Schools Face Financial Strain from Private Finance Initiative (PFI) Fees
Schools are struggling financially as the cost of Private Finance Initiative (PFI) contracts with private companies increases significantly, consuming a growing portion of their budgets.
PFI arrangements lock these schools into lengthy 25- to 30-year obligations, with expense increases outpacing those at non-PFI schools. Some schools report that stringent contract terms now take up nearly 20% of their budgets.
Defenders of PFI argue these deals offer taxpayers cost-effective solutions over the long run.
Over 900 English schools were established under PFI, starting in 1999, but the scheme ended in 2019. These schools are privately owned and maintained until PFI debts are cleared via public funds, ultimately transitioning to public ownership.
PFI costs rise by the Retail Price Index, a measure of inflation which is higher than the government's current standard and no longer officially used.
Despite confidentiality in PFI contract terms, headteachers are voicing concerns. For instance, Middlefield Primary's headteacher, David Potter, contends with contract stipulations that highly dictate maintenance, including grass height on playing fields, which alone costs the school about £30,000 annually.
This restricts the school's ability to reduce spending through other potential providers and has resulted in staff cuts to balance the budget.
Similarly, secondary schools like Cardinal Newman College in Oldham face escalating PFI costs and infrastructure issues, forcing closures and expensive repairs.
Transparency issues persist, with reports of enforced secrecy and lack of public discourse due to non-disclosure agreements within PFI contracts.
Stoke-on-Trent City Council recently alerted its 88 PFI schools of imminent fee hikes, with its extensive PFI agreement nearing its 2025 end.
Critics, such as Public Accounts Committee Chair Meg Hillier, concur that secrecy surrounding PFI deals is troubling and counterproductive, advocating for openness that might prompt PFI firms to reconsider their charges.
Even as the Department for Education pledges a 10.4% increase in support for PFI-burdened schools, PFI backers claim these contracts remain financially sound but acknowledge that school budgets haven't kept pace with inflation, emphasizing that PFI ensures valuable services like maintenance and catering.