Do priority schools add up?

For schools teaching children in dilapidated and crumbling buildings, winning access to funding under the government Priority School Building Programme should be like winning the lottery. Not so for Andrew Seager, headteacher of the Stratford Academy in east London. “To be honest, the whole project has probably been the worst experience I have ever had as a head teacher. It really has been painful.” That was how he described it to MPs at a specially convened education committee meeting called last month to examine the impact of the Priority School Building Programme (PSBP), before detailing a litany of perceived failures with the 1,500-place project (see box, overleaf), which is managed by the Education Funding Agency (EFA). The first of two new buildings was supposed to open in September last year ready for the start of a new school year. “We had to go in,” Seager explains. “The old building had been knocked down, so we were homeless. [But] the [new] building just was not ready and there was this huge list of snagging items that are still not all resolved.”

Launched in 2011, the PSBP was supposed to be the coalition’s austerity-era answer to Labour’s £55bn Building Schools for the Future (BSF) programme, offering to knock down schools based on an assessment of which buildings were in the worst state, and replace them with efficient modern premises, albeit without the bells and whistles of the BSF era. The idea was that PSBP schools would be slightly smaller and more standardised, but nonetheless create teaching environments every bit as effective for young people to learn in.
However, the picture that is emerging from some of the early completed schemes (there are only 19 at the current time) is very different. It is of a cut-price programme in which essential elements such as playgrounds and asbestos removal are left for the school to fund, and which is lining up a hefty maintenance bill for future years. Meanwhile rock-bottom contracting rates are leading to lengthy debates over costs between the EFA and some of its contractors. There is also debate about whether the £2bn 261-school first phase of the programme - the delivery of which was brought forward by two years to 2017 - has a chance of being finished on time. But with this characterisation strenuously denied by government, what is the real story of the PSBP?

Cutting costs

Certainly few argue that the PSBP is cheaper than the BSF programme. The Department for Education (DfE) says it has cut build costs by nearly 20% under a deliberate strategy involving the streamlining of procurement, increasing use of standardisation and the cutting the sizes of school buildings. Evidence submitted to the education committee by contractor Wates, while generally supportive that PSBP is delivering on the ground, suggests the reality is the cuts have been even more swingeing. Comparing Wates’ experience of a real BSF scheme, which it says was typical of the programme, with the PSBP standards it has to meet, it says construction costs per m2 are 28% lower. And while Wates’ evidence applauds what it estimates is a 90% drop in bidding costs to win schools, it says that flat-rate allowances of 12% on the budget to cover external items such as playgrounds, and 5% extra to cover site abnormalities, mean that schools with more challenging sites, whose costs can be much higher, end up seriously losing out. Overall, Wates says, while the programme has delivered “fit for purpose” new schools, headteachers have had to accept “lowered aspirations”, “lower quality specifications” and “less involvement and influence on the design” - as well as smaller school buildings.

Of course, the build cost per m2 is only a proportion of the cost saving Wates identifies. When it set out the priority school programme, the DfE said it was looking to reduce secondary school sizes by 15% on the BSF standard. With teachers keen to protect minimum classroom sizes to enable effective teaching, much of the reduction has in practice come from corridors, kitchens and communal spaces - so-called circulation space.

It’s a real challenge to deliver everything the school wants to do in the area. I think just a little bit more funding would make all the difference

Sharon Wright, education adviser

However, Wates says the reality is that compared with its typical BSF school, PSBP schools are actually 23% smaller. This isn’t because contractors or the EFA are undercutting the PSBP standards, but because under the BSF programme contractors, who bid against a fixed price, were incentivised to compete by offering schools greater area for their money. So typically BSF schools were actually far bigger than the building standards of the time, meaning the priority programme schools will feel even smaller in comparison.

Clearly cuts of this much in the size of new schools are pretty controversial. Taken together, the huge area reduction and cuts in construction costs add up - according to Wates - to a whacking 45% reduction in cost between BSF and PSBP. The total cost for a 964-person secondary school, it says, is £13m, compared with £23.5m previously. For some this is a price cut too far. “It’s a real challenge to deliver everything the school wants to do in the area. I think just a little bit more funding would make all the difference,” says independent education adviser Sharon Wright.

However, from the government’s perspective this means the EFA is, in theory, getting the best part of two schools for the price of every one under the old programme - a huge benefit in an age of spending austerity. So if, as Wates maintains, the money really buys “functional, fit for purpose buildings”, it would seem hard to argue against schools minister David Laws, who said in the same hearing that “we are driving down the price and getting very good value for money out of it.”

