New BSF delays imminent as Gove wreaks more havoc on schools

25 08 2010

The national school-building programme has been thrown into confusion once again after the government delayed work on schools that have been approved for development.

When Education Secretary Michael Gove scrapped Labour’s Building Schools for the Future (BSF) scheme earlier this summer, he allowed a small number of ‘sample school’ projects to go ahead where contracts had yet to be signed.

But according to business publication Infrastructure Journal [subscription required], Partnerships for Schools (PfS) – the national agency that oversees the BSF programme – has written to the councils and private firms developing these sample school projects, warning them to halt work pending yet another review.

The move throws many school projects back into limbo. Gove had delayed a decision on the sample schools before finally approving a number of them earlier this month. The latest review will delay these schemes yet again.

Under the review, Gove will consider the legal structures under which the schools are built on a case-by-case basis. The letter states: ‘There is no certainty as to what structure may or may not be permitted and it is possible [Gove] may conclude that no form of exclusivity is acceptable.’

This exclusivity point is crucial – it amounts to a strong suggestion that the government is trying to extricate the BSF schemes in question from the exclusivity arrangements that are automatically granted to the selected private sector bidder. This exclusivity gives the selected bidder the sole right to develop any school project over a certain value (typically £100,000) in the given area over a 10-year period.

The problem for the government is this:

  • where BSF schemes had selected a private sector bidder but not yet signed binding contracts, Gove kept some of their sample school projects but ditched the remaining projects
  • for the sample schools to go ahead, the schemes now need to sign binding contracts
  • signing binding contracts will give legal effect to the exclusivity arrangements, meaning no other company can carry out a major school project in the area for 10 years
  • this means that other than the sample school projects, no other school redevelopment would be able to proceed, no matter how necessary, without the involvement or blessing of the selected private sector bidder

Schemes that had already signed binding contracts before Gove axed BSF are not affected. Gove approved these schemes in their entirety, meaning all local school redevelopment is going ahead in these areas.

But the potential problems in areas where only sample schools were approved explain why Gove is now searching for a get-out clause from the exclusivity arrangements.

And while he looks for a way out via this latest review, important school redevelopment work must wait even longer. PfS has instructed the affected local authorities not to incur any more expenditure on their schemes pending the review.

Kiel Porter, the reporter who broke the story for Infrastructure Journal, told A Thousand Cuts: “Technically they can do it as nothing has been signed, but it would create all sorts of problems.

“First it would make a mockery of the bidding process and allow not just the preferred bidder but also losing bidders to claim the process was flawed. The test case (SITA v Greater Manchester Waste Disposal Authority) is still going on three years later with fees totalling millions.

“Second it would require a completely new project agreement that could take months to draft – and no one has the time to do it. Schools are already falling behind.”

Quite apart from yet another bungle from the increasingly hapless Gove – does anyone still describe him as a ‘rising star’? – it is also an example of how the government’s deficit machismo is blowing up in its face.

By rushing ahead with major cuts in an attempt to strike intimidating postures of intent, the government has not thought things through and is seeing unexpected problems crop up all over the place.

With BSF, we’ve already had the shambles over the publication of inaccurate lists of cancelled schools because Gove didn’t want to check the data first. Now we have Gove firing off panicking letters via PfS because he evidently didn’t consider the exclusivity issue when he axed BSF in the first place.

But it’s not just BSF. The in-year funding cuts to local authorities have forced councils to desperately hack away at local services such as Connexions. Had the cuts been delayed by a year, councils would at least have been able to prepare in advance and avoid making legally binding spending commitments.

Instead they must rush cuts through with large amounts of spending already committed. Council spending cuts have been determined not by the relative importance of specific services, but by which services have signed bits of paper and which do not.

Meanwhile Andrew Lansley’s hasty ‘denationalisation’ of NHS commissioning is heading for the courts over the legality of its unconvincing consultation process.

When millions of people’s personal details went missing under Labour in late 2007, the then-Shadow Chancellor George Osborne delivered this scathing attack on a government that had become obsessed with finding a grand vision:

“Never mind the lack of vision – just get a grip and deliver a basic level of competence.”

