Taxpayers in Lancashire will stump up almost £800 million for a schools programme that was scrapped by the Government before it could finish.
More than 80 county council secondary schools across the county were due to be rebuilt or refurbished as part of Labour’s Building Schools for the Future (BSF) project, but the plug was pulled in 2010 before it could be completed.
Three of four phases were done and had a combined capital value of £200.7m.
And, under the terms of Public Finance Initiative (PFI) deals penned by the Department for Education, taxpayers will repay almost four times that amount, £791.7m, by the time the contract ends in 16 years’ time.
Speaking in 2010 shortly after the Conservatives came to power in coalition with the Liberal Democrats, the then-education secretary Michael Gove, said: “The Building Schools for the
Future scheme has been responsible for about one third of all this department’s capital spending, but throughout its life it has been characterised by massive overspends, tragic delays, botched construction projects, and needless bureaucracy.”
The then-shadow education secretary Ed Balls described the move as a “tragedy” and said the decision marked a “black day for our country’s schools”.
Lancashire County Council’s then-children and schools boss Susie Charles, who is now vice chairman at the authority, said “it is obviously disappointing not to be able to proceed with our phase four Building Schools for the Future projects”, which would have included schools in Colne, Barnoldswick, Haslingden, Accrington, and Rishton in the east of the county.
Under PFIs, private companies handle up-front costs on public building projects such as prisons, hospitals, schools, and infrastructure, in exchange for yearly payments from the state.
Contracts often last decades and the deals, which were introduced by the Conservative government in the ‘90s and increasingly used by Tony Blair’s Labour government, cost the taxpayer much more than if the projects had been funded from the public purse.
A report from the National Audit Office said there are over 700 current PFI deals with a capital value of £60bn. “Annual charges for these deals amounted to £10.3 billion in 2016/17,” it said. “Even if no new deals are entered into, future charges which continue until the 2040s amount to £199 billion.”
The former Chancellor Philip Hammond last year said no new PFI deals would be signed, saying the government was “putting another legacy of Labour behind us” and would “abolish” their use.
He said: “I remain committed to the use of public-private partnership where it delivers value for the taxpayer, but there is compelling evidence that the private finance initiative does neither … I have never signed off a PFI contract as chancellor, and I can confirm today that I never will.”
Some 13 schools were built in Lancashire under the Building Schools for the Future programme, the Department for Education said in a response to a Freedom of Information request: Accrington Academy, Blessed Trinity RC College, Fulwood Academy, Hameldon Community College, The Rose School, Unity College, Burnley Sixth Form, Marsden Heights Community College, Pendle Vale College, Pendle Vale Community High School and College, Shuttleworth College, Sir John Thursby Community College, and Ridgewood Community High.
It said Accrington Academy was also refurbished under the programme, while the 11 schools due to be built or re-built until the project was scrapped were West Craven High Technology College, Colne Park High School, Colne Primet High School, Haslingden High School, Mount Carmel Roman Catholic High School, Norden High School and Sports College, Oswaldtwistle School, Rhyddings Business and Enterprise School, St John Fisher and Thomas More Catholic Humanities College, Tor View School, and West Craven High Technology College.
The Department for Education said seven schools have been opened under programmes which have superseded Building Schools for the Future: Maharishi Free School, Burnley High School, Eden Boys’ School (Preston), Olive School (Preston), The Heights (Burnley), the Burnley Hill Pupil Referral Unit, and the Lancaster Royal Grammar School.
Schemes have 'crippled hospital finances'
Taxpayers are shelling out billions of pounds more than planned for schools, hospitals and other projects built through controversial deals with private companies, an investigation by JPIMedia can reveal.
Extra costs and rocketing inflation are set to add at least £4bn to the overall price tag of Private Finance Initiative (PFI) schemes, according to figures obtained from hundreds of public bodies.
Penny Mordaunt, the former Defence Secretary, is among those who have warned that PFI schemes have “crippled hospital finances” as it can be revealed hospital bosses in her
Portsmouth North constituency will pay out an extra £700m for a hospital expansion scheme signed under the Labour government in 2005.
It can also be revealed that:
- An NHS maternity unit built and run by a private company was closed after just 16 years but is still costing the taxpayer millions of pounds;
- A police force in the South East is trying to think up new uses for a mothballed custody suite it is still paying for;
- Expensive maintenance contracts have seen one police force billed £884 for an extra chair.
With some PFI schemes set to continue into the 2040s, trade union leaders and public sector campaigners have called for urgent action.
Unite assistant general secretary Gail Cartmail said the “ever-escalating costs” of PFI are a “national scandal”.
She said: “The money that has poured into the pockets of profit-hungry financial institutions and private companies could have been much better spent directly on public service projects and infrastructure. PFIs are a rip-roaring example of out-of-control ‘bandit capitalism’.”
Many of the deals struck with the private sector in the late 1990s and early 2000s to replace crumbling buildings were pegged to the retail price index (RPI), the now-discredited high measure of inflation still used to calculate rail fare hikes and student loan interest payments.
This has risen faster than many councils, police forces or NHS trusts had planned for, lumbering them with ever-bigger payments at a time when they have seen their own budgets squeezed.
Alterations to buildings or services have also seen authorities hit with unforeseen costs.
Joel Benjamin, the co-founder of The People versus PFI, a campaign group calling for an end to the “institutionalised theft” of PFI debt, said the rising bill highlights how the scheme is a “shocking waste of public money”.
The contracts were first introduced by John Major’s Conservative government in the 1990s, but were significantly expanded under Tony Blair’s Labour.
The annual cost of PFI deals has this year hit £10bn - equivalent to a tax of more than £150 on every person in the UK.
The government’s oversight of PFI was heavily criticised by MPs and trade unions after the spectacular collapse of outsourcer Carillion, which the National Audit Office estimates is set to cost taxpayers £150m.
The shadow Chancellor John McDonnell has said a new Labour government will end PFI and bring financing schemes “in house”. Labour said the cost of schools and hospitals has “ballooned” under PFI.
In setting out his post-Brexit investment plans at the Conservative conference last month, the Chancellor Sajid Javid said he would “bring in an infrastructure revolution” and invest an extra £13.4bn into public services.
His predecessor Philip Hammond abolished the PFI model in the wake of the Carillion collapse.
The Treasury said it was supporting health authorities to manage the costs of old PFI deals. A spokeswoman said: “As announced in last year’s Budget, we will no longer be using PFI and PF2 funding for new government projects.”
Many deals to run public buildings are still shrouded in secrecy
Many authorities have refused to release details of the Private Finance Initiative (PFI) schemes they are involved in, prompting criticisms that the deals remain shrouded in secrecy.
JPIMedia Investigations requested the release of hundreds of contracts using Freedom of Information laws, but a third of responding authorities refused to supply them, citing commercial confidentiality.
It comes as our investigation reveals that taxpayers are paying billions more than planned towards the schemes, thanks to rocketing inflation and additional costs.
Megan Waugh, a postgraduate researcher at the University of Leeds who is studying PFI, said this meant the contracts and the people profiting from them were “not accountable to anyone”.
She said: “Councillors, MPs and members of the public have legitimate questions about the safety of these buildings about the level of profiteering but the answers remain hidden behind the cloak of ‘commercial sensitivity’ and ‘confidentiality’.
“It is very difficult to challenge this legally as private interests trump the public interest.”
Explaining the decision to withhold the contracts, many of the authorities said they had decided that the duty to protect suppliers’ commercial interests outweighed the public interest in releasing the documents.
Some other authorities heavily redacted contracts before supplying them.