97-736: Building Schools for the Future ( BSF ) was the name given to the British government's investment programme in secondary school buildings in England in the 2000s. Around half of the work was procured under the private finance initiative . The delivery of the programme was overseen by Partnerships for Schools (PfS), a non-departmental public body formed through a joint venture between the Department for Children, Schools and Families (DCSF), Partnerships UK and private sector partners. The programme
194-462: A PFI scheme without a high quality design. The upgrade programme took place at a time when building standards were being substantially rewritten to incorporate improved energy efficiency and green construction methods. Schools were alleged to emit about 15% of the public sector 's carbon footprint in the UK. New schools and refurbishment projects were required to perform an assessment in accordance with
291-624: A certain threshold, and PFI was a mechanism to take debt off the government balance sheet and so meet the Maastricht convergence criteria. PFI immediately proved controversial, and was attacked by Labour critics such as the Shadow Chief Secretary to the Treasury Harriet Harman , who said that PFI was really a back-door form of privatisation (House of Commons, 7 December 1993), and the future Chancellor of
388-491: A commercial rate. But, at the time, Vince Cable of the Liberal Democrats , subsequently Secretary of State for Business in the coalition , argued in favour of traditional public financing structures instead of propping up PFI with public money: The whole thing has become terribly opaque and dishonest and it's a way of hiding obligations. PFI has now largely broken down and we are in the ludicrous situation where
485-408: A consortium made up of a financiers, construction companies and IT companies to take away control of public assets from the local authority. This may handicap future changes, as designers currently face difficulties in trying to predict how learning environments will evolve, exacerbated by poor levels of participation by governors, teachers, pupils, and the community in the design process. The scale of
582-652: A full list of PFI contracts by department in March 2015. A study by HM Treasury in July 2003 was supportive, showing that the only deals in its sample which were over budget were those where the public sector changed its mind after deciding what it wanted and from whom it wanted it. A later report by the National Audit Office in 2009 found that 69 per cent of PFI construction projects between 2003 and 2008 were delivered on time and 65 per cent were delivered at
679-570: A national programme consisting of 15 waves. The programme did not proceed as rapidly as had been expected and both the Department for Children, Schools and Families (DCSF) and Partnerships for Schools (PfS) began looking closely at the authorities' capacity and readiness to deliver projects. During the spring of 2008, the DCSF consulted on the management of future waves of BSF and subsequently invited all LAs to submit an Expression of Interest to joint
776-522: A range of PFI projects. In December, 2012 the Treasury published a White Paper outlining the results of a review of the PFI and proposals for change. These aimed to: Under this "new approach", the government would become a minority equity co-investor in future projects, partly to better align the private and public sector interests in new projects. A consultation exercise was subsequently undertaken by
873-473: A result of the 2010 Spending Review , directing the cuts to those projects where least progress had been made with contract procurement and obtaining planning permission . In February 2011 the Treasury announced a project to examine the £835m Queen's Hospital PFI deal. Once savings and efficiencies are identified, the hope - as yet unproven - is that the PFI consortium can be persuaded to modify its contract. The same process could potentially be applied across
970-516: A service provider, and often a bank as well. The consortium's funding will be used to build the facility and to undertake maintenance and capital replacement during the life-cycle of the contract. Once the contract is operational, the SPV may be used as a conduit for contract amendment discussions between the customer and the facility operator. SPVs often charge fees for this go-between 'service'. PFI contracts are typically for 25–30 years (depending on
1067-504: A services or operating company (called "Opco"). The main contract is between the public sector authority and the Topco. Requirements then 'flow down' from the Topco to the Capco and Opco via secondary contracts. Further requirements then flow down to subcontractors , again with contracts to match. Often the main subcontractors are companies with the same shareholders as the Topco. Prior to
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#17328013697041164-469: A £60m restoration and refurbishment, completed in 2009. The NAO rents part of its offices to tenants, generating income of £1.1m in 2019–20. The building is a modern, open plan office and the refurbishment enabled the NAO to introduce many environmentally friendly features, such as rain-water harvesting. The NAO is structured into Directorates, each with a responsibility for a government department (for instance,
1261-529: Is a document setting out what the consortium is expected to achieve. If the consortium fails to meet any of the agreed standards it should lose an element of its payment until standards improve. If standards do not improve after an agreed period, the public sector authority is usually entitled to terminate the contract, compensate the consortium where appropriate, and take ownership of the project. Termination procedures are highly complex, as most projects are not able to secure private financing without assurances that
