Largest academy chain AET joins criticism of PFI costs

Largest academy chain AET joins criticism of PFI costs

The biggest academy chain in the country has joined other major trusts to criticise costly repayments to private firms who funded their buildings.

A Schools Week investigation published last week revealed that cash-strapped schools are being pushed into financial ruin by soaring debts owed as part of private finance initiatives (PFIs).

Schools are locked into contracts of up to 30 years to pay back the capital investment from private firms for new buildings or refurbishments, mostly under the scrapped Building Schools for the Future programme.

But many are struggling with rising repayments from static budgets.

Annual repayments at one school in Stoke have risen by more than £125,000 in four years.

Now Academies Enterprise Trust, which runs 68 schools with more than 45,000 pupils, has said the repayments are putting “a significant amount of pressure on some of its academies’ budgets”.

A spokesperson told Schools Week: “While we have been providing additional resource to these academies in recognition of the higher costs of PFI, the additional cost of these contracts is beyond what we expected and, in some cases, costs are over 50 per cent more than the average.”

Annual accounts from 2013/14 – the most recent available – show the trust has eight academies with PFI contracts.

The trust received a government grant to help with PFI costs of £100,000 in 2013-14, but it received almost £2 million the year before. Meanwhile, costs are rising.

Accounts show the trust spent £5.5 million on PFI-related management fees in 2013-14, up from £4.7 million in 2012-13.

One of its schools, Bexleyheath Academy, in London, has one of the largest annual repayments in the country. It paid out just over £1.5 million in the 2013-14 year, up by £61,000 from the previous year.

But the spokesperson added: “As a multi-academy trust we are in a good position to support our academies in dealing with these challenges.”

That includes a “thorough” benchmarking of the existing contracts, which compares current costs of maintenance to the market price. The trust is also working with PFI experts to review the experiences of individual academies.

“This work is intended to help facilitate good relations between academies and PFI companies and to ensure full and cost-effective delivery of PFI contracts.”

Other schools have been hampered in coming forward.

One headteacher said the PFI contract at his school included a “gagging clause” that stopped him speaking publicly about “any aspect” of the deal.

“The PFI holding company are very aggressive in enforcing this . . . it has caused a number of problems in the past.”

But Craig Elder, a partner in the public sector team at law firm Browne Jacobson, which specialises in PFI, said he had “never come across a clause in a contract to prevent a teacher bringing the company or project into disrepute.

“There are more commonly restrictions on media and publicity placed on the contractor. It is certainly not normal for ‘gagging clauses’ to be included that prevent teachers expressing a view on these matters.”