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Economics: How to fund a school system

The school building programme has been the main victim of the government鈥檚 cost cutting drive - as far as the construction sector is concerned, anyway. The decision to stop 735 好色先生TV Schools for the Future projects in July cut about 拢7.5bn from government spending over the next five years.

The pain has been intensified by the fact that the government has also cut 拢169.5m of capital investment from related programmes in the 2010/11 budget, such as a 拢24m fund for co-locating health and social services on schools sites, and a 拢15m fund to build swimming pools. Meanwhile, 75 academy projects have been told to review costs, the likelihood being that the most parsimonious will get the green light. The 拢7bn primary capital programme has also been frozen (although it never really got going).

鈥橠鈥� 鈥� this needs a lot more work

And the good news? Well the government has to replace BSF with something, but the big question is: how much will it spend on whatever that is? And what will become of the primary school estate (which was to have been the beneficiary of primary capital), and the remaining 2,000-odd schools that never received any BSF money.

A headline figure will be given in the Comprehensive Spending Review in October, which will cover the period from 2011/12 to 2014/15, although a detailed breakdown between individual programmes is not likely until Christmas. The pots of money that have been distributed so far are pretty paltry - 拢50m for free schools has been about it. And given that the government needs to cut between 25% and 40% of spending from most departments, it鈥檚 safe to assume that the public sector鈥檚 contribution to building demand will be a small fraction of what it was under Labour.

Despite its antipathy towards the PFI, the government is still hoping the private sector will play a part in financing schools. The review panel looking at future school building programmes has been instructed to consider how capital spending 鈥渨ithin any PFI policy鈥� could be distributed. But although the number of lenders to BSF projects was increasing towards the end of the Labour鈥檚 last term, there is ferocious competition for private investment throughout the economy, and there are doubts over how attractive smaller-scale projects will be to lenders, particularly given the Conservatives鈥� drive to limit the returns its private sector partners make on their money.

Schools that face a shortfall in their funding, or a long wait for it, may opt to raise money for themselves, without applying for PFI credits. However, the experience of colleges that tried to do that after the Learning and Skills Council programme collapsed is not encouraging.

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Michael Gove鈥檚 declaration that he wants to extirpate the 鈥渘eedless bureaucracy鈥� of BSF will be music to the ears of many in the industry. A BSF schools package was a huge win, if you did win, but the procurement process could take the best part of two years and cost each bidder 拢6m.

鈥橞鈥� 鈥� some good answers but show your working

A review panel has been set up to look at future schools procurement, and it is understood to favour framework agreements over one-off procurement. It is also understood that the education department is considering using existing local frameworks to procure some work, alongside deals like the academies contractors鈥� framework, which was re-procured last year. This would tend to mean smaller projects, shorter procurement times, and more involvement from regional firms.

The Local Education Partnership (LEP) model, under which schools were bundled together into enormous PFI contracts, is likely to continue only where an LEP is in place. This will certainly reduce bureaucracy (the National Audit Office found that LEPs took about 20 months to procure). On the other hand, more localised procurement is not naturally friendly to economies of scale.

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If the BSF programme had continued, and it had gone to plan, every secondary school in England would have been rebuilt or refurbished by 2023. Even though that was more or less impossible, it did at least mean that spending would continue without a break.

鈥機鈥� 鈥� stop stopping!

The current government has not committed itself to a timeframe and has not said it will improve every school in England. Some projects may be procured faster, but that鈥檚 because they鈥檙e relatively small. And it may take a year for the government to sort out its priorities and get work in the pipeline, as the review panel will not issue its full report until Christmas, and then there will be a lead-in time while frameworks or contracts are set up. The potential bright spots are the academies and free schools - the government has stated it wants to open 20 of the latter by 2011, and has invited all primary, secondary and special schools to apply for academy status. However, the free schools target already looks ambitious, with no system yet in place for procuring projects.

Despite this, it is worth remembering that 580 schools on which contractors were appointed under Labour will progress during the hiatus, and that the 33 sample schemes that have been given the go-ahead are due to appoint winning teams imminently, if they have not already done so.

Design: Retakes look inevitable

The government has wasted no time in axing the 拢972,000 annual funding Cabe received for its BSF work, a move that has fuelled anxiety over the quality of future school designs. One of the major effects of the cut is that Cabe has had to scrap its bespoke design review panels for schools. Previously, all BSF schools had to go before the panel (although academies and primaries did not) but now schools will only be subject to review if they put themselves forward.