1358-469: Is a sub-rural settlement of three towns, Kidderminster being the largest, Stourport being the second largest and Bewdley on Severn being the smallest. The schools that were part of the BSF 2013 rebuild plans included: Primary schools included: In 2008 The Bewdley School and Sixth Form Centre were provided with a £4m, state-of-the-art modular building. The look, sustainability and practicality are some of
1455-741: Is also responsible for agreeing payments from the Consolidated Fund directly to certain bodies, including the King (through the civil list) and judicial salaries. The NAO produces a number of briefings for select committees, but its key audience is the Public Accounts Committee. It also has a strong relationship with the Public Accounts Commission that oversees the work of the NAO and approves its budgets. The NAO and Public Accounts Committee (PAC) form
1552-446: Is flawed and must be replaced. We need a new system that doesn't pretend that risks have been transferred to the private sector when they can't be, and that genuinely transfers risks when they can be . . . On PFI, we are drawing up alternative models that are more transparent and better value for taxpayers. The first step is transparent accounting, to remove the perverse incentives that result in PFI simply being used to keep liabilities off
1649-496: Is sometimes ignored, as when Argentina 'restructured' its foreign debt ). Repayment depends entirely on the ability of the consortium to deliver the services in accordance with the output specified in the contract. Under guidance issued prior to the reform proposals initiated in December 2011, public sector partners were permitted to contribute up to 30% of the construction costs as a capital contribution, generally handed over at
1746-847: Is the auditor of bodies funded directly by the Parliament of the United Kingdom. The NAO reports to the Comptroller and Auditor General who is an officer of the House of Commons of the Parliament of the United Kingdom and in turn reports to the Public Accounts Commission , a statutory body established under section 2 of the National Audit Act 1983. The reports produced by the NAO are reviewed by
1843-445: The 2007–2008 financial crisis , large PFI projects were funded through the sale of bonds and/or senior debt . Since the crisis, funding by senior debt has become more common. Smaller PFI projects – the majority by number – have typically always been funded directly by banks in the form of senior debt. Senior debt is generally slightly more expensive than bonds, which the banks would argue is due to their more accurate understanding of
1940-491: The Blair government , PFI is part of the wider programme of privatisation and macroeconomic public policy, and presented as a means for increasing accountability and efficiency for public spending. PFI is controversial in the UK. In 2003, the National Audit Office felt that it provided good value for money overall; according to critics, PFI has been used simply to place a great amount of debt " off-balance-sheet ". In 2011,
2037-618: The Building Research Establishment 's assessment method ( BREEAM ) that checked against environmental performance targets for new and refurbished school buildings. However, there were concerns that commercial imperatives would mean no incentives to exceed these standards were put in place, and the subsequent works were mainly being designed against the cheaper but less energy-efficient older building standards, with very little cash being set aside to meet pending standards. To counter some of this criticism and to celebrate
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#17328013697042134-634: The Commissioners of Audit , were five in number (increased to ten in 1806). The Commissioners worked closely with the Comptroller of the Exchequer (who was charged with controlling the issue of funds to the government) following the establishment of that office in 1834. Under the terms of the Exchequer and Audit Departments Act 1866 , the offices of the Comptroller of the Exchequer and
2231-790: The Home Office or Department for Culture, Media and Sport ). Each Directorate contains 20–30 staff, many of whom are qualified accountants or in training for qualification with the Institute of Chartered Accountants in England and Wales (ICAEW). Within Directorates, staff will be split between Financial Audit and Value for Money work and include staff of the following grades: Above director grade, Directors General have responsibility for specific cross NAO functions (such as Audit Practice and Quality, and Finance and Commerce) and Executive Leaders (previously Assistant Auditors General ) support
2328-541: The Public Accounts Committee , a select committee of the House of Commons, and in some cases investigated further. The NAO has two main streams of work: Financial Audits and Value For Money (VFM) audits. The NAO's financial audits give assurance over three aspects of government expenditure: the truth and fairness of financial statements; the regularity (or statutory validity) of the expenditure, and;
2425-454: The TUPE process which applies to all staff in a company whose ownership changes. A public sector authority signs a contract with a private sector consortium , technically known as a special-purpose vehicle (SPV). This consortium is typically formed for the specific purpose of providing the PFI. It is owned by a number of private sector investors, usually including a construction company and
