PSB0022 - Evidence on Priority schools building programme

About the Local Government Association

The Local Government Association (LGA) is the national voice of local government. We work with councils to support, promote and improve local government.

We are a politically-led, cross party organisation which works on behalf of councils to ensure local government has a strong, credible voice with national government. We aim to influence and set the political agenda on the issues that matter to councils so they are able to deliver local solutions to national problems.

Background summary

1.1 The Priority Schools Building Programme (PSBP) needs to be set in the wider context of the need to use scarce schools capital resources flexibly and efficiently. This is to meet the threefold challenge of providing sufficient new school places to meet increasing demand; rebuilding schools that are beyond repair; and making sure that schools have access to capital to keep them in a good state of repair.

1.2 The current system for distributing schools capital is characterised by fragmentation, bureaucracy and central control. The capital pot is first divided into three, with separate allocations for rebuilding schools, school maintenance and new school places. The money is then allocated through a variety of central and local programmes with different bureaucratic reporting requirements for each. Maintenance funding is split into separate pots for council-maintained schools, faith schools and academies. The PSBP to rebuild schools is centrally run and procured in Whitehall and has seen significant delays as a result.

1.3 Although the majority of funding for new places has gone directly to local authorities to allow them to deliver the new places quickly and on time, a significant amount has been invested in the centrally run free schools programme. This has not always delivered places where they are needed or has been used to create secondary school places when the immediate pressure is in the primary phase.

1.4 In July 2010 the Government commissioned the independent James Review of schools capital which found that “the capital allocation process is complex, time consuming, expensive and opaque.”[i] A key recommendation of the Review was that “the Department for Education should avoid multiple funding streams for investment that can and should be planned locally, and instead apportion the available capital as a single, flexible budget for each local area.”

1.5 This recommendation for a single capital pot for each area must be implemented if councils are to meet the challenge of providing new school places and repairing and rebuilding crumbling schools. In the last Spending Review, a £21 billion schools capital allocation for 2015-20 was announced and the Government now needs to make a corresponding five-year allocation to local areas, paid into local capital pots. This will allow councils to plan ahead with schools to meet local needs and priorities and use scarce capital resources flexibly and efficiently. Evidence shows that capital programmes that are centrally run and procured by central government deliver poor value for money and seek to impose ‘one size fits all solutions’ which do not meet local needs.

How the allocation of funding under the PSBP has affected schools, including those who were due to receive funding under the Building Schools for the Future programme

2.1 Our analysis suggests that only a minority of the ceased Building Schools for the Future (BSF) projects have been picked up by the PSBP. 715 projects were abandoned when BSF was scrapped in July 2010. We estimate that, of these, around 55 (8 per cent) are being financed through PSBP1 with a further 30 (5 per cent) through PSBP2. However, the scope of these projects may be different as PSBP2 will in many cases not involve whole school rebuilding. This means that 87 per cent of the cancelled BSF projects have not been funded through PSBP.

The impact on schools in need of repair or rebuilding that have not received funding

3.1 Where schools have not received funding, pupils will continue in many cases to be taught in facilities which are inadequate. In our submission to the James Review in October 2010, the LGA estimated the need for capital funding at £15 billion. The LGA understands the total allocation through the first two rounds of PSPB to be around £4 billion; the Government has not yet released the total figure.

The experiences of schools who received funding under phase 1 of the programme

4.1 PSBP bids were invited in October 2011 and the successful projects in the first wave were announced in May 2012. The first PSBP school was opened in 2014, however this was an exception and most will be completed in 2016 and 2017. This means that most schools will have experienced a delay of between four and five years between the announcement that their bid has been successful and the completion of the project.

4.2 PSBP is a centrally specified and commissioned programme. The Education Funding Agency (EFA) is the client. It operates through a contractors’ framework which comprises ten contractors, all large national and international firms.

4.3 Schools’ experiences of the PSBP have been varied. In many cases, they have had to wait up to a year after the initial announcement for detailed engagement with the EFA to commence. Following this, there has been a period of a year working with the EFA and their advisers to work on a control option which can be used for initial negotiations with contractors. Following the designation of a preferred contractor, the pre-contract work between the preferred contractor and the school, including detailed design, is completed in a short period of six to eight weeks.

4.4 The initial announcement in 2011 was that PSBP1 would be financed through private finance as a ‘PF2’ scheme. The LGA expressed concern at the time that, given the recent financial crisis, there would be sufficient appetite in private financial markets to finance the scheme. This concern proved justified and, following further consideration by HM Treasury, the decision was taken in June 2013 for 216 of the 261 schools to be built through capital grants from the Government, with only 46 being built through a ‘PF2’ scheme. Following complaints about delays from councils and schools, the Government also set a date of the end of 2017 for all PSBP1 schemes to be completed.

4.5 The LGA has heard from some councils that they decided not to bid under PSBP1 as they did not have any experience of working with PFI. The LGA has also heard that some PSBP contracts are proving hard to let at the rates specified by EFA.

The value for money of the PSBP compared to Building Schools for the Future

5.1 It is too early to make a full assessment of the value for money of the PSBP compared to BSF. PSBP schools are certainly initially cheaper than BSF schools but whether they prove to be better value for money in the long term can only be seen over the whole lifetime of a building. For example, if a cheaper method of building demands more maintenance it may not ultimately be better value for money.

5.2 Feedback from councils is that PSBP projects managed by the EFA appear superficially cheaper than council-commissioned schemes because they omit a significant proportion of the costs, such as demolition of predecessor buildings, site clearance, instatement of roadways and pavements, and removal of asbestos, so they are not comparable and do not reflect the 'turnkey' costs.

5.3 It is also clear from feedback that, compared to council managed projects, there are frequently significant delays in EFA managed projects. Such delays are potentially disastrous where the project has an expansion element to meet statutory obligations to provide school places which are required to a deadline.