黑洞社区

In 2015 the government set aside 拢23bn to pay for school building and refurbishment programmes up to 2021, which were designed to fix the 拢6.7bn problem of school disrepair and tackle the challenge of creating hundreds of thousands of new pupil places to meet forecast demand.

But despite then-chancellor George Osborne鈥檚 pledge, government spending on school building fell by 拢1bn last year to just 拢4bn, well below the 拢4.6bn a year implied by the 拢23bn allocation. Contractors and consultants working in the schools sector report that progress has been slow on both the free schools building programme and the second phase of the Priority School 黑洞社区 Programme (PSBP2), which is designed to repair and replace those in the worst state. Some are starting to worry that last year鈥檚 fall in expenditure is not just a temporary blip.

Some fear that the apparent lack of noise from government on school capital spend 鈥� a subject on which the education secretary, Damian Hinds, has been silent 鈥� could even be a precursor to cuts. Meanwhile, difficulties finding sites and dealing with issues such as asbestos dog attempts to drive through those schemes that are in the pipeline.

鈥淏oth public and private sector players have expressed concerns about the pace of delivery of new schools鈥�

Tim Byles, Cornerstone

The former boss of the government鈥檚 school-building quango, Tim Byles, now deputy chair of social investment company Cornerstone, says: 鈥淏oth public and private sector players have expressed concerns to me about the pace of delivery of new schools.鈥�

So, do fears the government is cooling on school building have any basis, and, if not, what could the government do to pick up the pace?

Government denies problems

The government rejects the suggestion of any capital spend problem. It points to the fact it has already created 825,000 additional school places since 2010, and is on track to have created a million additional places by 2020. A spokesperson for the Department for Education said it remained committed to the 拢23bn investment between 2016 and 2021. 鈥淭he funding is delivering thousands of new school places, rebuilding and replacing buildings in the worst condition, and delivering thousands of projects across the school estate,鈥� she said.

A departmental source said the drop in capital spend last year was due to the winding-down of the first phase of the PSBP, which has now built 237 of the promised 260 schools. Indeed, the accounts for the Education and Skills Funding Agency (ESFA) for the year to March 2018 show that nearly 拢600m of the 拢1bn drop from the previous year was accounted for by a 55% fall in spending on the PSBP. The source said any variation reflected the natural ebb and flow of programme spend. 鈥淚f you look across spending reviews,鈥� he said, 鈥渨e got 拢17bn in the last one and 拢23bn in this one. In the bigger picture, spending is up.鈥�

Certainly, it is hard to pin the department down on targets missed. Consultants say the next wave of free school building work, Wave 13, which is now due to come out to the market in spring next year, was originally supposed to arrive a year earlier. But departmental sources say that there was never any firm commitment.

Nevertheless, there is some evidence that work is coming forward more slowly than expected, and plenty of room for suspicion. For example, last year鈥檚 government construction and infrastructure pipeline predicted approximately 拢5bn would be spent in 2017/18 on schools capital, 拢1bn more than ultimately was spent, supporting the view that spending did not come forward as hoped. Philip Watson, director at architect HLM, says: 鈥淥ur experience is that investment is not flowing as predicted. Every time a new framework is set up, it takes six months longer than expected, then takes six months to bed down, and then the work doesn鈥檛 come at the anticipated rate.鈥�

Progress on the second round of the PSBP, PSBP2, is one of the prime concerns. While the departmental source says PSBP2 is ramping up, those in the market see little evidence of this. PSBP2 is supposed to deliver new blocks at 277 schools between 2015 and 2021, so would be expected to be firing on all cylinders at this point.

Slowing pipeline

However, the ESFA accounts show that only five projects were completed and 30 contracts signed as of March this year. In addition, just 拢195m of capital commitments for PSBP and PSBP2 work were made in the previous year. According to one market source, ESFA pipeline documents shared only with bidders showed a mere 23 projects in the PSBP2 pipeline. With just over three years left, PSBP2 would be expected to be now delivering around 80 projects a year.