2522-400: The BSF programme for the first time, with another two – Lancashire and Tameside – starting the next phase of their BSF schemes. This brought to 96 the number of local authorities in England which were active in BSF. The National Audit Office reviewed the programme up to December 2008. Their report found that the Department and PfS had been overly optimistic in their assumptions of how quickly
2619-551: The BSF programme sooner than the original programme might have indicated. The announcement of the new programme arrangements was made on 2 March 2009 and at subsequent briefings to Local Authorities it was made clear by PfS that demonstrable "readiness to deliver" was to be a key condition for future pledges of funding. A tranche of forty authorities were invited to make a "Readiness to Deliver" submission by 8 May 2009. Of those that did, only Hampshire, Barnet, Bolton, Peterborough, Wigan and Sunderland were successful. In early August 2009
2716-525: The Chancellor, Philip Hammond , announced that the UK Government will no longer use PF2, the current model of Private Finance Initiative, for new infrastructure projects, due to value-for-money considerations and the difficulties caused by the collapse of PFI construction company Carillion . A Centre of Excellence is to be established within the Department of Health and Social Care to manage
2813-591: The Commissioners of Audit were merged and their duties vested in a new official: the Comptroller and Auditor General (formally the Comptroller General of the Receipt and Issue of Her Majesty's Exchequer and Auditor General of Public Accounts ). The NAO developed from the former Exchequer and Audit Department (founded in 1866) in 1983 as the auditor for central government (including most of
2910-541: The Exchequer in the coalition, sought to distance his party from the excesses of PFI by blaming Labour for its misuse. At the time, Osborne proposed a modified PFI which would preserve the arrangement of private sector investment for public infrastructure projects in return for part-privatisation, but would ensure proper risk transfer to the private sector along with transparent accounting: The government's use of PFI has become totally discredited, so we need new ways to leverage private-sector investment . . . Labour's PFI model
3007-400: The Exchequer , Alistair Darling , warned that "apparent savings now could be countered by the formidable commitment on revenue expenditure in years to come". Initially, the private sector was unenthusiastic about PFI, and the public sector was opposed to its implementation. In 1993, the Chancellor of the Exchequer described its progress as "disappointingly slow". To help promote and implement
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3104-743: The International Organisation of Supreme Audit Institutions ( INTOSAI ). The NAO shares knowledge and experience with other Supreme Audit Institutions (SAIs) around the world and undertakes the audit of some international bodies. For example, between 2010 and 2016 the C&;AG was one of three members of the United Nations Board of Auditors, responsible for auditing the United Nations itself, including peacekeeping operations and related organisations such as UNICEF and
3201-524: The Labour Secretary of State for Health , Alan Johnson , reaffirmed this commitment with regard to the health sector, stating that "PFIs have always been the NHS’s 'plan A' for building new hospitals … There was never a 'plan B'". However, because of banks' unwillingness to lend money for PFI projects, the UK government now had to fund the so-called 'private' finance initiative itself. In March 2009 it
3298-803: The Labour Party, the Scottish National Party (SNP), and the Green Party , as well as commentators such as George Monbiot . Proponents of the PFI include the World Bank , the IMF and the Confederation of British Industry . Both Conservative and Labour governments sought to justify PFI on the practical grounds that the private sector is better at delivering services than the public sector. This position has been supported by
3395-628: The Labour government appointed Malcolm Bates to chair the efforts to review the policy with a number of Arthur Andersen staffers. They recommended the creation of a Treasury Task Force (TTF) to train public servants into PFI practice and to coordinate the implementation of PFI. In 1998, the TTF was renamed to "Partnership UK" (PUK) and sold 51% of its share to the private sector. PUK was then chaired by Sir Derek Higgs , director of Prudential Insurance and chairman of British Land plc . These changes meant that
3492-720: The PCP priorities. Thus 23 Local Authorities (LAs) initially had access to £6.5 million each to refurbish a primary school, before widening access to an overall budget of £1.9 billion, with an initial expectation of starting 675 primary school building projects over the following three years. In November 2008, 41 additional LAs had their Strategies for Change accepted (green status) and thus their PCP funding for 2009/10 and 2010/11 approved. 92 LAs were invited to submit further information (amber status) and only had their 2009/10 funding approved, and 15 LAs (red status) were required to address specific issues in their Strategy before any funding
3589-456: The Public Accounts Committee do not allow them to question the policy itself and so VFM reports only examine the implementation of policy. The responsibility for questioning policy is left for other select committees and debating chambers of Parliament, but this has not prevented the PAC being named committee of the year in 2006. "Good Governance", an output somewhere between financial and VFM audits,
