Last year’s reinforced autoclaved aerated concrete crisis finally drew attention to the state of school estates, and the fact that thousands of schools are still using outdated and potentially dangerous buildings.

While the new Labour government was keen to blame its Conservative predecessor for failing to address “crumbling schools” at the time, it has yet to set out its plan for how to fix it.

The public purse can’t be counted upon, either, with chancellor Rachel Reeves so far ruling out relaunching the Private Finance Initiative (PFI), which helped build almost 1,000 schools between 1992 and its final withdrawal in 2018.

The state of the school estate

Work is clearly needed, though. In June 2023, the National Audit Office (NAO) identified about 24,000 school buildings as beyond their initial estimated design life, with 700,000 pupils attending schools requiring significant refurbishment.

Meanwhile, the Department for Education’s school rebuilding programme has enrolled 513 projects in England since 2021 - but this barely scratches the surface of modernisation requirements, as the NAO report shows.

What’s more, population trends may further affect demand for school facilities and where money for any upgrades is sent.

Data analysis by the Education Policy Institute (EPI) projects the pupil population in primary and secondary schools in England will fall by about 436,000 between 2022-23 and 2028-29, dropping by a further 382,000 between 2028-29 and 2032-33.

As funding is largely determined by headcount, smaller class sizes could result in cuts to school budgets that are unlikely to be offset by reductions in overheads.

This could, unless there is some change to future funding formulas, affect schools’ ability to sustain staffing levels, fund capital projects and adequately maintain estates.

Declining pupil numbers don’t follow an even geographical pattern either.

The EPI found the North East, Yorkshire and the Humber, and London will experience the largest drops in pupil numbers due to changes in living and working habits, with numbers growing in the East of England, South East and West Midlands.

School leaders will therefore need to review the locations, sizes and designs of existing schools, with some needing expansion and others potentially facing closure.

Could a new-look PFI fund new schools?

While options for funding new schools and refurbishments appear thin without a new national funding pot, Labour does appear open to some form of private involvement in the public sector.

For example, health secretary Wes Streeting has invited independent healthcare providers to help cut NHS waiting lists and reports suggest the government may ask investors to bankroll the £9 billion Lower Thames Crossing project.

Reviving PFI-style schemes - in which private sector partners fund upfront costs of a project and then recoup this capital, along with ongoing finance and operational costs, through long-term repayments from the procuring authority - would be challenging, though, especially with widespread criticism of these deals and how they much money they cost schools.

A potentially more enticing alternative could be the non-profit distributing (NPD) model used by public authorities in Scotland since the late 2000s to build schools, health facilities and roads.

Its three broad principles are enhanced stakeholder involvement in project management, no equity dividends and capped private sector returns.

Limiting profits is attractive to the taxpayer but less so for private investors, which therefore requires economies of scale for viability.

For the government, this would mean working with trusts to develop a long-term national pipeline of new-build and refurbishment projects nationally.

Pros and cons

In Scotland, an example of this in action for education was a twin-site campus for City of Glasgow College, which replaced four colleges split over 11 sites when it was completed in 2016.

The Glasgow Learning Quarter, a special purpose vehicle led by Sir Robert McAlpine Ltd, was established to deliver the £228 million construction contract for the design, build, finance and long-term maintenance in partnership with the college and facilities management provider FES FM.

Based on projects such as these, a 2020 report by Audit Scotland found NPD and privately financed hub contracts facilitated £3.3 billion additional investment in 56 projects for new public buildings and roads.

However, the Audit Scotland report said NPD increased total infrastructure investment but questioned the long-term value for money and said it was too early to establish how successful it has been at limiting overall private sector returns.

This illustrates the challenge of developing schemes that attract sufficient private investment while protecting the public purse.

The question for the government, then, is whether the cost of doing nothing is greater - which as last year’s crumbling concrete crisis showed, can often be the case.

Peter Jackson is a senior associate in the education team and Craig Elder is a partner specialising in complex procurements at the law firm Browne Jacobson

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