HC Deb 07 February 2002 vol 379 cc1011-3
2. Mr. Ben Chapman (Wirral, South)

If she will make a statement on the PFI in schools. [31401]

The Parliamentary Under-Secretary of State for Education and Skills (John Healey)

There are 38 signed PFI projects involving almost 500 schools with a value of more than £1 billion. A further £1 billion has been allocated to projects in various stages of development. The Government have increased the amount of PFI credits for schools from £35 million in 1997–98 to a planned £850 million in 2003–04.

Mr. Chapman

Does my hon. Friend agree that in public services, it is critical that the quality of service that people need is put in place, rather than the means of its financing or provision? In three schools in my constituency, PFI work is about to commence that will provide them with new classrooms—in one case to replace 14 mobile classrooms—and new facilities that would otherwise not have been provided, or not have been provided on the same scale or in the same time frame.

John Healey

I thank my hon. Friend for his question. I am glad to hear about the three schools in his constituency, which are among nine in the authority area that are to benefit from the scheme. The programme has already started and is running on time for completion in December this year. He is right that teachers and pupils will have good-quality buildings maintained to good-quality standards. He mentioned the added value that that can bring. Wirral local education authority officials told my officials that even at the current high levels of Government capital investment through public routes, it would have taken 15 years to reach by conventional means the same state that the PFI contract will deliver for the nine schools in the area.

Dr. Vincent Cable (Twickenham)

I welcome the fact that after many years of frozen capital spending, my local authority, which is Liberal-Democrat controlled, is working with the Department to build new primary schools in my constituency. However, does the Minister acknowledge that PFI funding is more expensive than conventional public borrowing? Will he explain whether the extra cost will be borne by the improved and expanded schools, or will it be spread across the whole LEA and so be borne by other schools as well?

John Healey

If the hon. Gentleman's authority has put in a bid for a PH project, it is one of the more than 100 out of 150 LEAs to have done so. That demonstrates the interest in that form of additional financing of capital investment. As for cost, he will know that PFI projects can proceed only if they can demonstrate value for money over conventional means of funding. My hon. Friend the Member for Wirral, South (Mr. Chapman) spoke of a project in his LEA area that will deliver a 9 per cent. lower cost for the programme. Furthermore, payments begin only when services start. Teachers, pupils and schools get new buildings with guaranteed higher maintenance standards.

Mr. Andrew Miller (Ellesmere Port and Neston)

Many of our constituents deserve new-build in the education system, some of which is 20 years overdue in my constituency. I welcome the PFI work and seek an assurance from my hon. Friend that despite carping from certain quarters, he will not back off from the programme, which provides a sensible way of putting capital into schools in our most deprived communities.

John Healey

I can give my hon. Friend that assurance. PFI is a means to raise additional resources to improve school buildings and to deliver better and more cost-effective public services. Of course, it can also free head teachers and teachers from the business of maintaining and managing buildings, allowing them to concentrate more on standards, education and their students. Despite the carping that my hon. Friend mentioned, it is increasingly popular with schools and local education authorities. Last year's bidding round was oversubscribed by 3:1, the current one by 4:1.

Mr. Peter Lilley (Hitchin and Harpenden)

The Minister will know that I strongly support the genuine transfer of risk to private bodies, but can he tell us the difference between shifting the Government's debt into public-private partnerships and Enron's accounting methods to shift its debt and hide it in offshore partnerships?

John Healey

The right hon. Gentleman does the PFI programme in schools a serious disservice in trying to make such links. There is no connection or comparison whatever with the methods that that company employed. He is right about shifting the balance of risk, which is key to PFI contracts and the ability to deliver value for money and cost reductions. Shifted risks include risks that the private sector bears in upfront costs until buildings are completed, and risks associated with serious systems and buildings failure during the contract, which is why many local authorities and schools regard the arrangement as a valuable way of bringing new capital finance into the school system.