A funding gap

However, there are of course those who do contest the value for money claim. They argue that the identified cost savings are largely a governmental sleight of hand, created by the fact that the priority schools programme includes far less scope to pay for so-called “externals” and other associated costs to the school construction. One example is temporary accommodation to hold students while the new building is being constructed. The EFA generally refuses to pay for this, on the basis that the new building should be constructed on a different part of the school site while teaching in the old building is ongoing. This, of course then puts big restrictions on the location of the new building, which cannot go on the existing site even if it is by far the best location. Another example is furniture, fittings and IT, which the government maintains should be re-used from the existing premises, however outdated they are. And critics say there are many many more examples where external costs are excluded, including roadways, playground surfaces, fencing, removal of asbestos, and demolition of old buildings.

For a number of local authorities and headteachers, this refusal to pay costs which they say are essential to creating a functioning school building, is just leaving them with a big bill to pick up - potentially running in to millions. Seager says his Stratford school will have to find £600,000 of “our own money” to fund this gap. Councillor David Simmonds, chair of the Local Government Association’s Children and Young People’s Board, told the committee the cost burden for councils was “a few million on some larger projects.” He said: “Certainly, a large part of the cost gap between what it might have cost under BSF and what it costs under the PSBP estimate will still have to be paid, but it will be paid through some source other than the PSBP money […] to quote what one of my people was told by EFA staff, ‘We would normally expect to bully those costs on to the local authority’.”

For education adviser Wright, this is a real problem. “I think it’s a great shame because the way a new building is furnished and supplied has an impact on how that new environment is viewed. Young people really value their external places, as many don’t have social spaces in a shared environment. But it’s one of those neglected areas [under PSBP].”

The real difficulties we have had are potentially going to leave us with some significant financial costs down the line

Andrew Seager, Stratford Academy

While the government and the EFA admit that they refuse to pay for some “externals”, in other areas the reality of what will and won’t be funded remains very controversial. In particular regarding asbestos. The LGA’s Simmonds maintains he has been given “absolutely clear advice” by the EFA on this subject: “Removal of asbestos and demolition of predecessor buildings is not included in the PSBP allocation and they will not pay for that,” he told the committee.

Stratford Academy’s Seager, likewise, says he understands that the issue of who bears the cost of removing asbestos - the EFA or the contractor - is one of the things delaying his school’s project. However, the schools minister denies that the EFA refuses to pay: “If we find more asbestos in [the old school] than everybody thought there was when the school was about to be built, we either pay it ourselves or … we negotiate with [the contractor] to pay those costs. We definitely do not leave that type of cost with individual schools or local authorities,” he told MPs.

Whatever the case with asbestos specifically, the wider charge is that aside from forcing schools to pick up capital costs for items such as new IT and playgrounds, the cut-price nature of construction will leave them with a longer-term maintenance bill that they will struggle to deal with. Seager says: “The real difficulties we have had are with the running of the project and the quality of the finishes, which I think are potentially going to leave us with some significant financial costs down the line.” Wates’ evidence hints at this issue, noting that under the BSF programme contractors made sure building components were “over-specified” as the ongoing maintenance cost rested with them, whereas with priority schools, the “FM risk sits with school/LA, therefore contractors design only to meet the specification requirement.”

Smaller classrooms and circulation space mean the buildings may also be less flexible to changing circumstances. Simmonds says: “The question is going to be whether, in five or 10 years’ time, the schools are providing a good standard of education. That is not going to be easy to measure today.”

Deadline looming

There are also increasing murmurings that the EFA’s insistence on cutting construction costs so deeply is starting to delay the delivery of the programme. While the schools minister maintains all but a “handful” of schools will hit the first phase’s 2017 deadline, the LGA’s Simmonds says he would be surprised if more than half were finished in time. Sources close to the programme suggest that in London and the South-east, where the construction market has recovered quickly in recent years, the price the EFA is willing to pay has failed to keep pace with the market. Hence sources suggest the EFA is now re-working and re-issuing tenders for different batches in London in a bid to make them more attractive to contractors without increasing the contract rates.

One industry source said: “The EFA has got a massive problem with attracting bidders. It can’t seem to get the market interested.” A separate source added: “The EFA have been playing with the batches to make them attractive, but some in London and the south east are now delayed.”

The data seems to support those who doubt the 2017 first phase deadline can be met: with two years left to run, just 19 schools have so far opened and only 60 more are under construction. According to data published by the government last month, only 71 out of 261 construction contracts have so far been signed, and 100 schools have yet to have a contractor even selected for them. Given that projects commonly take a year to get on site from award of funding, and a year to build, time is running out.

For contractors and consultants, the big question is whether the EFA will yield to market pressure and ask for more money from ministers to see the programme through. For the schools in question, the concerns - over whether the project is built, how it will be funded, and what teaching legacy it will leave - are even more profound.