Peter Jackson and Craig Elder, senior associate and partner, at UK and Ireland law firm, Browne Jacobson, reveal what the recent Budget means for the education estate

 

The Autumn Budget delivered a reversal on years of real-terms cuts to the education budget, with an extra £2.3bn pledged for schools.

This included £1bn to expand special educational needs and disabilities (SEND) provision, while efforts to freshen up crumbling school estates were bolstered by an additional £1.4bn for the School Rebuilding Programme.

An extra £300m was also allocated to maintaining and improving existing school buildings, with this total funding pot now standing at £2.1bn.

But is this enough?

That’s always the big question whenever new or enhanced funding is announced for any public service that is in dire need of greater financial support.

The state of the school estate

A commitment to ramp up the School Rebuilding Programme will be welcomed by school leaders, who have long been trying to draw attention to the outdated and potentially-dangerous buildings on their sites – an issue that finally came to the fore in the reinforced autoclaved aerated concrete (RAAC) crisis that many believe is just the tip of the iceberg.

In June 2023, the National Audit Office (NAO) identified about 24,000 school buildings as beyond their initial estimated design life, with 700,000 pupils attending schools requiring significant refurbishment.

Within months, the Department for Education (DfE) closed hundreds of buildings due to safety issues with RAAC, which was eventually found to be present in 234 schools.

Grants from existing funding pots paid for repairs or removal.

Separately, the School Rebuilding Programme enrolled 518 projects in England since 2021, but only a couple of dozen have reportedly been completed so far.

Low confidence within the construction industry, resulting from high inflation and interest rates, has led to delays in getting the programme running at full speed, so extra funding should help ignite greater interest for projects.

Still, this programme barely scratches the surface of modernisation requirements, especially when we consider how demographic changes may further affect demand for school facilities.

Data analysis by the Education Policy Institute (EPI) projects the pupil population in primary and secondary schools in England will fall by about 436,000 between 2022/23 and 2028/29, dropping by a further 382,000 between 2028/29 and 2032/33.

Declining pupil number patterns vary significantly across different parts of the country, which means school leaders will need to review the locations, sizes and designs of existing schools.

Some may require expansions, while others potentially face closure.

Reviving a PFI-style investment model

Therefore, whether the extra funding pledged by the Chancellor will be enough to truly address an acute problem remains to be seen.

The last major building programme in education was underpinned by the private finance initiative (PFI), a form of public-private partnership (PPP) that helped to deliver almost 1,000 schools during the 1990s and 2000s.

Under PFI, a company would fund upfront costs of a project and then recoup this capital, along with operational costs, through long-term repayments from the procuring authority, such as a council or government department.

PFI achieved great success in delivering infrastructure and associated services, but was abolished in 2018 after receiving widespread criticism.

Issues included perceived poor value for the taxpayer – an estimated 170-plus schools remain tied into PFI agreements with typical terms of 25-30 years – and windfalls for investors that refinanced debt at lower rates following the riskier construction phase.

Partially as a result of failing to replace the initiative, the UK has the lowest investment levels in the G7, but tops the table for project costs and delays.

Our prisons are overcrowded, school and hospitals are ageing, and rail networks are at capacity.

The huge scale of Britain’s need to modernise its school estate – as set out by the NAO last year – requires a new private finance model that can develop the critical mass of projects that would attract sufficient backing from businesses.

At the same time, it must learn from PFI’s mistakes to ensure the public purse receives better value and control.

A tantalising detail in the Autumn Budget’s red book is a desire to mobilise private investment by ‘developing a social impact investment vehicle’.

Further details, following consultation with industry, are expected in phase two of the Government’s Spending Review next spring.

Alternative PPP models are also emerging that are worthy of exploration.

In particular, the Future Governance Forum proposed the infrastructure investment partnership (IIP) model in a report published in September.

The IIP is billed as a new approach to PPPs, placing greater emphasis on community benefits, cultivating long-term collaboration, and giving local areas more control over their infrastructure.

Inevitably, this, and any other forthcoming PPP model, will require greater scrutiny.

But, while new funding will give a small lift to the sector – 77% of respondents to Browne Jacobson’s spring 2024 School Leaders Survey were dissatisfied by the previous government’s capital funding and estates policy – greater intervention is needed to drag our country’s school estates into the 21st Century.