The Private Finance Initiative ( PFI ) was launched in 1992 to open up opportunities for more private sector involvement in the provision and modernisation of public services. PFI involves the public sector procuring services to the quality standards it requires, instead of procuring a capital asset or other equipment then operating it itself. In many ways PFI is similar to buying a house with a mortgage over, say, a twenty five year period. In the case of school PFI the school buildings become the property of the developer, the school pays for them by a unitary charge and in return gets a building to meet its future needs, along with maintenance and possible various other services.
There has been a lot of interest in the national press, as issues arising from early schemes have come to light:
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increased scheme development costs due to complex and drawn-out procurement;
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higher revenue expenditure being incurred by the public sector;
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new buildings' design and construction not meeting required or expected standards;
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concern over terms and conditions for staff transferred from public to private sector;
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private sector companies making "super-profits" at the expense of the public sector.
The good news is that the majority of these issues have now been addressed by the Government:
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standardised contract documentation has now streamlined the procurement process;
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loopholes that enabled the private sector to make huge profits have been closed - in fact there is now potential for the public sector to benefit from additional income generated;
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emphasis and guidance is being given to securing quality of building design and construction;
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new regulations have been introduced to protect staff terms and conditions.
The Audit Commission published a report in January 2003 ("PFI in Schools"), which examined some early schools projects and identified some lessons for future schemes, such as the Gateshead scheme.
You can read or download this report on their website, linked below.
The key message for us is to ensure that schools are involved in the process, especially at the detailed design stage, so that specifications (eg. classroom size and layout, corridor width, break-out spaces, heating and lighting etc) will meet their needs.
It is important to emphasise that the contractor would not be supplying or managing the education provided on the site, this would be undertaken by staff appointed by the governing body in the traditional manner.