3686-472: The Treasury failed to negotiate decent PFI deals with publicly owned banks, resulting in £1bn of unnecessary costs. This failure is particularly grave given the coalition's own admission in their national infrastructure plan that a 1% reduction in the cost of capital for infrastructure investment could save the taxpayer £5bn a year. The Department for Environment, Food and Rural Affairs (DEFRA) withdrew funding support from seven waste management PFI projects as
3783-620: The UK National Audit Office with regard to certain projects. However, critics claim that many uses of PFI are ideological rather than practical; Dr. Allyson Pollock recalls a meeting with the then Chancellor of the Exchequer Gordon Brown who could not provide a rationale for PFI other than to "declare repeatedly that the public sector is bad at management, and that only the private sector is efficient and can manage services well." To better promote PFI,
3880-471: The UK government would no longer use PFI for new infrastructure projects; however, PFI projects will continue to operate for some time to come. The private finance initiative (PFI) is a procurement method which uses private sector investment in order to deliver public sector infrastructure and/or services according to a specification defined by the public sector. It is a sub-set of a broader procurement approach termed public-private partnership (PPP), with
3977-785: The UN High Commissioner for Refugees (UNHCR). The earliest known mention of a public official responsible for auditing government expenditure is a reference made in 1314 to the Auditor of the Exchequer . In 1559 an office was set up, with responsibility for auditing Exchequer payments, called the Auditors of the Imprest . In 1785 a Commission for Auditing the Public Accounts was established by statute (the former arrangement having fallen into abeyance). Its members,
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4074-417: The architectural press over the demolition of the brutalist Pimlico School , with many calls for the building to be protected by being placed on the register of listed buildings . The designs of 10 of the first 11 schools, including Pimlico, were granted planning permission even though they have been described by CABE as 'mediocre' or 'not yet good enough'. They noted that it was possible to be selected for
4171-463: The authorities that had been unsuccessful, as well as those who had delayed making a submission, were advised that all submissions for the remaining twelve places to be allocated during the financial year ending on 31 March 2010 were to be made by 17 September 2009. On 30 November 2009 it was announced that eleven local authorities – Brent, Darlington, Devon, Havering, Kingston, Croydon, Norfolk, Plymouth, Sefton, Wakefield, and Warrington – would be joining
4268-400: The balance sheet. The government has been using the same approach as the banks did, with disastrous consequences. We need a more honest and flexible approach to building the hospitals and schools the country needs. For projects such as major transport infrastructure we are developing alternative models that shift risk on to the private sector. The current system – heads the contractor wins, tails
4365-480: The body in question, the government and/or opposing political parties; while auditing for compliance and legal spending by departments on the activities voted for by Parliament, in a transparent and public forum. The NAO is based in London and Newcastle and has a staff of 800. Part of the NAO's London Office is a listed building, originally built for Imperial Airways as their " Empire Terminal ". The building underwent
4462-616: The building programme was far larger than the capacity of the available pool of experienced architects and designers, while the educators running the developments had very little prior experience of commissioning such major construction works. There was little sharing of best practice and learning between authorities, schools, contractors, suppliers and others involved in BSF, and the timescales discouraged thorough planning. The funds provided under this programme were used for materials and building infrastructure (usually including repairs and on-going maintenance) whilst funding for teaching continued in
4559-496: The construction stage is financed using bank debt, and then bonds for the much longer period of operation. The banks who fund PFI projects are repaid by the consortium from the money received from the government during the lifespan of the contract. From the point of view of the private sector, PFI borrowing is considered low risk because public sector authorities are very unlikely to default . Indeed, under IMF rules, national governments are not permitted to go bankrupt (although this
4656-403: The contracted price. National Audit Office (United Kingdom) The National Audit Office ( NAO ) is an independent Parliamentary body in the United Kingdom which is responsible for auditing central government departments , government agencies and non-departmental public bodies . The NAO also carries out value for money (VFM) audits into the administration of public policy. The NAO
4753-411: The contracting authority to enforce it. Many steps have been taken over the years to standardise the form of PFI contracts to ensure public interests are better protected. The typical PFI provider is organized into three parts or legal entities : a holding company (called "Topco") which is the same as the SPV mentioned above, a capital equipment or infrastructure provision company (called "Capco"), and
