School funding in England
Capital funding for schools and
shortage of school places
September 2013
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Introduction
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This briefing sets out recent developments on capital funding for schools, including the key
issue of the significant shortage of school places. It also recaps the Government’s decision
- shortly after it came into power in 2010 - to scrap the Building Schools for the Future
(BSF) Programme.
The NUT’s view is that capital funding for schools must be allocated on a needs-led basis to
support school buildings that are fit for purpose. We criticised the Government’s decision to
scrap the BSF Programme and argue that significant further investment is required to
secure the improvements needed in the school building stock.
Overview of the current situation
Priority School Building Programme
 The Government set up the Priority School Building Programme (PSBP) in July 2011
through a privately financed partnership known as PF2 – the Government’s new approach
to private finance. A limited amount of capital grant was also made available by making
savings elsewhere.
 To commence the PSBP, schools in urgent need of repair were invited to bid for money to
carry out renovations or to be rebuilt. In May 2012 the Secretary of State announced that
261 schools were successful in their bids.
 Delays to the PSBP mean that schools successful via PF2 will not see their new or
reconditioned buildings until at least four years after the decision was made to cancel the
BSF Programme. Some schools, who found themselves in the uncertain position of being
dependent on the 2016 spending review for funding, will have to wait even longer.
 The Government claims that PSBP will deliver a more efficient, faster and less bureaucratic
approach but the concern with low cost, speedier processes and increased efficiencies is
that newly built schools will be cheap and substandard.
Shortage of school places
 In addition to the need for repair and refurbishment of schools, there is a growing problem
of a shortage of school places. The surge in pupil numbers, following the biggest ten-year
increase in the birth rate since the 1950s, has created significant new demands for
investment in education just to maintain existing class size levels.
 A Public Accounts Committee report1 shows that 256,000 school places are needed by
September 2014 and the National Audit Office (NAO) forecast that demand is set to rise
with a further 400,000 places needed by 2018-19. The NAO published a report2 into capital
funding for new school places. The report showed that more than a fifth of primary schools
are full or over capacity and large numbers of Local Authorities (LAs) have less funding
than they need and children are travelling further to get to school.
 London councils appear to be feeling the most pressure because of the rising birth rate,
fewer pupils going to private schools than in other parts of the country, and fewer families
1
2
Capital funding for new school places: Public Accounts Committee. Published June 2013
Capital funding for new school places: National Audit Office. Published March 2013
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moving out of the city than had previously. The problem is compounded by the refusal of
the Government to allow LAs to open new schools.
London Councils’ analysis noted that London accounted for 42 per cent of the future school
places need. However, the government had only provided London with 36 per cent of the
funding shortfall, leaving LAs to pick up the shortfall to provide each child a school place.
The analysis shows that LAs need to fund a further 83,470 school places between 2014
and 2017 — the equivalent of 199 new primary schools or 80 new secondary schools.
London Councils said they were spending an extra £1.04 billion on top of extra
Government capital funding. Including places they had recently created and those they had
yet to pay for, London Councils said they had topped up the Government funding by
£9,000 per pupil without a place.
Targeted Basic Need Programme
 It was announced in July 2013 that £820 million will be used to set up the ‘Targeted Basic
Need Programme’, which will fund new ‘high quality’ places in locations experiencing the
greatest pressure on school places and where a rise in pupil numbers is expected. The
Government says the funding is sufficient to provide 417,000 places by 2015.
 LAs facing a capacity problem will be expected to bid for funding from the Programme to
build new schools. New schools set up as part of the Programme, however, have to be free
schools or academies and only maintained schools judged as ‘good’ or ‘outstanding’ will be
eligible for expansion.
 Under the Programme LAs are to have more power in deciding where these free schools
and academies should open, although the final decision will still rest with the Secretary of
State as is the case for all new free schools and academies.
 This represents a move away from the initial ethos around the free school policy - that
encouraged parents, teachers and charities to set up free schools - and hints at the
pressure on the DfE to address the problem of the shortage of school places.
