Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Schools £2bn PFI programme to go ahead despite review

The government has confirmed its £2bn schools PFI programme will go to the market in Spring 2012 despite a wide-ranging review of PFI being launched from December.

Treasury commercial secretary Lord Sassoon said the procurement process would attempt to learn lessons from the evidence around inefficiency of PFI but that it did not make sense to wait for the right model before starting procurement.

The Treasury will be launching a 10-week call for evidence on 1 December that it says “will make full use of the wealth of experience across the public and private sectors” to learn the lessons of 20 years of PFI.

The government announced that PFI would be used to fund 300 schools under a new Priority School Building programme from 2012 after the scrapping of Building Schools for the Future.

Education secretary Michael Gove said at the time that cost and time would be strictly regulated by the government and that standardised schools would be expected to contribute to efficiency gains.

PfS published details of the Priority School Building Programme in July and said it expected to spend between £1 billion and £3bn.

Lord Sassoon said: “Procurement will start in the Spring and that is the timescale that has always been. Where we can build transparency [into procurement] we will but with all of these things there is a balance to be struck.

“Holding up the schools programme while we find the right model would not make sense.”

Infrastructure UK chief executive Geoffrey Spence added: “We have a stream of projects at different stages. At different points they will be able to include the reforms we want to see.

“If you are closing schemes in the next three or four weeks, for example the Nottingham Tram, it would be pointless to go back over that in terms of detail but if you have a scheme that has not gone to the market yet then it would be relatively easy. Those projects that are further from financial close will look like the new model of PFI.”

The government announced the move today after criticism of PFI by MPs on the Treasury Select Committee in August, in which it slammed the initiative used to finance new public building programmes as “extremely inefficient” and highlighted rocketing borrowing costs since the credit crisis.

Lend Lease Infrastructure Development EMEA managing director Neil Martin said: “The industry generally accepts there is a need for the reform of PFI and, although the political and economic context has changed, project finance still represent a valid option for the public and private sector.  Equity is available for the right projects but the returns have to be there for the confidence to invest.” 

tom.fitzpatrick@emap.com

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.