As the coalition revels in its epochal ‘transformation’ of the public sector, Osborne and co would do well to heed their own advice.


Building industry lambasts government’s first 100 days as ‘death by 100 cuts’

19 08 2010

The National Federation of Builders has attacked the coalition’s first 100 days in office as ‘death by 100 cuts’ for the construction industry.

The NFB, which represents many of Britain’s small to medium-sized building outfits, said that the government’s policies are forcing the industry into a double dip recession, with the current growth in the sector due to ‘companies scrambling to finalise deals before the government axe could fall’.

The body highlighted the decisions to scrap regional development agencies and regional spatial strategies with nothing in their place and no policies to handle the transition.

Describing the government’s execution of its agenda as ‘sadly wanting’, it delivered a stinging verdict on the coalition’s policies so far: ‘In much the same way as Gordon Brown redefined the word “prudence”, this government has redefined the phrase from the emergency budget “no more capital spending cuts” to mean “we are now cutting the £55 billion Building Schools for the Future programme”.’

The Ultimate Right-Wing Nutjobs’ Guide to Outrageous Government Waste

12 08 2010

Eric Pickles. Eats public sector fat cats for breakfast, lunch, dinner...

Today Communities Secretary Eric Pickles trumpeted his department’s publication of all supply contracts above £500 as proof of the government’s new transparency. Rightly so.

He called for an army of “armchair auditors” to scrutinise what the department was spending money on. Fair enough – although a glance at the list shows how unrevealing it is, given that it doesn’t give any detail on what each payment was for.

And given the absence of any clarity, the press have settled for reporting the blatantly flagged expenditure of £1,600 on massages for staff and £539 on an away day at Blackpool pleasure beach.

Local government minister Bob Neill – yes, that Bob Neill – weighed in gleefully: “It seems, quite literally, the government offices for the regions were taking the taxpayer for a ride.

“They were living it up at the taxpayers’ expense whilst thousands of households were struggling to make ends meet.

“Splashing out six-figure sums on pollsters appears to be another one of Labour’s vanity projects. It’s unforgivable that a culture of excess was allowed to flourish for so long.”

But given the £314m that the department spent in total on supplies and procurement in 2009/10, a couple of thousand quid on dubious perks – even the “six-figure sums” on pollsters – is a drop in the ocean.

Any serious analysis of the data is difficult as very little detail is provided on what each contract was actually for. The government has indicated that future data releases will be more detailed, but not many conclusions can actually be drawn from today’s figures.

But that won’t stop people trying, of course.

The swivel-eyed right-wing brigadiers have been out in force on the messageboards this afternoon in all their spEak You’re bRanes pomp.

“Labour through and through. Councillors spend thousands on ‘jolly boys’ outings, alternative medicine and focus and diversity groups, while MP’s line themselves up for huge salary increases, gold-plated pension pots and fraudulent expenses claims. They treated the British public with complete and utter contempt,” said ‘The Doctor, The Tardis, somewhere in the Medusa Cascade, BRIGHTON’ in one of the highest rated comments on the Daily Mail’s ever reliable messageboard.

Inevitably there will be some dubious purchases among the thousands of supply contracts signed by the department. Highly paid executives no doubt enjoyed perks for themselves, hired expensive consultants and ran pricey advertising campaigns as New Labour tried to get the public sector to ape the private sector. But as a proportion of the total?

The lack of detail makes it hard to calculate how much of the department’s purchasing can be put down to ‘waste’. So let’s make this easy for the swivel-eyed Right. Let’s just assume whole swathes of spending were all wasteful, regardless of the detail. Let’s tar all purchases with the same brush and see how much it comes to.

