黑洞社区

Tim Byles is used to having his patience tested by construction projects. As a teenager, he spent his university holidays standing for 14-and-a-half hours a day on the site of what was one day to be the M25, watching a set of traffic lights change. Apparently, the contractor that employed him felt it was necessary for health and safety. 鈥淚t was the dullest job I鈥檝e ever done,鈥� he says. 鈥淚 wasn鈥檛 allowed to sit down, and I had to watch red, amber and green. But I did learn to play poker rather well.鈥�

As chief executive of Partnerships for Schools (PfS), the body in charge of the government鈥檚 拢45bn 黑洞社区 Schools for the Future programme and an increasing number of other initiatives, the adult Byles may have cause to miss the dullness of that job. Despite having clawed BSF back from crippling delays since his arrival in November 2006, the future of the programme is clouded in uncertainty. In the depths of recession and with an election looming, politicians of both parties are looking at ways to make BSF work in a period of austerity 鈥� although this might mean significant changes to the procurement and financing of schemes. And in the meantime, he also has to ensure that the banks鈥� reluctance to lend to construction schemes, and the risk of failure of contractors, do not send the programme heading back towards its darkest days.

A turning point

When he joined PfS two-and-a-half years ago, Byles was given a task many would have balked at. 鈥淭he programme was running significantly behind early expectations, and the relationships with local authorities were not well developed 鈥� in a few cases, they had been quite adversarial for some time,鈥� he says. 鈥淏ut now we鈥檙e at a point where I think we鈥檙e firing on all cylinders. We鈥檙e on a trajectory to deliver this programme on the original timescale, which is to be substantially complete by 2020 and fully by 2023 鈥� subject to future spending review decisions, as everybody wisely says,鈥� he adds wryly.

The point about future spending is a crucial one. 鈥淭he variables are considerable, including the performance of the economy, the tax take and so on. It鈥檚 far too soon to translate that into likely levels of investment across government.鈥�

The Conservatives, who are likely to have that decision to make, have been pretty much silent on the detail of their plans for education. Byles, who can have only limited discussions with a party that is not in power, says he cannot talk about specific Tory initiatives. What he will say is that the they are 鈥渄eveloping their plans and we鈥檒l need to see from any new government how they want to change things. But there has been recognition from all parties for some time that there is a considerable need to invest in our school infrastructure鈥�.

Schools are big, complex schemes that are timetabled quite closely and I鈥檓 not expecting any hurrying up or slowing down

He says the 鈥渄eveloping line鈥� from the Conservatives is a 鈥渧ery devolved one鈥�. That might not be great news for PfS itself, particularly since two right-wing think tanks recently said the responsibilities of the body should be cut. But Byles says the organisation can rise to the challenge. 鈥淏SF operates through local authorities already as they are the procurers. We鈥檙e there to help local authorities make the best use of their resources. Any system that works through local government, or individual school procurers as we do with academies, is something that can be taken on board.鈥�

And those threatening think tank reviews? 鈥淭here have been 12 reviews of BSF in the past two-and-a-half years at least,鈥� says Byles. 鈥淎lmost all have been based on transparent evidence, but there are one or two that have not gone down that road.鈥�

Breathing space

Byles is anxious to quell fears that the flow of school schemes will slow as the election approaches. 鈥淭hese are big, complex schemes that are timetabled quite closely and I鈥檓 not expecting any hurrying up or slowing down,鈥� he says.

His optimism seems borne out by the recent government announcement that it is to fund 18 BSF schemes that will run into the next spending review period. 鈥淭hat鈥檚 an unusual step for government to take,鈥� says Byles, 鈥渁nd it鈥檚 been very helpful in maintaining the certainty of the pipeline.鈥� He says it would be difficult for any government to stop a project once it鈥檚 had an OJEU notice put out, describing it as 鈥渁 solid commitment鈥�.

Even with that breathing space, however, keeping the momentum going on BSF is not easy. Although progress has improved dramatically under Byles, inherent problems with the programme have been compounded by the recession. In particular, contractors continue to complain that the bidding process 鈥� carried out through competitive dialogue 鈥� is too long. With schemes costing up to 拢6m to bid, several argue that the UK government is applying the letter of the law too rigidly.

There will unquestionably be pressure on local authorities to achieve more for less

Byles has sympathy with this: 鈥淭he truth of it is, we鈥檙e a delivery agency and we need to abide by the rules our government has set. But that doesn鈥檛 mean we do so blindly. We鈥檝e been looking very hard with colleagues in the Treasury at the way the PFI is funded and the need to respond to changing market needs.鈥�

He says they have been studying case law in other European countries, which in some cases has upheld a less rigid application of EU legislation on competitive dialogue. 鈥淭here are areas where case law is moving in a direction that may help us reduce costs. We鈥檙e likely to consult on further changes next year.鈥�

There are also continuing issues with funding BSF, about 40% of which is procured through the PFI. 鈥淎t the beginning of the year, we had no banks lending, in early January about six and now around 20. So liquidity has stopped being the big issue. The question now is the cost of money and how the risk in PFI is judged by the providers of finance.鈥�

Byles concedes that the stage between preferred bidder and financial close is taking 鈥�12 weeks longer, on average鈥� than before the recession. The situation has been helped by an injection of 拢300m from the European Investment Bank, which he is in talks to extend. 鈥淚t meant we were arranging up to half the debt finance on some of the large BSF schemes at 60 basis points against a market rate of about 250. So that鈥檚 helped.鈥�

In the longer term, Byles says he expects any future government to review the use of PFI in schools procurement. 鈥淭here are a number of ways in which financing a 25-year product can be achieved. It doesn鈥檛 have to mean you need 25 years鈥� money. I think there鈥檚 more scope for looking at shorter term money, and more scope for looking more flexibly at the way PFIs are funding into the future.鈥�

However, he points out that 鈥渟chools PFI looks set to continue off balance sheet in the public sector, and that鈥檚 a significant development鈥�. The other big plus for PFI, he adds, is that it 鈥済uarantees the maintenance of the asset, which we鈥檝e been lamentably bad at doing. That鈥檚 the reason we鈥檝e got 80% of school buildings beyond their design life at the moment.鈥�

Byles knows that, whatever the procurement route, there will be pressure on schools and their consortiums to come up with ways to improve their buildings on tight budgets. 鈥淭here will unquestionably be pressure on local authorities to achieve more for less,鈥� he says. 鈥淭hat鈥檚 why a debate about priorities locally on schools capital will be important going forward.鈥� Clearly, Byles is keen to be as involved as he can in that debate.