Raising the PFI question

Written by: Dr Bernard Trafford | Published:
Dr Bernard Trafford, head, Royal Grammar School, Newcastle

The buy-now-pay-later PFI approach delivered necessary new buildings, but what happens when the debts have to be repaid, asks Dr Bernard Trafford

One benefit of being long in the tooth as a head is the ability to say, “I told you so”.

Mostly I avoid the temptation: but I wish I could speak to the politicians whose messianic ventures of 20 years ago have created current disaster.No schadenfreude, though: it’s not the politicians who suffer from historically poor decisions, but people like (right now) the school children of Edinburgh.

Earlier this month, 7,000 Edinburgh school children were unable to return to 17 schools for the new term because their school buildings were not deemed safe. These aren’t crumbling edifices from the 1940s, but new constructions created under the last Labour administration’s Public Private Partnership (PPP).

In 2001, the Edinburgh Schools Partnership (ESP) signed a 30-year PPP contract to build 10 primaries, five secondaries and two additional special needs schools. In January, a wall collapsed in high winds, closing Oxgangs Primary for a few days. In March, Oxgangs closed again after a safety inspection, followed by three more schools. Then, earlier this month, 17 schools in total were closed.

As SecEd went to press, the ESP was due to report on the structural surveys that have been carried out at all 17 schools (see our news section for the latest).

I cannot talk specifically about what has gone wrong in Edinburgh and we will of course hear more detail in the coming weeks.

However, I do want to talk about the wider Private Finance Initiative (PFI) approach.

PFIs were conceived by Tony Blair and Gordon Brown in the run-up to their 1997 landslide election victory. They offered developers a fantastic deal. They would build millions-worth of new schools and hospitals, being paid over 20 or 30 years: meanwhile many cut deals that ensured they received payment for such “extras” as caretaking, maintenance and out-of-hours use.

New facilities were certainly needed to replace the country’s tired, ill-maintained old school and hospital buildings. Blair and Brown were able to appear powerful reformers investing heavily in public services – without meeting the cost up-front.

My parents’ generation used to talk about buying something “on the never-never”, via Hire Purchase. Buy now: pay later. Those who can afford a mortgage nowadays still do it when they buy a house.

At the end of the repayment period they own the house. But with PFI the builder/supplier retains ownership of the building: government is paying not a mortgage, but rent. How does that work? The ESP probably reckoned it had 15 years yet to ponder that question. It will appear more pressing now.

All of us know heads who have encountered significant difficulties with their smart new PFI-financed buildings. Some of the large corporations to whom they are in thrall make it expensive to run activities in the evening, because extra charges apply for caretaking, heat and light. In the same way sporting activities or weekend events are frequently seen by the providers as an extra earner, to the despair of the schools and their leaders. And there has undoubtedly been shoddy construction.

The buy-now-pay-later approach delivered necessary new buildings. But now the cracks are starting to show in the Blair/Brown wheeze. In addition to the continuing problems of the economic downturn, episodes like Edinburgh’s shine a light on the future debt with which the country will have to wrestle with when all those PFI projects reach their end.

I never could see anything in PFI but trouble stored up for the future. Chickens were sure to come home to roost: in Edinburgh they’ve come home earlier than expected. Told you so.

  • Dr Bernard Trafford is head of Newcastle’s Royal Grammar School and a former chairman of HMC. His views are personal. Follow him @bernardtrafford


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