And so, here we have A Thousand Cuts’ Ultimate Right-Wing Nutjobs’ Guide to Outrageous Government Waste:

  • Strategic consultancy – “No idea wot that is but it sounds like crap” – £27,709,553.15
  • PR and marketing – “I don’t even know what that department does. Why is it spending money on advertising?” – £13,554,732.80
  • IT consultancy – “When my computer breaks down I get my son to fix it. I’m sure little Johnny would be happy to do it for the government in return for the odd Mars Bar” – £4,669,922.44
  • Property services/estates consultancy – “I hate estate agents their like Nazis” – £2,844,325.12
  • Events and hospitality – “What kind of events? The Nuremberg Rally? looolll more Nazis” – £1,343,832.10
  • Events organisation – “Cum to think of it I quite like Nazis. Rule Britannia” – £1,268,834.07
  • Finance consultancy – “Paying people to check on money wots the point in that?” – £868,292.28
  • Rail – “Here we go first class trains. Why can’t they just use a car like the rest of us?” – £558,388.85
  • Vehicle hire – “Wot I’m having to pay for them to use a car? ANGRY” – £383,006.67
  • Marketing and comms consultancy – “Jeez more advertising” – £354,053.78
  • Staff childcare – “This is what happens when you hire women they should stay at home and look after their kids the lazy bints” – £332,957.78
  • Staff subscriptions – “Subscribe to what? They can get Nuts online no need to buy it!” – £281,876.98
  • Taxi – “I had one of these civil servants in the back of my cab the other day bloody disgrace them spending all our money on taxis” – £250,526.78
  • Staff medical care – “Bloody parasites spending my money. I’d rather they just died” – £193,108.77
  • HR consultancy – “I mean what is HR anyway?” – £109,851.10
  • Interpretation and translation services – “IMMIGRANTS BLEEEAAAARGGHHH!!!” – £49,369.73
  • Staff health and safety – “IT’S NOT HEALTH, IT’S ELF muppets cant even spell loolll” – £13,850.82
  • Clothing – Ok, so I don’t get that one either – £771.51

All outrageous, diabolical, ZaNuLaBliar waste. Every last penny. And what does it all come to?

£54,408,973.99. Out of £314m. That’s under 17.5 percent.

So, even if every single transport cost, every single hired consultant, each and every magazine subscription, taxi hire and advertising campaign was a waste of money, even if we accept the anti-health and safety propaganda of the Right, even if we dismiss medical care and childcare – even allowing all that, we’ve still got under 17.5 percent of the total. If even half this money is valid expenditure, that leaves us on less than 10 percent.

And unless the Right wants to start picking apart contracts for electricity and office equipment, the rest of the £314m is money you’d largely expect to be spent.

That 17.5 percent is a problem. Partly, of course, because it’s wildly excessive – dubious contracts will only make up a fraction of that total. And given that the percentage of departmental staffing costs for things like consultancy and transport will be minute – the whole point of buying in services is because you don’t have that capacity with your own staff – the percentage of total departmental expenditure that can be attributed to dubious supply deals will likely be in the low single figures.

And with the government planning to reduce departmental spending by about 25 percent, it’ll be far more than the odd trip to Blackpool Tower that gets cut. The level of government waste, even when massively and consciously over-estimated, comes in well below the level of cuts Eric Pickles is preparing to implement.

In fact, the largest single area of expenditure within the Communities Department is ‘Managed/outsourced services’, which cost £55m last year. If that counts as ‘waste’ – and we have no way of knowing whether it does or doesn’t – the Conservatives might want to think twice about their plans to outsource a vast array of public services at national and local level.

And that £54m – in fact, the entire £314m – is utterly dwarfed by some real public spending stinkers. Common Agricultural Policy – £3bn. Privatised rail subsidies – £820m. Service costs on Ministry of Defence PFI deals – £2bn. Mention these and the government goes strangely quiet.

Pickles can crow about £539 on a trip to the seaside – rather less than his own dubious expenses claims – but only through grand distortion and deception can today’s figures and sensational headlines justify the savage departmental cuts to come.

In fact, if we can draw one solid conclusion from today’s news, it’s that a huge number and range of private sector companies gain some level of profit from public sector contracts.

The government has done the right thing in publishing this data. Just don’t expect it to draw the right conclusions.

The full data is available here, but the Guardian’s datablog has it sliced and diced

PS: It’s worth clarifying that the head massages and Blackpool trip were purchased by one of the department’s quangos, rather than the department itself, so those costs don’t feature in the £314m central department spending I’ve referred to above. But the point remains the same.

