45 In early wave school PFI schemes, it was difficult for those developing contracts to be sure that the real risks had been identified. Some issues have emerged that have taken those involved by surprise - for example, in some schemes the scale and cost of vandalism has been a problem unanticipated by the PFI provider.I It would be wrong to criticise the private sector for lack of foresight, as some LEAs did not keep historical data on the costs, frequency and nature of incidents of vandalism. PFI begins to make these particular costs more transparent. Vandalism is a difficult risk to allocate between the school and the PFI provider, because it is not easy to identify, for example, how much damage could be avoided by better design features or surveillance by the PFI provider, or how much by better staff supervision. PFI providers will need to think more creatively in design terms as their experience of the school sector increases, so that vandalism can be pre-empted, rather than merely look to transfer the risk back to LEAs or to charge a higher risk premium. The DfES stated that every school PFI risk register now refers to vandalism, with the usual apportionment of risk being that vandalism is the responsibility of the LEA if it occurs during school hours, and the responsibility of the contractor if it occurs outside school hours.
46 There are a number of areas where unplanned risks could emerge during the contractual period. For example, the popularity of new-build schools can lead to increased demand risk, with pressure to extend pupil capacity very quickly. While this is a positive sign, the LEA must deal with the consequent financial demands that arise from a variation to a PFI contract. There is also a possible risk to neighbouring schools from a drop in demand that could create additional financial pressures for the LEA. Early signs of this risk materialising were reported during site visits.
47 LEAs need to consider from the outset how best to mitigate these risks and how to factor them in during contract development. A comprehensive risk register and active management of risks throughout the procurement and contractual period was needed in these early schemes - a template for such a register is now available via 4ps. But in addition there is a statutory risk that LEAs must bear, and cannot transfer to PFI providers. If there is a major problem with a school building, the bottom line is that the LEA must step in if the PFI provider fails to respond appropriately, because it is the LEA's responsibility to provide the education service.
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I Example statements during the Audit Commission visits: '£70,000 has been spent in one year on replacing windows'; '60 fire extinguishers were let off in one month in one school'; 'new toilets lasted two days: copper pipes were bent and the partitions taken down. Children also stole the toilet seats'.