Education leaders warn that PFI deal is sucking millions out of Portsmouth school's budget

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EDUCATION leaders have warned that teachers are powerless to stop millions of pounds being sapped from a city school’s budget to pay off a costly finance deal.

Portsmouth teacher Amanda Martin, vice-president of the National Education Union (NEU), has raised her concerns over the private finance initiative (PFI) to build Miltoncross Academy.

Miltoncross School

Miltoncross School

The Milton Road secondary was constructed 20 years ago as part of a ‘design build and finance operate’ arrangement, set to take 30 years to pay off. The deal also covers the maintenance costs at the school.

But despite Miltoncross’s site only being valued at £12.4m, The News can reveal it will cost more than quadruple that to pay-off its financial arrangement, estimated to be £67.4m.

The annual charges paid by the academy – £900,000 – amount to 10 per cent of the school’s total budget, the trust which runs Miltoncross said. Other costs are shared by Portsmouth City Council.

Ms Martin said: ‘PFIs are bad news for education, bad news for the NHS and bad news for public services.

The Lost Billions

The Lost Billions

‘As unions we were against these deals from the very start. They could never work. We were worried it would take more money out of education.

‘These fears have now come home to roost.’

She added: ‘Generations of children have gone through these schools facing cut after cut after cut. They’re being let down.’

This week, as part of the Lost Billions investigation, The News has revealed the long-term cost of PFI schemes.

A deal to rebuild Queen Alexandra Hospital was estimated to cost £1bn when it was first signed, but is more likely to come in at £1.7bn over 32 years. Likewise, Portsmouth City Council's agreement with Colas is likely to be £56m more than £586m it was estimated to cost over 25 years.

The first PFI was launched by Sir John Major’s Conservative government in 1992. 

But the use of the financing scheme exploded under Tony Blair’s Labour government.

At the turn of the millennium there were more than 60 new projects being signed off every year. 

However, the number has fallen back sharply since then.

Stephen Morgan, Labour MP for Portsmouth South, said projects financing schools and hospitals privately were costing the taxpayers ‘billions of pounds’.

‘The scandal of the PFI, launched by the Conservatives, has resulted in huge long-term costs for taxpayers whilst handing out enormous profits to some companies,’ he added.

Former Tory city council leader, Donna Jones placed the blame squarely in Labour’s lap for Britain’s multi-billion pound PFI bill.

She said the loans had been meant to provide ‘cash-strapped organisations’ a quicker way to fund costly building programmes.

However, the lengthy contracts offered ‘little room for flexibility’ in schools when they expand.

‘PFIs were widely used by Labour and this is a classic example of their ideas, ironically committing millions of pounds of public money to the private sector for years,’ she added.

‘This is something I avoided at all costs when leading the council, we invested through the council, and we ensured we stayed in control of the money.’ 

In a statement, the Kemnal Academies Trust – which runs Miltoncross – said: ‘The PFI contract has enabled the community Miltoncross to have a state-of -the-art school which is cleaned and maintained to the highest standard.  The annual charge to the school is currently about 10 per cent of the school's budget.’

The Department of Education added councils could give funding to schools with PFI deals to support them with the costs.

A spokesman added: ‘The department provides funding to local authorities for this, based on the PFI cost from the previous year, plus extra to take into account inflation. This year Portsmouth City Council has been provided with over £161,000 to support PFI contracts.’