Government’s delivery body set to launch search for contractors and to detail PF2 funding model
The body in charge of delivering the government’s Priority School Building Programme (PSBP) is to fire the starting gun imminently for for the £1.75bn privately financed element of the programme.
An announcement from the Education Funding Agency (EFA) that will reveal details of the funding method currently being prepared is thought likely to coincide with the official tender for the first batch of schools, in Hertfordshire, Luton and Reading.
Sources said the announcements could be published as early as today, but, if not, it is expected next week. The first batch has a notional construction value of £112m, according to the EFA.
The news follows comments by EFA head of capital Mike Green at the Building Future Education (BFE) conference in London this week that the EFA will launch the PF2 element of the programme “within days”. Government sources said the batch in Hertfordshire, Luton and Reading would be followed by three other batches “very soon afterwards”.
These will be in the North-east, worth £101m; the North-west, worth £94m; and Bradford and Kirklees, the value of which has not been disclosed.
Rachel Stephenson, the EFA’s programme director for PSBP, said that the EFA would start working with a further three groups of schools before the end of the year.
It is thought likely the EFA will at the same time formally begin a search to procure a single financial “aggregator” to raise private capital for the schools planned under the programme. These schools are to be the first public projects to use the PF2 model launched in December as a replacement to the PFI system. Instead of each batch of schemes raising its own private capital, as under PFI, the “aggregator” will raise debt finance for the whole £1.75bn programme.
Daniel Rudley, deputy director of private finance at the EFA, said at the BFE conference that the aggregator would reduce potential funders’ risks against individual projects by allowing them to invest in a portfolio.
He said: “This is about how the programme accesses the private finance needed. The aggregator removes the need for quite so much scrutiny of individual projects by institutional investors.”
“The aggregator will sit above the individual projects and assume a certain level of health of the individual projects, and be able to be institutionally rated for investors itself.”
Rudley confirmed PF2 schemes will still require bidders to provide equity finance, but the aggregator will replace all of the debt funding traditionally required for a PFI scheme.
In addition Rudley said winning PF2 bidders would be expected to be held accountable for the “baseline” energy use in buildings they construct, despite Treasury’s desire that schools themselves should have no recourse to the builders if energy bills are high.
It is also understood the winning contractor for the London batch of the £380m directly-funded element of the PSBP is also set to be decided today. The remaining directly-funded four batches, in the North-east, North-west and the Midlands, are to be decided before the end of the month.
The Education Funding Agency unveiled a fresh set of baseline designs (pictured above) for schools at this week’s BFE event in London. The designs, for a range of different sized primary and secondary schools, are an addition to designs published last October. The designs are intended to be used as a start point for contractors and architects proposing schemes under the Priority School Building Programme to show how the EFA’s required output specifications could be met.
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