PPS: I will actually be joining the army of armchair auditors with a truckload of FOI requests regarding some of the contracts that have been agreed, so we can hopefully get a better idea of what’s been spent and why. More when the responses come through.

The lecturers’ union has made monkeys of the National Union of Students

9 08 2010

NUS President Aaron Porter. Didn't major in Maths.

Well what a surprise that isn’t.

The National Union of Students’ much-heralded proposals for a ‘graduate tax’ – recently backed by Vince Cable, David Willetts, and seemingly every odd and sod running for the Labour leadership – turns out to be a bad deal for students.

The lecturers’ trade union, the UCU, has published research showing that under a variety of graduate tax models, students will pay far more for degrees than they do at present once they graduate.

Under a graduate tax, nurses with a degree on average earnings could end up paying two or three times more for their degrees than at present.

As the Telegraph reports:

Under a five per cent graduate tax on all earnings over 25 years, a secondary school teacher on average wages would pay £46,046, a social worker £37,550, a research scientist £46,418 and a doctor £70,526.

According to UCU figures, if the rate was set at three per cent over 25 years, the same teacher would be charged £27,628, the social worker £22,530, the scientist £27,851 and the doctor £63,338.

Paying off a £9,440 tuition fee loan under the present system of funding for higher education costs the teacher £10,025, the social worker £10,272, the scientist £10,017 and the doctor £9,696.

The NUS’ submission to the Browne review recommended a 5 percent tax on graduates’ income over £15k for 25 years – although an NUS spokesman didn’t know whether this meant a graduate earning over £15k would pay tax on their entire income, or just their income above £15k.

This may be news to the uninitiated, who assumed the NUS would actually defend students’ interests.

However, it will be of no surprise to those who been following the graduate tax as it has developed over the last couple of years.

Just last year, the student newspaper London Student revealed that under the NUS’ original graduate tax plans, the average student would end up paying more for their degree than at present.

Graeme Wise, the NUS official who came up with the numbers, admitted to London Student at the time that they had deliberately gone for a model that would be more expensive for most students for fear of being taken “much less seriously” if they hadn’t.

Well, they’re being taken seriously now. And the students of tomorrow will pay the price.

There is a wider point here. Many on the centre-Left have been far too quick to support the graduate tax, simply because the NUS backed it. Ignoring the actual figures proposed by the NUS, and assuming this body to actually represent students, they concluded this must be an idea that was, in some way, ‘pro-student’.

Nothing could be further from the truth.

Today’s NUS represents itself, no-one else. Comprised mainly of Labour frontbench wannabes with a gift for platitudes and little else, the NUS leadership is elected by about a thousand conference delegates, themselves elected by no more than 15 percent of their respective student bodies – and in many cases, fewer than one percent.

Ludicrously factional, conference delegates now nod through a raft of bad policy with little understanding or interest in the implications. Far more interesting to most such hacks is the annual election of the leadership – a reliable fast-track up the Labour Party career ladder.

The details of the NUS’ graduate tax proposals were cooked up by officers and managers – it’s unlikely more than a handful of student union officers ever saw them before they were sent off to Lord Browne.

And so we have the absurd situation where the National Union of Students – the National Union of Students – has managed to persuade both government and opposition to back a policy that the lecturers’ union has shown will leave students far worse off than at present.

Yes, there will need to be a broad alliance against the cuts. But it’s hard to see what positive role the NUS could possibly play in it.

Daily Cuts Briefing – Monday 26th July

26 07 2010

The big news over the weekend was the Sunday Telegraph’s investigation into frontline NHS service cuts.

The newspaper found that, far from the public eye, hospitals and primary care trusts across the country are planning to reduce services to save money as the NHS’ £20bn in ‘efficiency savings’ begin to bite.

Among the cuts reported by the paper:

  • Restrictions on some of the most basic and common operations, including hip and knee replacements, cataract surgery and orthodontic procedures.
  • Plans to cut hundreds of thousands of pounds from budgets for the terminally ill, with dying cancer patients to be told to manage their own symptoms if their condition worsens at evenings or weekends.
  • The closure of nursing homes for the elderly.
  • A reduction in acute hospital beds, including those for the mentally ill, with targets to discourage GPs from sending patients to hospitals and reduce the number of people using accident and emergency departments.