4850-415: The credit-worthiness of PFI deals – they may consider that monoline providers underestimate the risk, especially during the construction stage, and hence can offer a better price than the banks are willing to. Refinancing of PFI deals is common. Once construction is complete, the risk profile of a project can be lower, so cheaper debt can be obtained. This refinancing might in the future be done via bonds –
4947-432: The debt financing of the project will be repaid in the case of termination. In most termination cases the public sector is required to repay the debt and take ownership of the project. In practice, termination is considered a last resort only. Whether public interest is at all protected by a particular PFI contract is highly dependent on how well or badly the contract was written and the determination (or not) and capacity of
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#17328013697045044-519: The delegates adopted a resolution condemning PFI and calling for an independent review of the policy, which was ignored by the party leadership. In education, the first PFI school opened in 2000. In 2005/2006 the Labour Government introduced Building Schools for the Future , a scheme introduced for improving the infrastructure of Britain's schools. Of the £2.2 billion funding that the Labour government committed to BSF, £1.2 billion (55.5%)
5141-549: The effectiveness, economy and efficiency of government spending. Roughly sixty of these reports are produced each year, the most notable from recent years being the reports on MRSA , which led to an increase in public interest in the topic, the report on the rescue of British Energy and the report in the Public Private Partnership to maintain the London Underground . The remits of the NAO and
5238-690: The end of the construction period and subject to appropriate risk transfer and performance regimes being in place. The government indicated in its reform consultation that allowance for higher levels of capital contribution was being considered, noting the some international practice also offered examples of higher levels of capital contribution. PFI contracts generally allocate risks to the private sector contractor, who takes out appropriate insurance to cover these risks and includes anticipated insurance costs in its PFI charges. However, it has been recognised that levels of insurance premium are variable following cyclical economic changes, and difficult to predict over
5335-528: The existing PFI contracts in the NHS. There have been over 50 English hospitals procured under a PFI contract with capital cost exceeding £50 million: There have been some six Scottish hospitals procured under a PFI contract with capital cost exceeding £50 million: The following is a selection of major projects in other sectors procured under a PFI contract: The Guardian published a full list of PFI contracts by department in July 2012, and HM Treasury published
5432-533: The externalised agencies and public bodies) as part of an "appropriate mechanism" to check and reinforce departmental balance and matching of quantitative allocation with qualitative purpose (as set out by public policy). The existence and work of the NAO are underpinned by three fundamental principles of public audit: The basic need for the NAO arises from these three fundamental principles, in that, as Parliament votes on public expenditure of various activities by public bodies, they need auditors that are independent of
5529-509: The financial risk back to the public sector, then that has to be reflected in the structure of the contracts. The public sector cannot simply step in and lend the money to itself, taking more risk so that the PFI structure can be maintained while leaving the private sector with the high returns these projects can bring. That seems to us fairly ridiculous. In an interview in November 2009, Conservative George Osborne , subsequently Chancellor of
5626-474: The first schools could be delivered, and that scaling up the programme to deliver all 3,500 new or refurbished schools would be challenging. They found that the costs of building schools had been kept under control and were similar to most other schools, but the costs of setting up the local partnerships had been high, in part from extensive use of consultants. The Minister for Schools announced in June 2009 that PfS
5723-736: The first year, across an estimated 200 schools through the country, it was claimed as the single biggest government investment programme in education for over 50 years. The then- Prime Minister Tony Blair said the investment "will see the entire secondary school building stock upgraded and refurbished in the greatest school renewal programme in British history." Capital funding available for investment in school buildings rose sharply from £683 million in 1996–97 to £3.8 billion in 2003–04; this further increased to £4.5 billion in 2004–05 and to £5.1 billion in 2005–06, £9.3 billion over 2008–11, and £8.2 billion in 2011, ultimately costing £45 billion over 15 years to 20 years. Funding
5820-481: The government is having to provide the funds for the private finance initiative. In opposition at the time, even the Conservative Party considered that, with the taxpayer now funding it directly, PFI had become "ridiculous". Philip Hammond , subsequently Secretary of State for Transport in the coalition, said: If you take the private finance out of PFI, you haven’t got much left . . . if you transfer
5917-566: The government regarding the terms on which the public sector stake would be managed, aiming for a generally consistent approach across projects but with scope for details to be finalised prior to operation to reflect any project-specific issues. The government's response to the consultation and the "Standard PF2 Equity Documents" were published in October 2013. Under the Priority School Building Programme which
