Liverpool BSF turns its back on PFI route

Liverpool City Council (LCC) has won its battle with Partnerships for Schools (PfS) over how it delivers its £400m Building Schools for the Future (BSF) scheme.

The deal, which rejects the use of private finance in favour of conventional funding, has prompted PfS to issue a warning that this is a one-off.

The deal was wrought despite a study carried out by LCC that found PFI funding demonstrated the best value for money solution for the city’s new schools.

Although LCC will lose out on £40m of PFI funding, it defended its decision.

A spokesman said: “We have already built a partnership with the private sector for ICT and design – clearly that narrows the scope for the potential of a PFI deal. It also allows us to start delivering the programme about a year earlier than if we had gone down the conventional route.”

LCC set up a 10-year ICT joint venture with BT in 2001. It also has a similar JV for design with Mouchel Parkman.

He added: “We are not the only authority to go down a non-local education partnership route. In the first wave, there was a lot less scrutiny, but the process is much more prescriptive now and we had to go through a rigourous process to prove our case.”

However, councillor Paul Clein, Liverpool’s executive member for education, said most of the city’s schools had been unhappy about signing up to a PFI deal. “We had a deal with Jarvis and what happened to it has made the schools nervous.” Clein added that a PFI deal would have been a “bureaucratic nightmare” involving “seven sets of lawyers representing seven different bodies from different schools”.

Liverpool will set up a PPP incorporating its existing JV partnerships and a new framework partnering contract with three contractors. The framework is expected to be advertised in the OJEU next month. Liverpool’s BSF programme will span Wave Two and Wave Four with the first phase worth £130m.

PfS was keen to make clear that Liverpool does not set a precedent. PfS chief executive Richard Bowker said: “Notwithstanding the one-off characteristics of Liverpool’s case, we are very pleased it has been evidenced that PFI represents value for money. In future, we will ensure that any complicating factors are addressed right at the very outset, perhaps even before a local authority enters the BSF programme, so that we can rigorously apply the standard approach.”

A leading schools contractor commented: “There are quite a lot of one-offs in the BSF programme. Let’s hope this is the last one. What we want is some commonality to reduce BSF bid costs.”

n Carillion is tipped to be the preferred bidder on the £236m Leicester City BSF programme.

Carillion is up against Miller and Vinci, but sources say Inspired Spaces, the Carillion-led consortium, is in the lead. A Leicester City Council spokeswoman declined to comment.