This, of course, from the same Conservatives who promised to protect the NHS budget and to avoid cuts to frontline services.

Not that Labour was much better. While the Telegraph ran an essentially anti-Tory investigation, the Guardian reported Health Secretary Andrew Lansley revealing the truth about failures in Labour’s health policy.

One of the hallmarks of New Labour was its creeping backdoor privatisation driven of the NHS. A key initiative was the commissioning of privately-run ‘independent sector treatment centres’ (ISTCs) to carry out certain procedures, often in an attempt to meet hospital waiting time targets.

However, very often these private sector operators were paid vast sums of money for operations that were never carried out – and this weekend Lansley said that up to £300m was wasted paying for operations that were either cheaper to conduct within the NHS, or were never carried out at all.

Not that the coalition government has been thrown off its policy of ‘denationalising’ the NHS – Lansley simply said that under the new government, the private sector will have to compete on a level playing field.

But as Paul Evans, director of campaign group the NHS Support Federation, told the Guardian, the ISTCs revelations reveal the “murky world of a market-led health service, where deals can be made between companies using public money and we don’t see the contracts until the money has already been spent.”

The Sunday Times reported that government cuts to road safety budgets could lead to local authorities scrapping their entire speed camera networks, after Oxfordshire County Council moved last week to pull funding. Other councils are expected to follow – although suggestions that the entire national network is under threat are fanciful. Swindon scrapped speed cameras last year; the council claims there has been no increase in road accidents since then.

And finally, there’s a good chance you’ve already seen news of the massive leak of US data on the war in Afghanistan, secured by Wikileaks and published by (among others) the Guardian.

Suffice to say, in these times of austerity – remember how much this war costs.

A Thousand Cuts on Friday:

Nights of the long knives loom in Labour London
Government’s own report admits housing benefit cuts will force people out of Central London

Government’s own report admits housing benefit cuts will force people out of Central London

23 07 2010

The government has admitted that its planned cuts to housing benefit entitlement may make it harder for claimants to find housing and could force families to move further from where they work.

Last month’s Budget introduced a cap on the level of Local Housing Allowance (LHA) paid to claimants, and cut the level of LHA to the 30th percentile of rents in each area, rather than the median – reducing the number of properties that claimants will be able to afford.

Today the Department for Work and Pensions (DWP) published its equality impact assessment into the changes, which admitted that the cuts would hit some families hard.

The report said: “The Government recognises that some households, particularly in very high cost areas, may have to move as a consequence of these measures. In London, some households may need to move from central London to outer London Boroughs or neighbouring local authorities which are not impacted by the overall caps.

“There could also be knock-on impacts for outer London boroughs that could be faced with an increased number of new Housing Benefit customers needing access to additional services such as schools and health care.”

The report also warned that some claimants may struggle to find suitable accommodation due to the reduction in the number of affordable properties under the new, lower LHA rates. However, the report added that the department expects around a third of properties to still be affordable, except in more expensive areas where the cap will kick in.

Claimants who are in employment may have to move further from where they work. “There could also be negative impacts for Housing Benefit customers who are working if they have to move to an area where they need to extend their commute to their place of work,” the report said. “This impact may be more pronounced in inner London than elsewhere … However, a more positive impact is that moving to more affordable accommodation could encourage households to take up employment.”

The Budget also ended payment of LHA for five-bedroom properties, and today’s report warned that this move could cause overcrowding for a small number of families. Currently 7,338 households receive benefits at the five bedroom rate, out of over one million claimants.

Tonight Citizens Advice housing policy officer Liz Phelps said the report proved the government’s housing benefit cuts would increase poverty and homelessness:

“The government’s own assessment confirms many of our worst fears about the impact these cuts to housing benefit will have, and the dangers of rushing through fundamental changes on this scale without consultation or any pilot schemes to test the effects.

“There can be no doubt that the combined effect of these cuts will lead to a sharp increase in rent arrears and homelessness, with the potential to spark a housing crisis in places such as London where the cuts will have the biggest impact. Among those worst affected will be some of the most vulnerable households and people doing low paid but vital work in the capital. Only seven per cent of rents in central London will be affordable within the new housing benefit limits.

