ECS Chairman Highlights Benefits of PPP Programmes

The Chairman of The Highland Council’s Education Culture and Sport Committee, Councillor Bill Fernie, has issued a statement highlighting the benefits to many Highland communities of the two Public Private Partnership education programmes promoted by the Council.

Councillor Fernie has produced a briefing to correct a number of misleading comments he said had been made recently by opponents of PPP and reported in the media.

He recalled that PPP 1 had produced two new primary schools and two new secondary schools.  PPP2, when complete, would deliver six new primary schools, four new secondary schools, one new special school and an inter-agency centre on the Drummond School Campus, Inverness.

Crucially, these facilities could not have been delivered in this timescale without using the PPP process.

Included in each contract was community use. In PPP1, the schools were generally available every day of the year, whilst in PPP2, 12,000 hours per annum were available for community use. The Council’s analysis for Value for Money was confirmed by Audit Scotland, and the then Scottish Executive and the proposals were deemed affordable to the Council.

The annual cost for the contracts included:- providing the schools; cleaning and janitorial duties, all maintenance and repairs, and lifecycle replacement when required, with the schools coming into the Council ownership at the end of the contract in “as new” condition.

He went to clarify the various cost figures, and the resulting implications, for the PPP2 contract. 

It was alleged that the annual cost of PPP2 had more than doubled from £8.6m in 2001 to £15.725m and that in 2001 the Council was expecting to procure 31 schools for £100m whereas the contract delivered 11 schools for £134m.

He said: “The first issue is in relation to the alleged doubling of cost.  This is not a like for like comparison and is misleading.  In 2001, the Council was considering a range of options for inclusion in an Outline Business Case which was to be submitted to the Scottish Executive as a bid for Revenue Funding (previously known as Level Playing Field Support) towards the cost of the PPP2 scheme.  In September 2001, the ECS Committee considered a report by the Director of Education Culture and Sport outlining that, based upon the experience of PPP1, the likely estimated Unitary Charge for PPP2 would be approximately £17.25m, for a project with a construction value of £100m.  After receipt of an estimated amount of Revenue Support from the Scottish Executive, this would result in the Council contributing £8.6m to the project.  The £8.6m is therefore the net cost to the Council. The estimated full Unitary Charge in 2001 was £17.25m.  The actual agreed Unitary Charge is £15.725m (on a 2004/05 price base) considerably less than the original estimate.”

The second point covered the comparison of procuring 31 schools for £100m with the 11 schools for £134m.  This, he said, was also a misleading comparison for the following reasons: 

In summary, he said the costs of PPP2 had not doubled but were in accordance with the Council’s expectations and financial projections.  Similarly the comparison of the 31 schools for £100m to 11 schools for £134m did not reflect a true like for like comparison as the 31 schools were included in a list of options, which was subsequently refined to the 11 new schools in the PPP2 contract.