Crisis looms on Tower Hamlets schools PFI

Tower Hamlets Council's £345m bundled schools PFI is in further trouble, with both the funder Abbey and FM contractor Rentokil Initial walking away from the project.
The new build and refurbishment contract for 27 schools in the London borough is already a year late. Talks are still ongoing between the council and the leader of the Tower Hamlets Schools consortium, Babcock & Brown, over a replacement main contractor following the collapse of Ballast last October. An announcement is expected next week.
However, one project source told CJ talks are being hampered by the reluctance of the council to stump up extra funds to sign off the contracts for the new contractor, which could leave Babcock & Brown shouldering the costs.
Despite the dispute, a Babcock & Brown spokesman told CJ the company was confident the project would still go ahead.
"The company is determined to get the work done, whatever the costs," he said. "The company has a great reputation and would not want to be associated with a failed contract."
A council spokeswoman said: "We are under pressure to get the new contractor in place so that construction can start this month in time for the new school term. We are still waiting for confirmation from Babcock & Brown."
Work on the £44m, two-year construction phase has still not started, with only a small amount of emergency remedial work undertaken by subcontractors.
Meanwhile, talks are also underway to find one or two investors to replace funder Abbey, which decided to relinquish its PFI responsibilities from the project last month in light of Santander's bid for the bank.
Abbey is expected to make a phased withdrawal from the contract, although the timetable has not yet been confirmed.
Rentokil Intitial, which was put in place in July 2002 to provide services for the new and existing schools sites, also decided to walk away from the contract last month after it was asked to carry out duties "over and above" what was set out in the original contract following Ballast's demise.
In a statement, the company said: "Rentokil Initial is unable to undertake certain requested tasks, previously the responsibility of Ballast, which are outside our normal range of services. We are now discussing our withdrawal with Babcock & Brown."