Whatever has happened to “education, education, education”?  While no one would question the need to rein back on public spending, it does beg the question of whether halting the Building Schools for the Future programme was the best way to do this.

Monday’s announcement that the Department for Education (DfE) is setting out “a clear way forward for prudent capital investment in education” is all well and good but the content of their announcement has created huge problems for the beleaguered construction industry. There are a lot of construction companies currently trying to work out just how badly their businesses are being affected by the DfE decision.

The DfE has distinguished between “open”, “stopped”, “unaffected” or “subject to review” schools. Michael Gove has now admitted that there are numerous mistakes in the list itself where school projects have been put in the wrong list.

Any construction company which had any serious commitment to BSF before the change of government is going to face potentially very large exposure to wasted costs which they have incurred in getting involved in the process of bidding for schools work.

In some cases the affected projects have already got up to the point of closing dialogue or preferred bidder announcement, many after long and expensive competitive dialogue.

The affected contractors may well feel that they need to try to recoup some of those costs through starting legal proceedings. This is not exactly desirable but at the moment there is no clear picture of what might follow on from BSF so companies have simply seen potential work snatched away at the last moment without having something to replace it.

They also face the problem of claims against them from the designers, suppliers and sub-contractors who have also been left with nothing to show for the effort they have put in to date.

In some ways the impact on construction companies of the announcement is the simple part. More difficult is the position of the Local Education Partnership or LEP. No one has currently worked out what is going to happen in terms of timing of investment for the schools that are going to be built.

There is also no indication at this stage of how future government investment, no matter how limited, is going to be dealt with.

Clearly this is highly undesirable for all the construction companies and consultants who have invested time and considerable money in gearing up to deliver BSF projects.

The government now needs to make clear what its strategy is going to be for delivering the projects that have survived the cull to provide some certainty  for the companies in question and  to mitigate the impact on their share prices of the announcement.

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