It is not possible to say why projects are coming forward more slowly, though the accounts also refer to 56 projects subject to contractor claims, where asbestos or contaminated ground has been discovered. Steve Beechey, managing director of government affairs at contractor Wates, says: 鈥淭he priority schools work is coming through at a lower level than the market is used to. In the PSBP, the industry was doing hundreds of schools a year sometimes, but PSBP2 is more of a slow burn. There鈥檚 a lull.鈥� Meanwhile, any hopes of funding for a third round of PSBP 鈥� or an equivalent targeting rundown schools 鈥� will not be dealt with until chancellor Philip Hammond鈥檚 proposed post-Brexit spending review next summer.

It is not hard to see why many in the department may be prioritising other areas, with fears over a recruitment crisis and rock-bottom morale among teachers. Last year, when the department needed 拢1.3bn for a new funding settlement for schools, it took 拢900m of that from departmental money earmarked for buildings. Again, this July the department raided its own coffers to fund a 拢1.4bn, 3.5% pay rise for teachers 鈥� and some suspect capital funding may once again take some of the hit. 鈥淲hen you see headlines in the sector talking about a chronic teaching shortage,鈥� says HLM鈥檚 Watson, 鈥渢here鈥檚 clearly a concern that capital funds will be redirected to the front line.鈥�

However, the departmental source denies this is the case. 鈥淭he department can鈥檛 reclassify capital money as revenue even if it wanted to,鈥� he says. 鈥淭he accountants won鈥檛 let us.鈥�

Free schools

The other big concern is around the 拢9.7bn free schools programme. Here, accounts show a fall in spending in 2017/18 of just under 拢200m on the previous year, to 拢1.2bn. This is broadly consistent with the 拢280m the government said was being cut from it to pay for last year鈥檚 school funding settlement. However, concerns are being heightened by the perceived delay to Wave 13 coming to market. Cornerstone鈥檚 Byles says the government needs to get smarter about doing deals on land held by other public sector bodies in order to break the logjam. 鈥淭here鈥檚 a massive need for more co-ordinated investment; we鈥檝e got to have a more joined-up approach across the public sector.鈥�

The rising cost of free school sites led to the government creating a new quango, LocatED, to locate and buy sites for the programme, in 2017 (see 鈥淟ocatED 鈥� is it making a difference?鈥�, previous page). But a spokesperson for the body admitted last year鈥檚 target to buy 100 sites for new schools had been downgraded, and it instead worked on purchases of just 55, implying a slowing of momentum. The departmental source claimed this was because the ESFA had already been successful in finding surplus sites owned by other public bodies that could be handed over for free 鈥� meaning fewer purchases were needed for the same number of projects.

鈥淭here鈥檚 certainly a cooling on free schools from the government, but whether that means moving away from the target is not clear鈥�

Steve Beechey, Wates

Nevertheless, speculation has grown that the government is poised to back away from the 2015 manifesto commitment of 500 free schools by 2020, which was repeated in the 2017 manifesto. Since replacing Justine Greening in January, Hinds has not publicly backed the programme. Wates鈥� Beechey says: 鈥淭here鈥檚 certainly a cooling on free schools from the government, but whether that actually means moving away from the target is not clear.鈥�

A separate senior industry source says there are 鈥渨idely mooted鈥� and 鈥減ersistent鈥� rumours the government will step away from it. When asked, a spokesperson for the Department for Education declined to answer specific questions about the target.

A wider shift that may be influencing thinking is the changing demographic drivers for much of the mooted school building. According to Department for Education estimates, the latest of which were published in March, about 80,000 new primary and nearly 90,000 secondary school places need to be created between now and 2021/22 to accommodate the long-forecast rise in pupil numbers. However, more recent ONS population predictions are forecasting weaker population growth than previously expected, with growing evidence of a Brexit effect of EU citizens returning home and lower birth rates.

National government pupil place predictions are yet to catch up with this, but Greater London Authority estimates, also from March, show the impact in the capital, where the primary school-age population is already around its peak. Marcus Fagent, partner at consultant Arcadis, says his business is seeing some school expansion programmes slowed or scaled back due to population changes as local authorities rework their predictions for school places. 鈥淭his is also impacting on the free schools programme 鈥� some projects have slowed due to the clear demand for new places not being there,鈥� he says.

Whether the recent fall in capital spend is a blip, a cumulative result of lots of individual site problems, the first sign of a wider shift in government priorities, or reflective of a slowly reducing birth rate remains to be seen. But a nervous pre-Brexit construction market is desperate for some stronger public signals from government as to which way investment is heading.