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#17328013697046014-455: The government transferred the responsibility of managing PFI to a corporation closely related with the owners, financiers, consultants, and subcontractors that stood to benefit from this policy. This created a strong appearance of conflict of interest. Trade unions such as Unison and the GMB , which are Labour supporters, strongly opposed these developments. At the 2002 Labour Party Conference ,
6111-410: The grounds that they are a form of odious debt . Critics such as Peter Dixon argue that PFI is fundamentally the wrong model for infrastructure investment, saying that public sector funding is the way forward. In November 2010 the UK government released spending figures showing that the current total payment obligation for PFI contracts in the UK was £267 billion. Research has also shown that in 2009
6208-565: The handling of benefit payments at post offices. Two months after Tony Blair 's Labour Party took office, the Health Secretary , Alan Milburn , announced that "when there is a limited amount of public-sector capital available, as there is, it's PFI or bust". PFI expanded considerably in 1996 and then expanded much further under Labour with the NHS (Private Finance) Act 1997 , resulting in criticism from many trade unions , elements of
6305-400: The key links of the public audit cycle, which has the following sequence: The Public Accounts Commission (TPAC) annually approves the NAO's corporate plans and budgets. It also receives value for money reports on the operation of the NAO. These are written by private sector audit firms in much the same manner as the NAO reports on Central Government. The National Audit Office is a member of
6402-734: The lifetime of a PFI project. PFI terms were amended in 2002 and standardised in 2006 to allow for insurance cost sharing mechanisms, whereby the client and contractor could share the risk of market fluctuation in insurance premium costs. PFI was implemented in the UK by the Conservative Government led by John Major in 1992. It was introduced against the backdrop of the Maastricht Treaty which provided for European Economic and Monetary Union (EMU). To participate in EMU, EU member states were required to keep public debt below
6499-534: The local government sector. The Comptroller Function is administered by the Exchequer Section within the NAO. Its work centres on recording all transactions to and from the Consolidated and National Loans funds. Money cannot be paid from either of these without the C&AG's prior approval. This approval is granted every banking day through a mechanism known as 'the credit'. The Exchequer Section
6596-417: The main defining characteristic being the use of project finance (using private sector debt and equity, underwritten by the public) in order to deliver the public services. Beyond developing the infrastructure and providing finance , private sector companies operate the public facilities, sometimes using former public sector staff who have had their employment contracts transferred to the private sector through
6693-541: The major new building works were PFI-funded, which takes the construction and facilities management (but not the educational provision) out of the financial control of local education authorities because the construction and facilities management of a school becomes a source of revenue for the consortia involved for up to 30 years, even if the school is no longer needed. While promoted as a huge investment in public services within Secondary Education, it allowed
6790-759: The many positive aspects of the BSF programme, in November 2008 Partnerships for Schools hosted the first annual "Excellence in BSF Awards", recognising a wide range of aspects of the initiative. Primary and secondary schools in the district of the Wyre Forest in Worcestershire were part of the national school upgrading process from Building Schools for the Future. The plans also involved local sponsors and LEA funding to provide £130m to rebuild, extend and modernise five secondary schools and approximately 10 primary schools. The Wyre Forest area of Worcestershire
6887-528: The normal way, except in the case of academies where funding came directly from the Secretary of State. A consequence of the PFI element of the programme was that recurrent and strategic maintenance of school buildings is addressed within the contract, which reverses the tendency for school governing bodies to under-allocate funds for these aspects of asset management, leading to high levels of backlog maintenance at many schools. Bidders for funding claimed that
6984-549: The parliamentary Treasury Select Committee recommended: "PFI should be brought on balance sheet. The Treasury should remove any perverse incentives unrelated to value for money by ensuring that PFI is not used to circumvent departmental budget limits. It should also ask the OBR to include PFI liabilities in future assessments of the fiscal rules". In October 2018, the Chancellor Philip Hammond announced that
7081-533: The policy, he created the Private Finance Office within the Treasury, with a Private Finance Panel headed by Alastair Morton . These institutions were staffed with people linked with the City of London , and accountancy and consultancy firms who had a vested interest in the success of PFI. The largest of the early PFI projects was Pathway, announced by Peter Lilley in 1995, which was to automate
7178-411: The programme. In 2007 the programme was complemented by the announcement of a Primary Capital Programme , with £1.9 billion to spend on 675 building projects for primary schools in England over three years. On 5 July 2010, in the early stages of the coalition government 's austerity programme , the Secretary of State for Education, Michael Gove , announced that following a review, the programme
