1.7 The Department has doubled its capital expenditure on schools since 2000, to £5.4 billion in 2007-08. It devolves 40 per cent to Local Authorities and schools to use as they wish, but retains some as targeted funding for specific ministerial priorities (such as school kitchens), and spends a third on "strategic programmes" including BSF, the Primary Capital Programme, Academies and One School Pathfinders (Figure 5 overleaf). BSF has replaced the former school PFI programme.
1.8 The Academies programme aims to improve educational attainment in deprived areas, by replacing poorly performing schools with new schools run by independent sponsors. Our 2007 Report on Academies found that the buildings were of a good quality and that there were indications that most of the first Academies had improved pupil attainment. But we also found that unforeseen costs, poor project management and increases in scope had often led to significant cost increases and overruns. These schools were procured individually, with a project manager hired by the Department (using a national framework) for each project, and directly funded through grant from the Department. From 2007, responsibility for the procurement and construction of the buildings of new Academy projects was transferred to PfS, with responsibility for overseeing the educational and governance aspects remaining with the Department. To reduce the cost and time of procuring Academies, they are now procured either through the local LEP, where already established, or through a national framework of suppliers.
1.9 In 2007-08, BSF provided 22 per cent of capital expenditure on state schools in England (£1 billion out of the £5 billion capital value of both public capital expenditure and PFI contracts signed in 2007-08), and 20 per cent of all PFI deals in England (£700 million out of the £3.6 billion capital value of PFI deals signed in 2007-08).
1.10 In November 2008, the Chancellor announced that education capital funding would be accelerated to act as a fiscal stimulus. The Department brought forward devolved and targeted funding planned for 2010-11 to 2009-10. BSF was not part of this accelerated capital programme.
4 | Forms of capital funding provided by the Department in BSF |
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Capital funding type | Proportion of planned funding up to March 2011 % | Description
| Mostly used for
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Capital Grant
| 52 | The Department provides funding to the Local Authority, who use it towards paying contractors. It can only be used for capital purposes.
| Remodelled and refurbished schools Voluntary aided schools ICT equipment.
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Private finance initiative (PFI)
| 41 | The private sector partner undertakes the design, construction and financing of an asset and thereafter maintains it for an extended period, often 25 or 30 years. Local Authorities are obliged to pay yearly unitary payments to the private sector partner, which are funded through central government's PFI credits.
| Rebuild schools only.
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Supported Borrowing
| 7 | The Secretary of State agrees that the Local Authority can borrow money towards its BSF programme, and the Department (via Communities and Local Government) provides annual Revenue Support Grant to cover the Local Authority's loan payments. Supported Borrowing has not been used since 2007-08 because caps on Revenue Support Grant have meant it was not always effective. | Previously used for ICT equipment.
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Source: National Audit Office analysis of funding |
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