Private finance contract for three schools costs West Sussex County Council almost £1m a year
The county council continues to pay just under £1m towards a contract for schools in Crawley at a time when it faces ‘extreme financial pressure’, according to a councillor.
West Sussex County Council pays the annual sum as part of a private finance initiative (PFI) contract agreed in 2004, which saw three secondary schools built in the borough.
Under the agreement, the contractor also maintains and operates the buildings over the 30 years of the contract in exchange for yearly payments, which amounted to £8.5m in 2018/19.
While part of this sum is funded by a grant from the Department for Education and contributions from the three schools themselves, the county council pays £999,800 from its own budget at a time when it is having to make millions of pounds worth of cuts.
The council has made over £239 million of savings since 2010, during which time its funding has been cut by £145 million by the Government, and it still needs to save £75.5 million over the next four years.
Earlier this year it cut its Local Assistance Network budget, which provides assistance to families and individuals in times of crisis, from £806,000 to £200,000, and it has recently proposed to further cut the remaining budget by half.
In light of these pressures, the PFI payments have been criticised as being ‘a burden’ to the taxpayer.
Councillor Michael Jones, who represents Southgate and Gossops Green on West Sussex County Council, said: “There’s no way that the PFI contract can be described as good value for money to taxpayers, and West Sussex County Council is clearly still paying a great deal at a time of extreme financial pressure.”
A county council spokesman said the sum it paid was part of the original agreement for the scheme and said PFI scheme repayments were ‘factored into budget planning processes’.
“The county council has a duty to supply school places for all children across the county and a part of this includes schools with PFI arrangements,” the spokesman said.
Mr Jones said there should be more opportunity to re-examine contracts.
“I think that the PFI company with the contract should not have some indisputable right to continue to charge what it wants regardless, at a time of such great pressures on schools and public spending,” he said.
However the county council said renegotiating PFI contracts was generally ‘a complex process’ where all stakeholders involved needed to be in agreement.
‘Not the ideal scenario’
The total cost of the PFI scheme over the 30 years is expected to be £265.85m.
This is £29 million more than was initially expected at the outset of the deal, but the council said the reason for the ‘large increase’ was that one of the schools was extended in 2009/10.
Henry Smith, the MP for Crawley, who was leader of West Sussex County Council from 2003 to 2010, said he did not think the PFI contracts signed were ‘particularly good for either the schools in question or the taxpayer’.
While schools could be built straight away at very little cost, he said taxpayers were left with ‘quite a hefty sum’ to repay over the lifetime of the project, adding: “I think overall the PFIs longer term have been quite a burden to the taxpayer.”
However he stressed that, at the time, there was ‘a stark decision’ to be made – with a choice between either entering into the PFI deal or having no new schools.
Considering the two existing Crawley secondary schools ‘really weren’t fit for purpose’, he said: “On the balance it was decided it was better to get the school built, even though the financing of it wasn’t the ideal scenario.
“West Sussex County Council did request direct public funding but this was completely rejected by the then Department for Education and Treasury.”
When asked whether the PFI scheme constituted good value for money, the county council spokesman said: “PFI as a scheme was the Government’s preferred public-private partnership model to fund and manage public projects which the council utilised in order to provide new school places for our resident’s children.”
The impact on the schools
Under the scheme, Oriel High School was built as a new secondary school for the growing Maidenbower neighbourhood.
Replacement schools were constructed for the Thomas Bennett Community College and Ifield Community College on the existing school sites.
Headteachers at both Oriel High School and Ifield Community College have praised the PFI agreements.
Rob Corbett, headteacher at Ifield Community College, said the scheme worked well, allowing staff to concentrate on ensuring good teaching ‘without the headaches that managing a school site can bring’.
“We have a lovely learning environment for our students and the cost is largely met by the local authority who are the partners in the contract,” he said.
Philip Stack, the headteacher at Oriel High School, agreed that the project worked ‘exceptionally well’.
“Visitors often comment upon the high standard of our building and the manner in which it is maintained by the PFI provider,” he said.
“PFI has had a poor representation in the media, but as is often the case the reality is somewhat different and we could not be happier with the service provided by BAM FM.”
While both schools are maintained by the county council, Thomas Bennett Community College became an academy in 2011.
A spokesperson for the Kemnal Academies Trust, which runs the school, said the annual charge to the College for the PFI scheme was currently about 10 per cent of its budget.
The National Education Union (NEU) said at the time that at least 22 teachers and support staff would lose their jobs.
A spokesman for the trust said: “The need to restructure staffing in 2018 was necessitated by low student numbers, which determines funding, and the PFI fixed charge.”
However the spokesman said the PFI contract had enabled the community to have ‘a state-of -the-art school’ which was ‘cleaned and maintained to the highest standard’, adding: “There has been discussions with West Sussex County Council and the PFI company about the charge to ensure value for money.”
A spokesman for BAM FM, which is no longer the PFI partner for the scheme but continues to provide a range of services at Thomas Bennett Community College including building and grounds maintenance, catering and cleaning, said: “Our service is efficient and value for money, and we are grateful that schools covered by this contract have indicated their satisfaction with what we do.
“We are aware of the background issues affecting funding at the school which we cannot influence.
“BAM FM has however held meetings with the College to offer its advice and support to help it identify and save costs whenever possible.
“We have also worked with them extensively in the local community.”