and
15% refurbished. The broad distinction was that rebuilding would be financed via PFI
whereas remodelling and refurbishment would be financed via a traditional grant
mechanism.
CBI: ‘MORE THAN BRICKS AND MORTAR’
ABSTRACT
In this paper the CBI reiterates its strong support for BSF as a means of transforming
education and raising standards. However, it identifies trends and developments that have
the potential to undermine the transformative potential of the initiative.
CONCERNS
The paper conveys a feeling that there has been a loss of momentum. Its specific concerns
centre around:
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High-level political direction:
The capacity of the programme to deliver change on the scale envisaged;
Procurement capability issues.
The paper proposes that if momentum is to be regained, the following imperatives need to
be evident:
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Education is put first;
Decisive leadership from the DCSF;
Long-term commitment to BSF;
Improvements in procurement practice.
PARTNERSHIPS FOR SCHOOLS
The ‘Partnerships for Schools’ website contains content that challenges aspects of the CBI
position. For example, the CBI paper alludes to:
‘only 13 schools have opened in the five years since the first schemes were launched.’
Yet, the PfS site states:
‘BSF well on track as students and teachers celebrate opening of 50th new school’
This dichotomy is resolved in that the CBI only refers to new-builds whereas the PfS
includes new-builds and refurbished schools in its figures. This weakens the CBI’s
contention that the process has lost momentum. Indeed, PCW, in a report commissioned by
PfS, comment that BSF had ‘gathered momentum’ over the previous year. PCW’s key
findings are:
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BSF has “gathered momentum” over the last year with “significant progress” made to
improve the overall efficiency – including cutting £250m of red tape and
strengthening the design and procurement process.
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Nearly all stakeholders involved see it as the key to educational transformation and
that satisfaction rises sharply the longer schools and local authorities have been in
the programme.
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Heads overwhelmingly back BSF - 96% in the first three BSF waves and 88% in
second three waves surveyed saying it will make schools better places for staff to
work. Eight in ten overall say it will improve pupil attitudes, behaviour and attainment;
improve teaching; and provide vital services for local communities.

Positive feedback from pupils and teachers in four new BSF schools opened in the
last year. Teachers said facilities more than met pupils’ needs; had vastly improved
ICT provision; and improves teaching, learning and behaviour. Pupils feel prouder of
new schools and say it has raised their aspirations.
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Big improvements in consultation with schools, with heads being far more deeply
engaged as projects progress – but report says schools need more resources from
local authorities to free up staff to focus on BSF; sharing lessons learnt from the early
BSF projects to later ones; and senior staff need to involve other staff more.
Heads confident that new buildings would transform standards but concerned that old
facilities are deteriorating quickly or not maintained properly before BSF building
begins in earnest.
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SELECT COMMITTEE PROCEEDINGS
Neither the CBI paper nor the PCW’s report were produced in the context of the ‘credit
crunch’. From December 2008 onwards there have been concerns that the pressures the
baking sector is facing could have a significant impact on BSF. The reason, as outlined in
evidence given by the Construction Industry Council to the Commons Select Committee, is
that banks are increasingly reluctant to lend money to construction firms to finance PFI.
PfS’s Chief Executive, Tim Byles, quantified this in his evidence. Banks are generally only
prepared to lend up to £30m. Therefore, for a £200m project six companies would need to
become involved. If this state of affairs is applied to the CBI’s criticisms of the BSF process,
two in particular can be revisited:
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The capacity of the programme to deliver change on the scale envisaged.
Procurement capability issues.
The CBI expressed concerns about ‘high level political direction’. In December 2008 the
Minister announced that an agreement had been reached with the European Investment
Bank for a £300M loan. This is paltry in relation to the £45b that BSF was originally
envisaged to cost.
In evidence to the Select Committee on 4/2/09 the SoS alluded to new deals being made.
There was also a reference to focussing on small and medium projects. When questioned on
this on the basis of evidence that projects were losing momentum, the SoS responded by
suggesting that some PFI players are,
‘thinking about the kind of finance they are willing to offer in a different way’
A number of concerns emerge.
