When it was reported in March that one school was having difficulties finding a trust due to a costly public finance initiative (PFI) deal we decided to investigate the programme further. For the September issue of Education Executive, Sue Birchall, a school business manager at The Malling School, Kent who works across two PFI schools, weighed up the pros and the cons
Over a year ago I was offered a post at The Malling School and The Holmesdale School, both of which are private finance initiative (PFI) schools. I have experience of business management in most types of schools but to work at a PFI school was new to me – a new challenge!
Other than knowing that the PFI programme was introduced in 1997 by Tony Blair’s Labour government to finance the construction and refurbishment of school buildings – as well as having seen the adverse press PFI had attracted – this initiative was not familiar to me. I was curious to see how it worked at ground level.
The PFI way
The PFI contracts which my schools hold took some getting used to but the time I’ve taken to study the way the process works has proved invaluable. There are many restrictions within the PFI model which – once you understand why they’re in place – make some sense. At its most basic, a PFI is where a group of individuals invest in a fund which is used to build and maintain a school for the period of a contract. This investment is ‘rewarded’ by an annual return taken from payments from the LA and the school. These payments are intended to:
- provide a return on the investment;
- pay for maintenance and upkeep of the school – for example, caretaking and cleaning – and include an element of ‘lifecycle’;
- cover expenses such as statutory obligations;
- cover the cost of utilities;
- pay salaries.
Procurement and maintenance
Lifecycle, listed above, is very important within the PFI context. When a non-PFI school – i.e.. one that’s responsible for its premises – purchases an item, adds a piece of equipment or makes a structural change, it will make a definite, actual allowance in its budget plans or, at least, a mental note of the lifecycle and maintenance requirements of the purchase. However, as a PFI school, these elements are done for you and added to the cost of the school’s PFI contract. This is where the bad press has stemmed from – purchases have an ongoing cost, some of which appear quite disproportionate to the original purchase costs.
In addition to this, PFI schools cannot make alterations to the fabric of their buildings – not even decorating or moving notice boards; this is because they’re not, technically, the school’s to alter. Any change you seek to make must not have an impact on the condition of the premises – if it does, it must be assessed in relation to the rest of the area in which you’re planning to make the change. For instance, moving a noticeboard which leaves the wall damaged, and a different colour, in the PFI context would mean that the whole room would need to be redecorated. This can cause problems; teachers’ and learners’ needs can be affected because quick decisions are not possible. We overcome this by having in place a process which encourages everyone to think ahead so that changes can be considered within lifecycle, or budget cycles if there’s going to be a significant cost. It’s imperative that you have a good relationship with your PFI colleagues because this can mean changes are met with positivity and, often, a solution can be found which doesn’t involve cost.
What’s important to understand is that this is a monetary transaction for the investor and that, at the end of the investment period, the buildings go back to the key stakeholder in a fully-functional and ‘as new’ condition. As a result, buildings need to be maintained to a high-level and kept, you guessed it, ‘as new’ – which, in a school environment, can be difficult!
Weighing up PFI
So, what are the challenges of being a PFI school? Firstly, you’re restricted in your access to the school – the PFI contracted company will set the scope of access. In my case access to my schools is between 8am and 6pm on school days – plus another 250 hours for parents’ evenings, events, etc. Another challenge you must consider is that you have no control over the amount that the PFI contract will cost your school and no ability to make savings through ‘best value’ on any utilities or contracts. Spontaneity is a thing of the past; every item, change, major purchase or breakdown has to be managed, thought about and planned for. The process for getting even the simplest maintenance issue addressed can (sometimes) be laborious – often with a lot of paperwork. In addition, be aware that your PFI contributions will change year-on-year with pupil numbers, adding another consideration when doing long-term forecasting. Finally, it can seem – and sometimes is – expensive.
But, in my usual ‘look on the bright side’ style, these challenges are matched, if not outweighed, by positives. For example, we always have a fully-operational, attractive and warm learning and working environment for staff and pupils. The PFI contracted company are responsible for the maintenance of the building – as should be detailed in the contracts ‘performance clause’ – and so any issues are dealt with quickly and efficiently – if not we’re entitled to a rebate under the performance clause in the PFI contract. Plus, they project manage any alterations and additions for you – one less job for SBLs! Further, all your statutory obligations with regards to any part of the PFI contract are the responsibility of the project – and there are also benefits in relation to HR because the staff retention issues which are so often present with cleaning, caretaking and catering teams are no longer yours. And, while there are some additional budgetary considerations, overall, the budget process is largely sound, and you can be confident that any large premises issues will be dealt with by the building owners. If you work to create a good relationship with your project manager and contracts team you can use the process of lifecycle as part of your strategic planning
Outsourcing a better environment
Having worked in schools where there were freezing cold classrooms, cracked windows, poor facilities and endless staff issues, I must say that what you get for your money is good; whether it is value-for-money is debateable. It should be noted that I’m writing from my own experience and that not all PFI contracts are the same.