Life after BSF

Following the government's announcement that the Building Schools for the Future programme is to be curtailed, Adrian Turner looks at how local authorities can respond.

On Monday 5 July the Education Secretary, Michael Gove, announced he is establishing a capital review team to look at every area of the DfE’s capital spending. The aim of the review, to be chaired by Sebastian James, the group operations director of DSG international, is to drive down costs, procure new buildings more quickly and direct a higher proportion of money straight to frontline services. The review will consider how all DfE capital expenditure within any spending constraint and PFI policy could be distributed more effectively over the next Spending Review period.

The announcement will have come as no surprise to most local authorities since there was reference to a full spending review to in the Coalition plans published  in May. With the nation's debt having topped the £900bn mark, there was inevitably going to be close scrutiny over a programme that had £55bn of capital spending earmarked to it, especially when a deficit reduction is stated to be the overall priority.

However, as teachers, pupils, parents and indeed authorities start to come to terms with the fact that BSF will not provide the route to educational transformation, they will start to turn their minds to the obvious question: what do we do now?

Do nothing

Gove’s announcement does not alter the fact that hundreds of schools up and down the country remain in need of major investment. With the promised BSF funding gone, or at least on hold, authorities will be considering their options. However, the timeline for Michael Gove’s review is short — it will report to Ministers in mid-September and a forward plan for capital investment over the next Spending Review period will be produced by the end of the calendar year. In light of this, some authorities will simply sit tight and wait - hoping that the review will offer up a slimmed down BSF or a new  programme to replace BSF. This may well be the case.  However, other authorities will feel that they can’t afford to sit back, particularly where significant time and resources have been expended on their BSF programme. For authorities in this situation, there is much to consider.

Do what you can

Each authority in the BSF programme will have expected to have made a financial contribution to its scheme. For a reasonable sized authority with a number of waves anticipated, it may have expected to part with around £10m. For many, the obvious option might be to look at how this money can be spent outside of BSF, to at least give the schools missing out something to hold on to. This may result in the letting of smaller refurbishment contracts or the carrying out of emergency works. However, with only a matter of days left before schools break up for the summer holiday, the window of opportunity to carry out such works may have gone. Additionally the Scheme may already have identified savings which will no longer be achievable and  there will therefore need to be a more general financial reappraisal of options.  

Rationalise and reorganise

A key element of BSF was a strategic review of pupil demographics for each area. For many authorities this led to school reorganisations and rationalisations. For some, there may still be opportunities in this regard. Where there is a need or a desire to rationalise the estate, there may be opportunities to free up sites, release value in them and use these funds to upgrade those school buildings that remain. This may be something authorities look at in the context of the education estate or possibly as part of a wider review of its property portfolio.

Another limb to this is the proposed Free School model which the Government has introduced. As groups come together to establish Free Schools, this will remove further demand for places at authority controlled schools. Furthermore, such schools will require land and buildings and there may be opportunities for unused authority owned sites to be put into the mix. This is very much the model seen in Sweden, where such schools often occupy unused office accommodation. Again, innovative authorities may see opportunities here to deliver benefits perhaps thought lost.

Lobby and challenge

Some authorities may refuse to accept that their scheme has gone, seeking to lobby for a u-turn or indeed challenge the decision. The likelihood of this bearing fruit is probably slim. Against the back drop of the wider economic problems the country faces, it is hard to see decisions being changed other than perhaps in exceptional circumstances.

Embrace other opportunities

The priorities for the coalition government are clearly the expansion of the Academies model and the introduction of Free Schools. Indeed the review announced by Michael Gove will look at how best to allow new providers to enter the state school system in response to parental demand. Some local authorities will see this as a challenge to their right to deliver education and will fight against it. Those who are less wedded to retaining control over education delivery however may see this as an opportunity. With capital budgets slashed and uncertainty over what, if anything, will replace BSF, one of the few ways a local authority can transform education is by switching roles — becoming a facilitator rather than a deliverer. It could for example sponsor academies or as suggested above assist groups to establish Free Schools and find premises for them.

The future

Whatever route local authorities take, it is clear that the landscape has changed for good. As the review proceeds, the way in which future spending on school buildings and facilities is delivered will start to emerge. Whatever it looks like, it is clear the review is designed to offer a solution which matches the new government’s priorities. What everyone will hope is that under that new model the schools which need it most get the funding first and the investments made represent excellent value for money. In the meantime, authorities have some interesting decisions to make.

Adrian Turner is a partner at Eversheds LLP