鈥橠鈥� 鈥� seems to have forgotten everything we learned last term

Cabe has also had to stop its 鈥渆nabling work鈥� with schools, under which it allocated a design adviser to guide staff through the design process. Philip Watson, design director and head of education at Atkins, says: 鈥淚 think the benefit of Cabe was its central role in providing design advice to clients. It will be interesting to see what plans the government has for ensuring design quality going forward and the role that we as designers can play in this.鈥�

An architect at a major practice adds: 鈥淚 think it鈥檚 a real shame for Cabe, and it鈥檚 a worrying signal of things to come in terms of design quality. I think their being removed from the process is the thin end of the wedge.鈥�

Cabe will continue to provide technical guidance and case studies on schools work, particularly on refurbishment and the conversion of non-school buildings to educational use. It is planning to publish guidance on the latter in October in association with the New Schools Network, the charity that is advising parent and teacher groups on setting up free schools.

Matt Bell, Cabe鈥檚 director of education and external affairs, said: 鈥淚t isn鈥檛 a binary choice between good teachers and good buildings. Parents want both for their children. The challenge is now to offer that within a much tighter budget.鈥�

Sustainability studies: Why refurb is greener than new build

The emphasis on refurbishment offers the opportunity to address carbon emissions, as it will cut the energy used in the construction process. Simon Lucas, head of education at EC Harris, says: 鈥淚f you are recycling a building, a lot of the energy involved with it has already been expended during its construction. For example, you wouldn鈥檛 need to manufacture the steel frame again.鈥�

鈥橞+鈥� 鈥� more work and it could be an 鈥橝鈥�

In addition, a programme of retrofitting could cut the emissions that come from the school estate. Schools currently account for about 2% of UK greenhouse gas emissions, equivalent to 15% of the country鈥檚 public sector emissions, according to the Zero Carbon Task Force鈥檚 report on schools earlier this year. It is estimated that in England, schools are responsible for 9.4 million tonnes of carbon dioxide a year, with energy use in school buildings accounting for 37% of this.

There has been a notable downplaying of green rhetoric surrounding schools since the taskforce published its report under the last government, suggesting that eco-schools fitted with expensive technologies may fall by the wayside. But this may make less of a difference than you might think. As Ros Fox, head of education at consultant Appleyards, says: 鈥淓ven with brand new buildings, the sustainability aspect hasn鈥檛 always been great as people don鈥檛 know how to operate them.鈥�

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Michael Gove has wasted no time in laying the groundwork for conversions of non-school buildings to educational use, a strategy favoured by the international models of education that have influenced Conservative policy.

Within weeks of being appointed, he announced his intention to relax planning rules to allow the redesignation of commercial and residential buildings for use as schools.

However, industry experts acknowledge there are still hurdles to be overcome before there can be widespread conversion of these buildings. These include problems with acoustics, fire safety, classroom size and access, and may entail structural changes, or the scrapping of, the 好色先生TV Bulletins that cover acoustics, lighting and ventilation.

鈥橞-鈥� 鈥� this shows a lot of imagination, but pay attention to the details

Simon Lucas of EC Harris says: 鈥淪ome of the regulatory controls do need to be looked at. I think they need a review of how they work in the context of this, and generally. The biggest challenges we have uncovered in our research are acoustics and natural light. But as long as it鈥檚 a structure that is capable of conversion there are many models of building which you could use.鈥�

Ros Fox of Appleyards adds: 鈥淚f sufficient common sense is used, I think you can deliver good standards in many buildings. Some schools are extremely successful despite being cramped.鈥�

However, industry sources are cautious about the scale of the challenge. One consultant says: 鈥淢y gut feeling is we鈥檝e spent the past 10 years looking to push education design, and it feels like a bit of a retrograde step to think we can take any buildings and make them suitable.鈥�

Much easier, particularly in the short to medium term, is to remodel or refurbish existing schools, instead of building them from scratch. This policy will be aided by the fact that BSF, which was intended to be roughly 50% new build and 50% refurbishment, had already knocked down many of the worst schools, and was moving towards greater use of refurbishment. The new government will accelerate that trend.

This article was published under the headline: 鈥淚f you take away 拢7.5bn from education spending, what are you left with?鈥