“Worryingly, the government’s impact assessment skates over some potentially major effects of the changes. Rent arrears and evictions are likely to rise sharply once the changes come into force, yet there is little consideration of the impact on local councils, whose homelessness services will be under enormous increased pressure, with reduced scope to find housing solutions in the private rented sector because of the cuts – and all this at a time when local authorities themselves will be facing budget cuts.

“Nor is there any assessment of the impact on the private rented market. The Minister has expressed the hope that the cuts will result in a reduction in rent levels, but no information has been provided to support this view.”

Citizens Advice’s full statement can be read here.

The report said that the DWP would carry out further assessments into the economic impact of the changes, focusing on the impact on local authority housing departments, mobility, homelessness and overcrowding.

How scrapping BSF flies in the face of the evidence

9 07 2010

Michael Gove’s decision to scrap the Building Schools for the Future (BSF) school-building programme has morphed into the government’s first real difficulty.

The botched release of the list of affected schools created a sense of farce around the move, and the growing discontent among government MPs whose constituency schools have been hit by the decision has forced Gove onto the back foot.

Little wonder. Look at the evidence of two independent reviews of the BSF programme, and the rationale for axeing the entire programme melts away.

The National Audit Office published a report in February 2009 that found that the programme had suffered from over-optimistic early targets, time-consuming bureaucracy, and rising costs due to a decision to increase the scope of BSF and inflation of building material prices.

But despite this, the NAO report found that BSF schools were cheaper than standalone academies – the model of school that Gove prefers to fund from the public purse.

Setting up the first BSF schemes was expensive, but Partnerships for Schools – the national agency set up to oversee the BSF programme – subsequently streamlined the process to partly reduce the costs. BSF’s model of using a regular partner to develop all the schools in an area was found to lead to quicker procurement of new schools further down the line.

Following the NAO report, the ever-feisty Public Accounts Committee produced its own critical report into BSF in June 2009. The PAC report focused its attention on the government’s initial timescale for refurbishing the national secondary school estate, which it said had been optimistic and unrealistic, with initial projects taking years to come to fruition.

As is so often the case with private finance spin-offs, the planning and procurement of local BSF programmes was taking years to come to fruition and the scheme was well behind schedule as a result. Costs were rising, although this was due to the increased scope of the scheme and inflation of building material costs rather than overrunning building work.

Neither report called for the BSF programme to be axed.

So where does this leave us now? There are two immediate conclusions:

  1. the evidence suggests that most of the delays and costs were racked up in procurement, rather than during building work
  2. many of the school projects that have been cancelled were right at the end of the procurement phase

Gove has said that where BSF schemes had chosen a preferred bidder, the one or two ‘sample schools’ to be developed first may still go ahead. Most if not all of the other schools in these schemes will be cancelled.

Take Oldham. The local BSF scheme had been in planning since the end of 2007. A preferred bidder was chosen last month. The long, expensive and bureaucratic procurement process was virtually over – what waste exists in the BSF system had been and gone. Work was nearly ready to start.

And now, Gove’s decision means that only two sample schools and – inevitably – three proposed academies have a chance of going ahead. Eight school projects have been ditched.

Look at those parliamentary reports – the expense was in planning and procurement. Oldham had pretty much got that out of the way. Now its investment is a write-off, to enable Gove’s grandstanding.

This is the logic of the government’s slashernomics. In order to be seen to cut as much as possible, as fast as possible, the government ensures that even more money is wasted.

By scrapping projects that had reached preferred bidder stage, the government writes off considerable time and investment from local authorities and opens itself to possible legal action over cancelled contracts.

Rather than scaling down the national BSF programme, simplifying planning and procurement and ditching the PFI garb, the government has (as a colleague who covers BSF deals puts it) caused maximum damage for minimum gain.

What most infuriates taxpayers is when they don’t see an end product for their money. BSF was not perfect, but it gave them an end product – new and refurbished school buildings. The government has now guaranteed that the taxpayer gets absolutely nothing in return for the money it has already spent.

If this is the new politics, the education secretary needs to go back to school.