Credit crunch could slow down BSF

21 January 2009

The credit crunch could hinder the government’s flagship £45 billion flagship Building Schools for the Future programme, the construction industry has warned MPs.

The government hopes that by 2011, at least 200 BSF schools will be opening every year. But the construction sector is struggling to find the capital for its work in Building Schools for the Future, according to a report in the Guardian on-line.

Graham Watts, chief executive of the Construction Industry Council, was speaking to MPs on the cross-party children, schools and families select committee. He said that the industry was facing a massive slump: "The sharp rate in decline we are experiencing is unprecedented. We expect output in construction to fall in 2009 by at least 9 per cent. That's the worst fall in almost 30 years.”

He said that there was “no shortage of people wanting to be involved, but a number of those are struggling to raise the private capital they require because of the problems with liquidity we have within our banking system."

Jim Knight, the schools minister, told MPs it was not the case that BSF money had dried up. He said banks were still interested in the initiative, and other sources of funding were available. Current problems with lending could damage BSF because the scheme uses private finance initiatives.

Watts’s and Knight’s comments come just as the Department for Children, Schools and Families published in part a positive report from consultants PwC. It found that school heads are confident that their future new school buildings will transform standards. But they are also are concerned that their old facilities are deteriorating quickly or not maintained properly while they wait for their new building.

Overall, BSF has “gathered momentum” in the past year and there has been “significant progress” to improve the efficiency. The PwC report comes as the 50th school built or refurbished under BSF was recently opened.

However, BSF designs have come in for criticism in the past, most notably from the Commission for Architecture and the Built Environment (CABE) which found that eight in 10 design proposals were either “mediocre” or “not yet good enough”.