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Education agency to remove more schools from £2bn PFI programme

School feasibility studies are likely to result in up to nine priority schools being funded through capital rather than PFI funding, CN has learned.

The Education Funding Agency has said it is looking at using capital funding to pay for more of the schools that were initially set to be procured through the private finance initiative.

Up to £154 million of work in the North-east, Midlands and London batches of schools were revealed on Thursday, to include two East Riding schools that were previously earmarked for PFI funding that will now be capitally funded in the North-east batch.

CN revealed more than a fortnight ago that questions were being raised over whether more schools would be procured outside of the current PFI model.

The EFA said at the time “we are not replacing the private finance element of the Priority School Building Programme with capital”.

But a Department for Education spokesperson told CN on Friday that only a handful will be switched to capital funding: “We have always been clear that a handful of the 219 schools identified for the private finance element of the Priority School Building Programme may be better delivered through capital to ensure value for money, and that this would be identified as we examined them further.

“The Education Funding Agency has now identified a very small number of cases where it is simply better value to refurbish schools using capital finance. We must ensure that tax-payers’ money is spent wisely and that schools are re-built efficiently.”

CN understands that no PFI schools will be allocated to either of the Midlands or London batches. A restriction on the number of schools that can be added to the capital programme is also affected by limited funding being available over the remainder of the spending review period for the capital element of the PSBP, and so it would not be possible to transfer a large number of the private finance schools into the capital element.

Carillion chief executive Richard Howson has told CN that questions still remain over the procurement process of the Priority Schools programme.

Mike Green, director of capital for the EFA, which is tasked with delivering the programme, last week revealed details of the first batch of capitally funded schools to come to market.

Under the scheme, £400m of capital funding will be used for the 42 schools most in need of work.

The remaining 219 were set to be procured under the current PFI model, which is itself subject to a Treasury review after critics branded it bad value for the taxpayer.

But Mr Green said it was “always thought” that a “handful” of schools would be transferred from PFI as they would not be suitable, for reasons such as being listed buildings.

An EFA spokeswoman added: “At the time of the announcement 42 schools were identified as suitable for being delivered via capital grants.

“To date we have identified a further two schools (Goole High School and King James I Academy Bishop Auckland) which would not deliver value for money if procured using private finance. Therefore, in discussions with the schools and relevant parties, they will now be delivered via capital investment.

“As we work with schools and relevant parties, a handful may be more suitable to be delivered via capital in order to deliver value for money.”

CN understands that as a result fewer than 10 schools are set to be removed from PFI funding.

Mr Green is adamant that the first of the PFI schools will reach the market in December – the same month chanceller George Osborne is expected to reveal a replacement for the current PFI model.

Asked if he thinks the whole schools programme will be procured under the existing PFI model, Carillion’s Mr Howson said: “I think some of them will. I don’t think it’s been made clear whether all £2 billion will be procured under that model.” 

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