THE £361.8m cost to Scottish Borders Council of building three new schools represents ‘pretty good value for money’, a senior councillor believes.
It is 20 years since elected members decided by 27 votes to two to use a PFI (Private Finance Initiative) project to deliver replacement schools for Eyemouth, Earlston and Duns.
PFI was heralded as a way for local government to fund public construction projects by partnering with private companies.
Instead of the council paying upfront, a private company builds the project, and the council pays them back over time, meaning the cost can be spread.
However, concerns have been raised that some PFI contracts have astronomical charges and interest built into them, leaving the final cost multiple times more expensive than the original project.
At a meeting of Scottish Borders Council (SBC) on Thursday, September 26, Galashiels SNP councillor Fay Sinclair asked an open question on the costs of building Earlston Primary School, Galashiels Academy and Peebles High School through the funding mechanism.
Tweeddale East Conservative councillor Julie Pirone, SBC’s executive member for education, youth development and lifelong learning, said: “The cost of building these three new schools was £72.5m. How much has been paid by SBC for the scheme to date – £129.58m to 23/24. How much has been overpaid in the remaining 14 years of the deal – that’s around £232.29m between 24/25 and to 2038.
“The overall cost to SBC for these three schools was £361.8m.”
Ms Sinclair said: “I appreciate that this was the funding route being promoted by central government at this time and was really the only option by the council, but we’ve heard that the bill’s cost was £72.5m and the total cost is £361.8m. Does the executive member think this scheme has been value for money?”
Ms Pirone responded: “My own personal view is that it’s pretty good value for money, given the quality of the schools we have and the amount of children that have gone through them.
“I think when you’re faced with a dilemma of providing educational facilities for our young people you have to weigh that up with the value of the education you get.”
Ms Pirone added: “Councils have been using private public partnerships to construct new education facilities in our communities for many, many years. It’s an approach that has been amended over time and has been promoted by successive governments, and a form of PPP was used to construct Kelso High School and Jedburgh Grammar.
“All councils were encouraged in the 1990s and in first decades of the millennium to go down the PFI route to construct new schools. In fact, if this council didn’t use this route in the past, and if we didn’t look at it now or at the time it was brought in, thousands of our children throughout the Borders would not have been educated in these excellent facilities and they also provide community assets with high standard maintenance built into them.
“The PPP contracts to construct Eyemouth, Earlston and Berwickshire high schools include the cost of the capital build, debt and the interest payments on this expenditure, life cycle maintenance, and the ongoing annual hard, soft facilities management maintenance costs for these facilities.
“These have been in place since 2007.
“Eighty per cent of the capital build for these three high schools was supported financially by the Scottish Government through a mechanism known as Level Field Support.
“These contracts have been in place since 2007 and the model continues to realise continued investment in school facilities since opening and will keep doing so.
“The buildings are passed back to SBC at the end of the contract concession with a maintenance period of up to five years.”
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