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Priority School Building Programme to be privately funded, Government says

All the investment needed to carry out a new school building programme will come from the private sector, the Government has said.20 Oct 2011

In July the Government announced a new programme to spend £2bn on construction costs for England's most in-need schools. The Priority School Building Programme replaced the Labour Government's £55 billion Building Schools for the Future Programme which was scrapped last year.

Local authorities, schools and organisations with responsibility for schools were invited to apply for work to be done to their chosen buildings between 3 and 14 October. Under the scheme between 100 and 300 schools will be designed and built under private finance initiatives (PFIs), the Department for Education (DfE) has said.

PFI was introduced in the early 1990s as a way of using private sector skills and finance to provide public services. It allows the private sector to obtain finance to design, build and operate a facility for the benefit of the public. In return, the public sector will grant its private sector partner a long-term contract to run the facility and will pay a monthly fee over the life of the project to repay the loan.

The Government will make an announcement on the first schools selected for rebuilding work by the end of the year and private contractors will be able to bid to do the work early next year, a spokesman for DfE told Out-Law.com.

"It is likely that schools will be batched so that the programme is structured as efficiently as possible and so that appropriately-sized projects are offered to the market," the DfE spokesman said. "The position on batching will be clearer once applications have been processed."

The DfE said it expects pupils to have access the first lot of rebuilt schools in time for the 2014/15 academic year.

"It will also be interesting to see what sort of value the Government attaches to an individual project – too high and they risk alienating those smaller enterprises they are so keen to encourage. Too low and the main players may have less appetite to bid," Kate Orviss, a specialist in projects and construction law at Pinsent Masons, the law firm behind Out-Law.com, said recently.

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