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A possible implication of this is that rebuild projects could be threatened and there
will consequently be more projects based on refurbishment.
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A further concern relates to schools in future waves. PCW reported that some school
buildings awaiting refurbishment were deteriorating rapidly and that LAs appeared
reluctant to act on the basis that refurbishment was planned. The Minister responded
by stating that school revenue funding contains an element for
‘repair and maintenance to keep their buildings looking smart and capital funding
to meet all health and safety needs.’
The Minister is one of the speakers at the 2009 BSEC in February and it is thought that he
will announce the national programme for the next stages of BSEF.
NATIONAL AUDIT OFFICE (FEB 2009)
This report supported the proceedings of the Select Committee regarding the impact of the
banking crisis:
Over the course of 2008, difficulties in the banking sector reduced the amount of money
available for banks to lend and it became difficult for Local Authorities to find lenders of
senior debt for PFI deals.
The report is cautious in tone in that it does not lapse into total doom-and-gloom. It refers to
the DCSF’s bullish view that BSF remains comparatively,
……one of the more attractive markets for bidders….
A cynical reaction to this might be, ‘they would say that, wouldn’t they?’
However, tacit recognition that the current climate is not conducive comes from the
confirmation that new sources of finance are being sought, including the European
Investment Bank.
The NAO report is more historically than futuristically orientated, the main thrust being to
look at progress up to December 2008. Conclusions include:
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Over-optimistic projections led to unrealistic expectations. At virtually every stage
processes took longer than anticipated at both central and local level. There were
some cautious indications of optimism in that although LEP procurement has taken
longer than estimated it has occurred faster than previous PFI projects. PfS
streamlining of procurement and strategic planning processes should lead to further
efficiency gains.
The report is pessimistic about capacity to include all schools within the time-frame.
The number of schools in procurement and construction would need to double by
2011 to get back on track. The report bemoans the shortage of procurement and
project management skills available.
The total capital cost of the programme is likely to rise by between 16 and 23%
compared with initial projections.
Improved guidance and processes have enabled LAs to work more strategically on
the evidence of more recent projects.
Initial LEPs were expensive, this being attributable to avoidable delay, extensive
reliance on consultants by LAs and other procedural inefficiencies. PfS have acted
on this in order to reduce future costs.
LAs have had insufficient involvement with LEP to date to identify benefits. Private
sector partners told NAO that they anticipated benefits to accrue (70% were
optimistic)
NAO’s conclusion is that once an LEP has been set up, procurement becomes more
efficient both I terms of time and cost. PfS has also acted as a broker between LAs
and private sector players to improve working relationships. Judgment is somewhat
guarded: some are beginning to see the benefits of effective partnering…’
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The need for effective safeguarding mechanisms to ensure value for money under
conditions where LEP projects are not subject to competitive tendering during a ten
year exclusivity period is stressed by NAO.
The report is positive in tone about the effectiveness of PfS. The need to adjust the
balance between the timescale of delivery targets and other quality indicators is
stressed. PfS is also urged to extend its valuable benchmarking work to help LAs
achieve greater efficiency.
The report’s recommendations flow from the points summarised above and are based on the
notion that the apparent improvements brought about by LEP need to be built upon and that
this is challenging in the extreme in the present economic climate..
CONCLUSION
The impact of the recession on BSF was confirmed in early March with announcements of a
government ‘bail out’ of projects. This was not confined to education as other public works
are also PFI funded. Focussing on schools and secondary schools in particular, the major
implications are:
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The impact on future ‘’new build’ projects’;
Availability of funding for refurbishment projects;
Impact on schools anticipated BSF in a distant wave bearing in mind the PCW finding
that some works were being deferred in anticipation of BSF;
The possibility of significant numbers of schools not having the estate necessary to
put into effect strategy designed to realise educational plans relating to collaboration,
21st Century schooling, etc.
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