7275-532: The programme. These projects helped to build capacity and competence in those authorities, as well as to provide exemplars in sustainability and science ("Project Faraday"). Private finance initiative The private finance initiative ( PFI ) was a United Kingdom government procurement policy aimed at creating " public–private partnerships " (PPPs) where private firms are contracted to complete and manage public projects. Initially launched in 1992 by Prime Minister John Major , and expanded considerably by
7372-674: The propriety of the audited body's conduct in accordance with parliamentary, statutory and public expectations. Financial audits are carried out in much the same way as private auditing bodies and the NAO voluntarily applies the International Standards on Auditing (ISAs). The NAO is subject to inspection by the Audit Quality Review team of the Financial Reporting Council. Value for Money (VFM) audits are non-financial audits to measure
7469-554: The public sector. On Monday 11 April 2016, 17 PFI-funded schools in Edinburgh failed to open after the Easter break because of structural problems identified in two of them the previous Friday; the schools had been erected in the 1990s by Miller Construction. A January 2018 report by the National Audit Office found that the UK had incurred many billions of pounds in extra costs for no clear benefit through PFIs. In October 2018,
7566-731: The reasons that the modular building has influenced other new major building projects including BSF, in places such as Birmingham , London and Staffordshire . The new projects in Bristol such as Bridge Learning Campus and many new primary schools have been based on the modular building at Bewdley. The BSF programme provided funding for the construction of entirely new schools and colleges, as well as rebuilding existing ones and providing ICT funding to non-BSF, new-build schools. A number of BSF schools were funded as "One School Pathfinders", in Local Authorities that were in later waves of
7663-439: The schools at the top of the league tables were ancient schools with mostly ancient buildings. The House of Commons Select Committee expressed concerns that, whilst this investment in spaces to support learning was unprecedented, the enormous scale of the project was not being managed to ensure that its scope and aims remained appropriate. There were no clear or consistent objectives set down to judge progress, or to establish if this
7760-640: The start of term. Critics have pointed to Gove's decision to scrap the BSF scheme in the drive to save money as a central factor in the delays to repairs and new builds. The BSF programme had historically been dogged by sporadic or no management at the top, with Richard Bowker (Chair and Chief Executive of the Strategic Rail Authority ) leaving his post after eight months. He was replaced in November 2006 by Tim Byles , who joined from Norfolk County Council , where he had been CEO for 10 years. Initially, all Local Authorities (LAs) were placed in
7857-464: The system have never been weaker. The government is very concerned to keep the headline rates of deficit and debt down, so it's looking to use an increasingly expensive form of borrowing through an intermediary knowing the investment costs won't immediately show up on their budgets. The high cost of PFI deals is a major issue, with advocates for renegotiating PFI deals in the face of reduced public sector budgets, or even for refusing to pay PFI charges on
7954-484: The taxpayer loses – will end. Despite being so critical of PFI while in opposition and promising reform, once in power George Osborne progressed 61 PFI schemes worth a total of £6.9bn in his first year as Chancellor. According to Mark Hellowell from the University of Edinburgh : The truth is the coalition government have made a decision that they want to expand PFI at a time when the value for money credentials of
8051-414: The total capital value of PFI contracts signed throughout the UK was £68bn, committing the British taxpayer to future spending of £215bn over the life of the contracts. The 2007–2008 financial crisis presented PFI with difficulties because many sources of private capital had dried up. Nevertheless, PFI remained the UK government's preferred method for public sector procurement under Labour. In January 2009
8148-436: The type of project); although contracts less than 20 years or more than 40 years exist, they are considerably less common. During the period of the contract the consortium will provide certain services, which were previously provided by the public sector. The consortium is paid for the work over the course of the contract on a "no service no fee" performance basis. The public authority will design an "output specification" which
8245-432: The work to put together a bid was onerous and costly, and required the navigation of many government bodies. The co-ordinating body, Partnerships for Schools, was reportedly focused on construction procurement without a full understanding of all the other factors involved. There were accusations that the relationship between the quality of infrastructure and the quality of pupil education was not clearly demonstrated; many of
8342-623: Was announced that a parallel programme – the Primary Capital Programme (PCP) – would be starting for primary schools and schools for primary-age special needs pupils. Rather than allocating money by authority in waves, it was intended that there will be regional pilot schemes in 2008, leading to a broader approach whereby all authorities could apply for funding from 2009. Funding to Local Authorities would only be confirmed once they had submitted and gained approval for their 'Strategy for Change' (SfC) describing how they would address
