A council in the north of England remains locked in a battle to end a 拢657,000-a-year private finance initiative (PFI) contract for a school that closed four years ago, highlighting the 鈥渃omplexities鈥 that continue to plague such deals. A Schools Week investigation has also uncovered documents that reveal ministers footed the bill to end such agreements during the early years of the academies programme to force moves out of local authority control. Meanwhile, controversial gagging clauses, called non-disclosure agreements (NDAs), have been issued to several PFI school leaders, prompting transparency concerns. 鈥楶ower in companies鈥 hands鈥 Andrew Chubb Andrew Chubb, of , said schools and local authorities 鈥渢hrough no fault of their own鈥 found themselves ill-equipped to understand the complexities of the contracts, 鈥渨hich leaves the balance of power in any negotiations in the hands of the private sector鈥. 鈥淔ailure to grip these contracts and manage them appropriately means it鈥檚 almost inevitable the quality of service will be substandard, and costs will be far higher than they should be, to the detriment of school budgets.鈥 Successive governments have used PFI to fund the construction or refurbishment of schools since the late 1990s. Private companies carry out the work and maintain sites in exchange for mortgage-style payments, normally over 25-year contracts 鈥 which often rise beyond inflation 鈥 before handing them over to taxpayers. Council鈥檚 years-long negotiations Kirklees Council revealed through freedom of information that it is still 鈥渨orking to remove Almondbury High鈥 from its PFI contract 鈥 four years after the school shut. The site was used for 12 months to accommodate pupils from a neighbouring school that was undergoing extensions. In October 2021, councillors greenlit plans for officers to begin talks to bring the agreement to a halt to pave the way for a 拢21 million special school to be built on the site. Warning sounded as schools not ready to exit PFI deals Documents prepared ahead of the vote noted that a 鈥渄eed of variation to the project agreement鈥 would have to be secured to stop the authority from having to continue paying its 拢657,000 annual unitary charge. They noted 鈥渢he monetary impact鈥 of the contract 鈥 which runs until September 2033 鈥 with Kirklees Schools Services Limited. The council said it had 鈥渃ontinued to pay a charge under the agreed terms of the contract鈥. But fees 鈥渉ave been reduced during this period and there were buildings needing maintenance in order to protect the on-site swimming pool and keep it in use for both the local community and the school swimming programme鈥. 鈥淲e are now in the pre-planning stage of our ambitious plans to rebuild and relocate one of our existing special schools, Woodley School and College, by using the Almondbury site to create superb new facilities.鈥 Meanwhile, Wirral Council was saddled with PFI payments following Kingsway Academy鈥檚 closure in 2018. Council documents, published in 2021, stated the annual costs then stood at 拢867,500, which would rise with inflation. But the authority said this week it paid the fees to Wirral School Services Ltd 鈥渙n a reduced basis due to the site either being fully mothballed or only partially occupied鈥. Historic contract terminations Papers uncovered through FOI show the government stepped in 18 years ago to aid the academisation of two underperforming schools by terminating their PFI contracts. Compensation was paid by the Department for Education 鈥渇or the loss of potential income鈥 this would have caused the PFI company, NewSchools (Merton), and its sub-contractors. A Merton Council spokesperson explained this was done because 鈥渂ack in 2006, academy providers did not want to take on鈥 PFI schools, so the DfE 鈥渁greed to meet the cost of changing the contract鈥. Asked how much it forked out, the department said it did not hold information going back that far as it wiped financial records 鈥渟even years after the date [they were] last modified鈥. In 2009, Cornwall Council secured the termination of a PFI deal for 34 schools that ensured 鈥渧arious disputes between the parties had settled鈥. The authority would not say how much was paid to end the contract or whether any NDAs were issued. Four years later, four schools in Stoke-on-Trent, which has more PFI primaries and secondaries than anywhere in the country, struck a deal to terminate their agreements with Transform Schools (Stoke) Ltd. Two 鈥渘egotiated an arrangement with the council and DfE which permitted them to leave鈥ubject to them demonstrating acceptable alternative arrangements鈥 to government officials and serving notice on the authority. The others were relocated under the Building Schools for the Future programme. A council spokesperson said 鈥渘o compensation was paid for potential loss of income from these schools鈥. Widespread use of NDAs Answers to our FOI requests also reveal big variations between local authorities in the use of NDAs. Most said PFI contracts did not feature gagging clauses, while others rejected our FOI request as it would either take too long to track down the information or for commercial reasons. Norfolk said 鈥渁ll parties鈥 to its only PFI contract 鈥渉ave to abide by鈥 NDAs. This included the local authority, the PFI company, individual schools and now multi-academy trusts. The council 鈥渄oes not hold information about the specific number of people this covers鈥 but stressed 鈥渢he confidentiality clauses were part of the standard PFI contract developed at the time鈥 by the DfE. A spokesperson added the NDAs were used “to ensure schools consult with us鈥. 鈥淸They] can decide whether they wish to discuss their experiences or their overview of operational experience within a PFI contract, but they are not allowed to disclose certain project agreements to third parties. 鈥淚f a school were to breach their NDA, the school and Norfolk County Council would be in breach of contract which could lead to financial penalties.鈥 Sponsoring MATs gagged Two other authorities said the orders also covered external lawyers and PFI experts in receipt of 鈥渃ommercially sensitive鈥 information. Meanwhile, Worcestershire County Council confirmed NDAs had been distributed to two MATs since 2020. The agreements are issued to sponsoring trusts and members of the schools鈥 governing bodies after the DfE has granted an academy order. Once signed, confidential documents are released. Legal expert Jordan Glackin, of Shakespeare Martineau, said one of the reasons NDAs are used in the schools sector 鈥渋s because of the sensitivity of information being shared and other confidentiality obligations subject to that鈥. 鈥淚t could be part of the due diligence process when an academy trust鈥檚 taking on another school. 鈥淸In these cases] sometimes NDAs will be put in place because, if the transaction doesn鈥檛 go ahead, you鈥檝e given information to a third party/competitor and will want to ensure that information you have provided is protected and its use is restricted.鈥 But Chubb noted that, when it comes to PFI, the clauses can make 鈥渋t far harder for schools and councils to ensure best value is obtained from the contract鈥. This is because 鈥渄epending on the wording of the NDA, it may make it impossible for鈥them] to obtain the independent advice they need to get best value in terms of costs and service levels鈥. Semperian Asset Management Ltd, which Wirral School Services and Kirklees Schools Services are a part of, and Vercity Management Services Ltd, the company listed as Transform Schools (Stoke) Limited鈥檚 secretary on Companies House, have been approached for comment.
Peter Lambert 7 June 2024 How do Norfolk intend to enforce or ensure compliance with any NDA’s if they do not know what they are and who has them and how hard is it to add them up and give a figure. If they do have them they are obfuscating and if the don’t they fail in their due diligence and that is maladministration. So, do you report them to the ICO or Local Government Ombudsman.