 The shortage of school places has featured significantly in the media. Questions have
been asked of the DfE by the Education Select Committee, including how the success of
the Targeted Basic Need Programme will be measured.
Impact of the Government’s free schools policy
 The ending of BSF came at the same time that the Government was encouraging the
expansion of the free schools programme. The NUT was rightly concerned that some of the
funding released by cancelled BSF projects could be spent on building new free schools.
 The NAO noted in its report that the DfE has under-estimated the cost of delivering new
places and this is combined with the cut to capital funding by the scrapping of the BSF
Programme. The NAO report highlights the problems caused for LAs in planning new
places by the Government’s wasteful academies and free schools’ policy and points out
that only a third of free school places are in primary schools, where the major increase in
pupil numbers will occur.
 Free schools have opened in areas where there is no ‘basic need’ for places and
sometimes where there is a surplus of school places. This is at the same time as some
areas are facing a capacity crisis. The NUT believes this is a wasteful use of resources.
The DfE needs to take an evidence-based approach to the issue, factoring the real needs
of LAs into its spending decisions.
Background to the current situation
Building Schools for the Future cancellation
 The previous Government set up two programmes that aimed to rebuild or refurbish every
school – the Building Schools for the Future (BSF) Programme and the Primary Capital
Programme. BSF was a large scale investment programme that was ambitious in its aims
and timescales but was seen as a popular and bold move.
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The £55 billion Programme was, however, criticised for its onerous process, its lack of clear
and consistent objectives, the poor design and build quality of a number of schools, the use
of Private Finance Initiatives (PFI).
Following the general election in 2010 the Government made the unpopular decision to
scrap the BSF Programme. The Secretary of State justified the decision on economic and
value for money grounds, arguing that the BSF Programme was wasteful and bureaucratic.
Amid some confusion and various incorrect published lists of affected schools, it was
revealed that some 700 projects would be cancelled.
Whilst there were clearly issues with the BSF Programme, its aim to refurbish and rebuild
the majority of schools was viewed by the NUT as a vital and long-overdue initiative that
sought to address the issue of out of date and dilapidated classrooms and the resultant
impact on teaching and learning. The NUT therefore regarded the decision to scrap the
Programme as a major setback for schools, teachers and pupils.
LAs, especially those only a matter of weeks from starting construction works, incurred
significant costs. Several took court action by seeking a Judicial Review. Although the LAs
were successful in their action, the court’s decision did not compel the Secretary of State to
give the go-ahead to the cancelled projects, though it did require him to look again at the
decision for those authorities. The councils put their case to the DfE but Mr Gove only
reimbursed the costs for the cancelled projects and did not change his decision.
The James Review
 After the decision to end the BSF Programme the Government set up the ‘James Review’
to look at how the DfE could achieve better value for money. The review3 concluded that
there was an urgent need to renew some school buildings that were in a bad state of repair
– hence the setting up of the Priority School Building Programme.
 The ‘Partnership for Schools’ quango that assisted LAs to oversee building projects under
BSF transferred its functions to the Education Funding Agency (EFA) from April 2012.
 The James Review was also critical of the absence of centrally-collated data on the
condition of school estates. The Government accepted the Review’s recommendation to
collect up-to-date information on the nationwide condition of school buildings and
established the Property Data Survey Programme (PDSP). The PDSP is being carried out
by the EFA and the results will be available in autumn 2013.
 The NUT is concerned however that the PDSP specifically excluded an audit of the extent,
type and condition of asbestos in schools. Even the most basic repairs are impeded by the
presence of asbestos so when schools are refurbished considerable cost overruns can
occur through unexpected asbestos remedial and removal work. Excluding asbestos from
the survey makes it impossible to make realistic funding estimates and to allocate
proportionate resources.
3
Review of Education Capital: Sebastian James. Published April 2011
SSEE Department September 2013