DfE to help schools on PFI handover – but guidance ‘too late’

Government guidance admits hundreds of projects risk 'disruption' and paying twice for repairs when PFI deals eventually expire

Government guidance admits hundreds of projects risk 'disruption' and paying twice for repairs when PFI deals eventually expire

11 Mar 2022, 17:16

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The DfE will help all PFI schools handle expiry.

The government has pledged to help hundreds of schools avoid disruption when private finance initiative deals expire, amid warnings new guidance has come too late.

The controversial schemes, in which private firms build and maintain schools in exchange for mortgage-style payments, typically last 25 years, before handing them over to taxpayers. Many projects have been dogged by complaints over high costs and construction problems.

Having launched in the 1990s, the first seven school contracts are due to expire within the next six years, moving buildings back into public hands.

The Department for Education’s PFI expiry unit had promised to help those schools and has now expanded its support to all PFI schools, although only from five years before contracts expire.

A spokesperson gave few further details of what the assistance entailed.

The government has said that handovers present “inherent challenges”, warning of “service disruption” unless authorities plan properly.

Guidance last month from the Infrastructure and Projects Authority also warned that schools risked “double payment” if repairs were not finished pre-expiry.

Experts say firms have few incentives to invest in maintenance as handover looms. The IPA admits contracts typically lack “specificity” about handing over sites in good condition.

Firms may become “shell” companies post-expiry, making seeking compensation difficult.

The IPA recommends appointing a senior officer to understand contracts, agree expiry processes and plan for post-expiry maintenance provision. Planning should begin seven years pre-expiry.

Dame Meg Hillier, chairwoman of the public accounts committee, said the IPA guidance “comes too late to enact its own recommendations for the first wave of expiry”. The PAC published a report on the risks involved in expiry last year.

Barnhill Community High School’s contract is due to expire in 2024.

Executive headteacher Tracey Hemming said the school would have been “steamrollered” without DfE and consultants Project PFI’s support, but the site’s condition was still “not where it should be”.

Private firms including Capita and Grant Thornton are now advertising expiry services. “Now we see the inevitable army of consultants moving to cash in again,” said Hillier.

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