£1.5m to plug hole in cost of schools

Nov 12 2007 by Liam Murphy, Liverpool Daily Post

WIRRAL Council will have to put away an extra £1.5m to cover the cost over-runs of new schools built under the controversial Private Finance Initiative.

The extra costs of the controversial scheme comes at a time when the authority is putting in place a massive savings programme worth tens of millions of pounds over the next three years.

The Private Finance Initiative (PFI) scheme had been used for a £55m building programme for nine schools across the borough, but ran into problems.

The original operator, Jarvis, fell behind with the schemes and eventually – after it revealed massive debts – withdrew and the contract was passed on to Secondary Market Infrastructure Fund Ltd (SMIF) who then stepped in to provide facilities management to the schools.

Now the authority has to find extra money to plug gaps in funding as it also grapples with cuts to cover a £60m hole in its budget over the next few years.

Last night, Cllr Phil Davies, cabinet member for children’s services, admitted the PFI scheme “is costing the authority” but added: “We always knew that would be the case to get the quality of schools we wanted.”

He said the problems arose because initial contractor Jarvis had fallen so far behind schedule in finishing work on the schools.

“Now Jarvis are off the scene and SMIF have taken over.”

The local authority had set up a reserve fund to cover additional PFI costs but a report to the authority now says this is expected to be used up within two years.

The report to the authority’s children services scrutiny committee said the cabinet had agreed £800,000 for increased PFI payments in 2009/10, although this has since been revised down to £200,000.

However, the report by director of childrens’ services Howard Cooper said a further £1.5m approved for 2010/11 has been included.

Mr Cooper added: “Since 2005/6 PFI costs have, as anticipated, exceeded the specific grant received.”

Wirral’s PFI project involved the complete replacement of two schools – Leasowe Primary School and Weatherhead High School, and the extension, refurbishment and maintenance of seven secondary schools – Bebington High, Hilbre High, Park High, Prenton High, South Wirral High, Wallasey School and Wirral Grammar School for Girls.

liammurphy@dailypost.co.uk