Public sector lifeline in doubt as £2bn BSF contracts stall

Three schools schemes worth a total of almost £2bn that were expected to appoint contractors this month, have fallen behind schedule. The news will come as a blow to contractors relying on public sector work to cushion the impact of the downturn.

Preferred bidders have not yet been named on schools worth £1.2bn in Birmingham, £350m in Salford and Wigan and £300m in Barnsley. The news has raised concerns over the feasibility of chancellor Alistair Darling’s plan to boost the economy by spending in the education sector.

It is understood that a winning bidder will not be named on the Birmingham scheme until the end of November at the earliest. Land Securities Trillium is vying with Catalyst Lend Lease, and an appointment was originally expected in the spring.

The Salford and Wigan scheme, on which Bovis Lend Lease and a Hochtief–Laing O’Rourke joint venture were shortlisted in January, is now due to declare a winner in mid-January next year.

BAM and Laing O’Rourke, the remaining bidders on the Barnsley scheme, are waiting for a decision that was due in the summer.

Project sources have attributed the delays to the scale of the schemes and the limited experience of the clients. A contractor close to one said this raised doubts over councils’ ability to fit in with government plans to accelerate the school building programme.

He said: “It’s one thing saying you’re going to speed up the programme, another getting local authorities to make this happen.”

The delays add to contractors’ woes. Wates Interiors this week revealed it was to make up to 31 staff redundant, which is 20% of its workforce. Bovis Lend Lease may make up to 230 staff redundant and most major contractors are thought to be considering similar moves.

Despite the delays there is evidence that Partnerships for Schools, the delivery agency for the £45bn Building Schools for the Future programme, is overcoming some of its long-standing problems.

Financial close was this week reached on a Land Securities Trillium BSF project in Kent, with Kier as main contractor.

A spokeswoman for PfS said: “BSF continues to gather momentum, and we are working with councils across the country to support them in the delivery of new and refurbished schools.”

Meanwhile, John McDonough, chief executive of Carillion, has said the industry’s new Construction Council, which he chairs, would work with the government to speed up spending programmes. He said: “We can’t magic up new spending but we can identify to the Treasury which areas can be accelerated.”