8439-431: Was announced that the Treasury would lend £2bn of public money to private firms building schools and other projects under PFI. Labour's Chief Secretary to the Treasury , Yvette Cooper , claimed the loans should ensure that projects worth £13bn – including waste treatment projects, environmental schemes and schools – would not be delayed or cancelled. She also promised that the loans would be temporary and would be repaid at
8536-556: Was approved. The BSF programme involved the decentralisation of funds to local education partnerships (LEPs) to build and improve secondary school buildings. However, the LEPs were not only responsible for the construction of the buildings but also for co-ordinating and overseeing the educational transformation and community regeneration that the investment can support. The private sector LEP partner(s) were intended to introduce capital and expertise. With investments of over £2 billion in
8633-515: Was cancelled in 2010. The private funding element of the programme was part of the increased use of private finance initiative (PFI) funding by successive Labour governments. BSF was ambitious in its costs, timescales and objectives. Fourteen local education authorities were asked to take part in the first wave of the Building Schools for the Future programme for the fiscal year 2005/6. By December 2009, 96 local authorities had joined
8730-734: Was in 15 'waves', or groups of authorities. BSF was intended to be approximately half conventional and half Private Finance Initiative (PFI) funded. Of the £2.2 billion for BSF, £1.2 billion (55.5%) was covered by PFI credits. Funding associated with BSF was not just limited to construction and equipment in new schools, but also improving facilities at existing schools, such as providing schools with direct capital funding to spend on buildings and Information and communications technology (ICT) . Depending on their size, primary and secondary schools received about £34,000 and £113,000 respectively during 2007–08 for these initiatives, which equates to around £1 billion across English schools. Most of
8827-646: Was launched in 2014 by the Education and Skills Funding Agency , the rebuilding and/or refurbishment of 46 schools in England was funded and procured using the PF2 model. A specialist unit was set up within the Scottish Office in 2005 to handle PFI projects. In November 2014, Nicola Sturgeon announced a £409m public-private funding package which would be funded through a non-profit distributing model which would cap private sector returns, returning any surplus to
8924-545: Was previously a strand of NAO work, but is no longer a focus of activity. The NAO does, however, publish best practice guidance for public sector organisations. An example includes the fact sheet on governance statements. In addition, the NAO undertakes fast-paced and more narrowly focused work called investigations. The NAO received new powers under the Local Audit and Accountability Act 2014 to provide an end-to-end view of policy implementation, and produce reports aimed at
9021-622: Was the Priority School Building Programme , under which the government provided capital grants for the replacement or repair of over 500 schools. As of 2020, hundreds of schools were still awaiting new buildings. In May 2022, the civil service warned the government that many school buildings were in such a state of disrepair that they posed a "threat to life". On 31 August 2023, the Conservative government announced 147 schools were found to use RAAC in their construction, forcing schools to redistribute pupils, switch to hybrid learning, or delay
9118-430: Was the best way to spend £45 billion on education. 800 schools most in need had already been prioritised and refurbished in the years immediately before this programme started; it was unclear what the current need was, and how the money previously spent would fit in with the broad untargetted approach of BSF. The selection of some schools for demolition and rebuilding was controversial; notably there were criticisms in
9215-565: Was to assume responsibility for the management and delivery of all school building and refurbishment programmes. Day-to-day responsibility of all schools' capital programmes, including the Primary Capital Programme, transferred from the DCSF to PfS on 1 October 2009. Private Eye noted high staff costs in December 2009, stating that the Chief Executive and top four directors received about £750,000 p.a. in total. Primary schools were initially not included in BSF, although in March 2006 it
9312-488: Was to be covered by PFI credits. Some local authorities were persuaded to accept Academies in order to secure BSF funding in their area. In 2003 the Labour Government used public-private partnership (PPP) schemes for the privatisation of London Underground 's infrastructure and rolling stock. The two private companies created under the PPP, Metronet and Tube Lines were later taken into public ownership. By October 2007
9409-455: Was to be scrapped, calling it "bureaucratic and wasteful." Projects which had not achieved the status of 'financial close' would not proceed, meaning that 715 school revamps already signed up to the scheme would not go ahead. He also announced that a further 123 academy schemes were to be reviewed on a case-by-case basis. Many years later, Gove stated that cancelling the programme was his biggest mistake in office. A successor between 2014 and 2021
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