Academy facing ‘crippling’ £21 million PFI costs will now close

A struggling academy facing “crippling” PFI repayments of £21 million will now close, it has been confirmed.

Schools Week reported last week how the government had agreed “in principle” to close The Kingsway Academy, in Wirral, following two-year discussions over its viability.

Northern Schools Trust, which took on the academy in 2014, said low pupil numbers and rising private finance initiative repayments, currently costing more than £600,000 per year, mean the school is “unviable and potentially not able to pay its bills”.

It was confirmed this afternoon that the school will close in August next year. Pupils in year 6 that had been planning to attend the school from this September will be found new schools.

It means that Wirral Council is now set to pick up repayment of the outstanding £21 million PFI debt.

Nigel Ward, chief executive of the Northern Schools Trust, said: “While we are disappointed to have reached this situation due to continued falling pupil numbers, we are very grateful to the Department for Education and local authority for their support to keep The Kingsway Academy open until the end of the next academic year.

“This is a very good alternative and allows for a much more coordinated and planned approach to securing alternative school places for our children either locally or within the schools of the Northern Schools Trust. All parties are working together in the best interests of our families and their children.”

The council is working with families to help them find new schools, with “sufficient places” available, a trust spokesperson said.

Extensive investigations by Schools Week previously revealed how schools were being pushed into financial ruin by soaring debts owed to the private firms that funded their buildings.

Schools make repayments through councils that signed up to the PFI deals to build or refurbish schools. Contracts normally run for around 25-years, and rise each year – whether or not schools lose funding because pupil numbers drop.

Ward previously said the closure plans were “nothing to do with the quality of education being provided”, but because of low pupil numbers and the PFI deal signed by Wirral Council to refurbish the school years ago.

Schools Week understands the PFI contract still has around 15 years yet to run – with repayments of around £21 million due to be paid.

If the school closes, the council will have to pick up the tab, as it would own the building, the trust said.

The Liverpool Echo reported last year how Liverpool council was repaying £4.3 million PFI costs per year for a school, even though it had closed in 2014.

Wirral Council did not respond to a request for comment.

Schools Week has previously revealed how takeovers of struggling schools had hit snags over PFI issues. Trusts willing to takeover schools identified as needing intervention have been put off over PFI repayments.

Former education secretary Nicky Morgan previously said government lawyers had tried, but failed, to unpick the “watertight” deals.

But Morgan pledged schools with hefty PFI contracts would get extra funding under the new fair funding formula. Further details on the final funding formula are expected to be released later this year.

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