Scottish Schools are Falling Down – Do We Blame PFI Procurement?

The closure of schools in Scotland last week might have got much bigger headlines in the national press if it had been Essex or East Cheam rather than Edinburgh. After various serious issues, 17 schools were closed because of safety fears. All were built under the PFI (Private Finance Initiative) programme, some by a combination of Miller Construction and Amey, some just by Miller, since acquired by Galliford Try.

As the BBC reported: “The problems were first uncovered in January when a wall at Oxgangs Primary collapsed during high winds. Further closures were prompted on Friday after workers repairing serious structural issues at the primary found "further serious defects" with the building.

The city council said urgent work would need to be carried out on at least four of the schools: two high schools Gracemount and Craigmount, and two primaries - Oxgangs and St Peter's. The initial problem was discovered with wall ties, which hold the outer and inner walls together, at Oxgangs Primary School”.

Andrew Kerr, Chief Executive of the City of Edinburgh, said on BBC Radio that it appeared the schools had not been built to the required standard. “At this stage I’m not sure that anything went wrong with the public-private contract and until we are able to look at the investigations we can’t be exactly sure what the problem is in all 19 schools. However, it appears to be a constructor problem. In other words, the construction of the buildings has not been undertaken to the required standards.”

Now PFI has been criticised for a number of reasons – we’ve seen accusations that it has locked buyers (hospitals, schools) into long-term inflexible contracts, that it leads to ridiculously high fees for trivial work provided under monopoly contracts and that the original providers re-financed their debt and made huge windfall profits at the taxpayer’s expense. Unfortunately, there is some truth in all of these claims and there was an element of conspiracy in certain aspects of the PFI programme that have still never been fully exposed (in my personal opinion).

But this is the first time we've seen PFI held responsible for what appears to be some combination of poor design and shoddy building work in a construction environment. But is this really anything to do with PFI as opposed to more conventional procurement approached?

Our first thought was simply that PFI was being conveniently blamed for something that probably has nothing really to do with that particularly financing and procurement method. If it is a problem with construction techniques, then surely that is independent of the way the project is financed (which really is the main characteristic of PFI)?

But on reflection, perhaps there is something here, not so much about PFI itself, but around output-based specifications, which did tend to be the way in which PFI  contracts were approached.  Was that what might have led to these technical issues years later? We’ll look at what we mean by that in part 2 to follow shortly.

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