Q1 Chairman: Good afternoon. Today we are considering the Comptroller and Auditor General's Report on Building Schools for the Future, renewing the secondary school estate and we welcome back David Bell, who is the accounting officer and permanent secretary for the Department of Children, Schools and Families. We welcome for the first time Mr Tim Byles, who is the chief executive of Partnerships for Schools. You are both very welcome. What we are talking about here is an absolutely massive programme. There are 3,500 secondary schools in the country and the government is hoping to rebuild and refurbish all of them by 2020 at a cost of up to £55 billion. We are used to big money in this Committee but this is a huge project. Mr Bell, perhaps I could refer you to paragraph 23 to look at the overall cost and likelihood of success of this programme. We know this is hugely expensive. The Report tells us in paragraph 23 that the original expectations of how quickly schools could be built were overly optimistic. Partnerships for Schools are finding it very challenging to improve all 3,500 schools by 2020. Are these plans realistic, do you think?
Mr Bell: Yes, they are. You are absolutely right to highlight the fact that the original targets were over optimistic. We rescheduled those targets from late 2004-05 and of course at this stage we have been in start-up mode. The reason I am confident in terms of the overall target is because, once the Local Education Partnerships are set up-I am sure we will come back to these later-we see those as the key local vehicle in a local authority area for bringing forward school buildings to time. By 2011, we are confident that we will have 200 schools a year at that point being opened and by 2020 we are hoping that every school will at least be in the early stages of the programme.
Q2 Chairman: What is the answer? Are we going to meet this target that half our secondary schools will be by 2020, 35% will be extensively remodelled and the rest will be refurbished? Are you saying you can meet that target or not?
Mr Bell: Yes. I am confident that we can meet that target.
Q3 Chairman: If we read the Report, paragraph six says, "Over the course of 2008, difficulties in the banking sector reduced the amount of money available for banks . . . ". We know this is going on and we know we are in difficult times. You are going to have to raise, if we read paragraph ten, nearly £1.5 billion a year of private finance. Can you do this?
Mr Bell: Yes. It is important to make the point that at this stage, to date, there have been no construction works or school openings delayed as a result of the credit crunch. We have had three projects already in 2009 signed off, including the most recent one, a £50 million project in Thameside. We do recognise that the circumstances are tighter, as the Report points out, but there is still a lively market here. There is still considerable interest in this scheme. I think it would be obvious too that, at a time when other building projects elsewhere across the economy are squeezed, a project like this is quite an attractive proposition for mainline builders and others who might come into the market.
Q4 Chairman: If that is your answer, is there a chance that you will have to use the government's credit rating to pre-empt builders' interests so they spend less on other desirable projects, housing for instance? This is such a massive programme that either you can raise £1.5 billion and you apparently think you can-
Mr Bell: Yes.
Q5 Chairman: That begs the question that if you are doing so how much of this spare money are you soaking up?
Mr Bell: Even before the credit crunch really took off in late 2007/8, it was already the case that builders and others were coming into this market and it did not appear to be creating difficulties elsewhere in the economy. In other words, house builders were continuing what they were doing and partnership bids were coming in for Building Schools for the Future. We have to recognise that elsewhere in the economy at the moment, if there is less house building and other kinds of development going on, this does represent a good proposition for companies who might otherwise be squeezed. We are confident we can raise this and I do not think that we are creating problems elsewhere in the economy. I think it is the opposite. We are helping the economy through these projects.
Q6 Chairman: Let us look at the structure. It is very complicated, is it not? If we look at this figure on page 16, paragraph six, it is so complex that only experts and consultants can understand it, in my view.
Mr Bell: I was hoping that you might even have referred to the simple version on page five. It is quite clear in terms of the respective roles and responsibilities. The department responsible for the over-arching policy, Partnerships for Schools that Mr Byles leads, is responsible for the delivery and implementation. At local level, Local Education Partnerships are responsible for local plans. Both at national and local level we have an external financial investment. It seems to me that it is relatively straightforward.
Q7 Chairman: On this question of consultancy, if we read paragraph 4.8, was it really necessary for your department to pay KPMG £1.35 million over three years for the delivery of corporate finance services?
Mr Bell: No. We should not have done it. The reason it happened was because a consultant was originally employed to do a particular piece of work. The work that he was then asked to do expanded. For example, we brought the academies' work into his remit. We then asked him to look at advising on the construction of Building Schools for the Future investments. As the Report points out, if we had known at the beginning that the scope of this individual's work was going to expand so considerably, yes, it would have been much more sensible to have employed somebody full time. I regret the fact that we did pay this amount of money. We needed the expertise. There is no argument about that but, because of the way in which his work increased-in a sense, the more it increased the more we needed him-we ended up paying what we did and I do not think we should have done that.
Q8 Chairman: Mr Byles, bearing in mind what I have put to Mr Bell-this is dealt with in paragraph 2.4- you will have to double the number of schools that are in procurement and construction at any time over the next three years. It is a very challenging programme. Can you possibly deliver that?
Mr Byles: Yes, we can. The important thing to bear in mind here is the length of time it takes to conclude a deal and then to construct one. We have 100 schools under construction at the moment. In 18 months' time there will be 300 under construction. 95% of the targets we have for this year are already contracted. 75% of next year's are already contracted. Looking at it afresh, it might be difficult to appreciate the amount that is in the system but the trajectory of delivery is on target.
Q9 Chairman: We read in paragraph 3.34 that a few local authorities told us that they felt forced into adopting a Local Education Partnership against their own judgment. This sort of comment worries me in a report like this because, as an enthusiast for local government, I see local government being downgraded all the time. Here they are being told what to do, how to do it. We are paying chief executives a lot of money now to run these local authorities. How much freedom of manoeuvre do they have? In the past this was a major point of being a councillor. You ran education in your area. Now they are so constrained. Does this worry you?
Mr Byles: As an ex-local authority chief executive myself, I do recognise the position. Our experience has been that it has been helpful for local authorities to look in detail at just what it means to set up a Local Education Partnership. Many who have been sceptical in the early days have come back to us wanting to have these kinds of partnerships. They do fit very well with the local community strategy function of local authorities and as a public private partnership help to deliver those things locally. A number of authorities came into BSF without having a Local Education Partnership. Two of them, Liverpool and Lambeth, have come back for their next wave asking to establish one.
Q10 Chairman: Do you think you can help them enough in the beginning? If we read paragraph 16, the message is that they felt perhaps you took too long to give them a guiding hand. First of all, having been forced into this structure, some of them felt perhaps they were not given enough help.
Mr Byles: What the Report is suggesting is that there were those who did not feel they were having enough help. The example I have just given you is of a couple of authorities who, with support from us, went through their procurement without a Local Education Partnership and are coming back wanting one for the future. That is a pattern which we are seeing more generally. These procurements are complex. They are very large in scale. In the case of Kent, it is getting on for £2 billion-worth of procurement. It is important to have structures that are proper to test value for money and good procurement practice. When I was a local authority chief executive, I would have said to all comers, "Just let me get on with it", I do recognise the use of having the rigorous support and challenge that can be offered from the centre, helping them make a procurement decision which, at the end of the day, is theirs.