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ITEM EX11 - Supplement

EXECUTIVE – 10 DECEMBER 2002

SCHOOLS PFI CREDITS

Views of Learning & Culture Scrutiny Committee and Briefing Note by Acting Chief Education Officer

Views of Learning & Culture Scrutiny Committee

Key comments arising in debate:

• There had been insufficient opportunity for members to consider the philosophical aspects of PFI and whether it was appropriate for Oxfordshire
• The report was disappointing – it did not fulfil the Executive’s original requirements, there was a general lack of clarity about huge issues, key points were not discussed and the outcome of consultation was not fully reflected
• There had been inadequate local / member consultation ; there also needed to be a full consultation with schools
• A thorough review of areas’ needs was required, with prioritisation
• Other options/alternative sources of funding should also be explored – new government guidelines on local authority borrowing; when developer contributions are more appropriate, etc; the Executive should follow up other sources and also seek research and comparisons of PFI and other schemes as operated elsewhere, particularly considering value for money for local council tax payers
• Members wondered if we had the appropriate resources and personnel in place as a council to undertake such a major scheme; there would be significant financial implications in staffing and resourcing the project as an authority
• Wantage/Grove: it was reported that the vision for a new single site school was not supported in the local community (see attached statement by the Mayor of Wantage to the Scrutiny Committee).
• The selection of schools and areas into PFI projects had wider geographical implications – eg what happens in Grove/Wantage could have a potentially detrimental effect on Abingdon schools
• There should be further opportunity for discussion by all members of Council. There was a minority viewpoint at the committee that PFI was to be welcomed as a pragmatic means of securing this level of funding for our schools. The Scrutiny Committee felt there should be an opportunity for full Council to debate whether it wished to commit Oxfordshire to this funding and delivery route.

3 December 2002

Briefing Note by Acting Chief Education Officer

1. The philosophical and political issues raised by the Scrutiyn Committee are outside the scope of the officers’ report (EX11) although there is some discussion in it as to the practical pros and cons of a PFI scheme - which were also discussed in some detail at the members’ seminar on PFI. There is of course always the need to balance the length of a report with the inclusion of sufficient information.
2. Option appraisals have taken place and these being made available in the Members’ Resource Centre. The report outlines the outcome of these for a number of schools. These have taken account of alternative sources of funding and information on this and of the financial implications overall would have been available and discussed with the Scrutiny Committee had time been made available. As the report implies these will also be available for the Executive.
3. Although significant work and much thought has gone into possible PFI schemes the revised guidelines were only received from the DfES on 30 September with an expression of interest to be submitted on 3 January 2003.
4. The implication of the report is that Wantage/King Alfred’s is not appropriate for a PFI scheme at this time; the report is not meant to imply any decision over a preferred way forward for Wantage although a number of scenarios proposed by the Governors and local members might be appropriate for a PFI bid in the future once a strategy is agreed.
5. There were concerns about the effect on other schools, notably Abingdon. However, this shouldn’t stop us trying to make improvements to school buildings when we are able to do so. In the short-term, we might expect a number of out-area pupils going to Didcot to decline, possibly increasing again in the medium-term with the opening of the third school. In the long-term we would expect the number of out-area pupils going to Didcot to be lower than they currently are.
6. Members have had an opportunity for a seminar on PFI with outside specialist input. The current timescales are for a submission through the expression of interest by 3 January 2003, with an outcome being known at the end of March as to whether we can proceed with an outline business case. Relevant governing bodies have been informed that a strategy will be adopted whereby between January and the end of March there will be further meetings with governors to look at the implications of PFI and for schools to begin to look at their expectations for their site. Governors are already being encouraged to visit schools operational under PFI. Members will be encouraged to do the same. Every local member for the schools concerned has been written too and has been offered a personal briefing.
7. It has been made clear to Members and to the Executive that specialist advice will be required to move to the next stage of the PFI project, should the expression of interest be supported, typically in the region of £300,000. The report to the Executive outlines that there will be a discussion at the meeting on the additional funds that may be needed. This confirms a sum in the region of between £300,000 - £500,000 of additional resources each year over a 25-year period. A financial model based on the likely level of PFI credits generated by this bid will be discussed at the Executive meeting alongside discussion of funding through traditional funding routes. It is true that public sector borrowing is less than that in the private sector, however, the prudential guidelines would not allow the LEA to borrow the amount required to finance this bid.
8. In theory, it could be argued that the unitary charge is financing both the profit and the higher interest payments of the private sector, but essentially it is also paying for a better service given that maintenance standards etc. will be higher.
9. It must be stressed that procuring a PFI scheme is not a panacea for all problems and the Kirklees situation (alluded to in the Scrutiny meeting) demonstrates that some of the difficulties experienced through traditional build can be a problem with PFI schemes. However, the fact that an authority is entering into a 25-year partnership will mean that these problems are resolved. The experience of talking to other officers in authorities with operational schemes is that the procurement and signing of the contract can be long and difficult, but that in the majority of cases, the end result is welcomed by schools albeit that most schemes are still in the early years of the long-term contract.
10. The DfES expect that PFI is the preferred route of providing a new Voluntary Aided school. There is a specific team to assist with VA schemes and additional funding towards the legal and financial costs.
11. The expectation is that the next bid would be in a year’s time.
12. We do not anticipate any change in our stand on developer contributions where these can be justified to fund the total on-going costs of the project.
13. Discussions about the shape of future provision in Bicester are outside the scope of the PFI bid. However, the Cooper School site is full, and any further provision in the town will be elsewhere and is likely to magnify the problems that they are already experiencing. Regardless of the long-term provision within the town, the proposed solution for The Cooper School is appropriate.
14. There was support in principle for the bid but no vote was taken to ascertain how representative this was. The recommendation states that the matter will need to return to Full Council. The current position is to submit an expression of interest and not a commitment by the Council.
15. Any copy of the proposed bid will be placed in the Members’ Resource Centre along with option appraisal documentation.

December 2002

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