Building Schools for the Future (BSF) is a major school rebuilding programme. It is the biggest single government investment in improving school buildings in the last 50 years and its aim is to rebuild or remodel every secondary school across the UK, totalling 3,500 schools
1. Why are schools being rebuilt?
86% of secondary schools were built in the 1950’s, 60’s and 70’s and are coming to the end of their useful lives. Research has shown a clear link between capital investment and improvements in school standards, and this is why investment in high-quality school buildings plays a crucial part in the government’s programme of education reform. The purpose of BSF is to ensure that secondary school pupils learn in 21st century facilities. BSF is delivered in waves, with local authorities and then groups of schools being selected according to social deprivation and attainment. There will be 15 waves in total.
2. How does BSF work?
Local authorities are brought together with a private sector partner and will make use of their expertise to design and construct (and in some cases also maintain and operate) the facilities. Partnership for Schools has been set up to help local authorities to select a private partner to form a local education partnership (LEP). An LEP is a public private partnership between the local authority, Partnership for Schools and the selected private sector partner. The private partner must be selected in open competition, under EU procurement rules.
3. How is BSF funded?
The BSF programme is funded entirely out of the public purse, half from conventional DCSF funding and half from private finance initiatives (PFI) credits. PFI was launched in 1992 and presented itself as a useful accounting device to limit borrowing, with PFI contracts being treated as ‘off balance sheets’ – any money invested through PFI did not show up on the national debt. PFI has had mixed success, with some schools finding that the infrastructure they have obtained via PFI is inadequate.
4. What is the legal framework for PFI?
Under PFI, a private sector consortium (usually including a building firm, a bank and a facilities management company) establishes an independent legal company called a special purpose vehicle (SPV), which enables the organisations involved to work together under one umbrella. The SPV bids for a single contract which will be awarded by the LA or school seeking to implement a building project. The SPV then proceeds to design and build the project in line with the clients’ specified outputs.
5. What happens with ownership?
The building asset that results from the project is not publically owned. Instead, the LEA, governing body or trustees, depending on the type of school, will normally hold the freehold of the relevant site. The private sector partner then provides, pays for and operates the new-build school over the period of the contract, usually between 25 and 30 years, during which time the school/LA effectively leases the building back.
6. How is BSF delivered?
An eight-stage process has been set out to ensure that the BSF aims are met:
- Stage 0 – Preparing for BSF
- The LA should begin preparing the project as soon as it hears it has been invited to join a BSF wave. The Public Private Partnership Programme can provide LAs with support
- Stage 1 – Project initiation
- Defining the BSF project – forms the basis for managing and assessing success of the project
- Stage 2 – Strategic planning
- Robust analysis of need, cost, risks and expected outcomes
- Stage 3 – Business case development
- Creating an outline business case to set out in detail the scope, cost, affordability, risks, procurement role and timetable of a project
- Stage 4 – Procurement planning
- Preparation of the documentation needed to publish a notice in the official journal of the EU – a requirement for all European contract tenders above a certain value
- Stage 5 – Procurement
- The LA will evaluate potential tenders and produce a long list of bidders, then produces a shortlist – usually of three bidders. Final tenders are submitted and a preferred bidder identified
- Stage 6 – Financial close
- Contractual commitment to the formation of the LEP
- Stage 7 – Construction
- Ensure that costs and timescales are controlled and disruption kept to a minimum. The LEP will procure the delivery of approved projects through a supply chain, periodically market tested to demonstrate value for money
- Stage 8 – Operation
- Work does not stop once the schools have been built and are in use. The outcomes are assessed against the planned objectives and information is fed back into the programme for future projects.
7. What has the response to BSF been?
The first annual review, in December 2007, of BSF revealed that headteachers thought that existing, unmodernised school buildings were generally poor or average and did not meet the needs of pupils or staff. Nine out of 10 headteachers believed that BSF would improve the overall quality of teaching and learning. BSF has been criticised for running behind schedule. These delays have been blamed on red tape and complicated administration. Early targets have now been recognised as being overly optimistic and have been revised. The Report of the Audit Commission into BSF, published 12 February 2009, has stated that the Department for Children, Schools and Families and Partnership for Schools were overly optimistic in their assumptions of how quickly the first schools could be delivered, leading to unrealistic expectations. The report also noted that there is an increase in the total estimated costs and that delivering the project to all 3,500 schools will be challenging.
8. Is BSF going to be affected by the recession?
MPs have recently warned that schools may have to tighten their belts as funds are diverted to tackle the recession. BSF is currently under review as concerns are raised that the private finance that some projects rely on may dry up. However, at the same time the government is promising to invest heavily in public sector projects. Overall there is the risk of further slippage in the timetable but not of the BSF project failing in itself.
This e-bulletin issue was first published in March 2009
About the author: Kate Mills works at Browne Jacobson and specialises in social services, education and local government litigation and assisting in providing legal services to local authorities on a wide range of legal issues, including those relating to institutional abuse and professional negligence