Massively increased interest rates on Condition Improvement Fund (CIF) loans could cost schools tens of thousands of pounds and be “another impediment” to “vital” building work, sector leaders have warned.
The CIF is an annual bidding round focused on addressing “significant condition needs” - such as boiler replacements and roof repairs - for which smaller academy trusts, as well as some voluntary aided schools and sixth-form colleges, are eligible to apply.
The application process is highly competitive, with around 1,400 to 1,500 bids accepted a year from a pool of 5,000 eligible schools.
Guidance from the Department for Education states that applicants can score “additional points” on their submission if they apply for a CIF loan, which they pay back, rather than relying on grant funding, which is non-repayable.
But new guidance released today shows that a 10-year CIF loan will now incur an interest rate of 5.37 per cent, compared to just 1.49 per cent last year.
On a £100,000 loan, this could mean the school having to shell out more than £20,000 extra to repay the loan than they would have on the rates from last year.
The DfE said its rates were set at Public Works Loan Board levels of interest, which are the same levels that local authorities can access.
But Geoff Barton, general secretary of the Association of School and College Leaders, has warned that the rising rates could be ”another impediment to schools being able to carry out vital capital work”.
“It needs to be remembered that this funding is intended to address issues such as the poor condition of buildings and health and safety issues. Schools should be able to access the money they need simply and easily without having to jump through hoops to secure grant funding and take out loans”, he added.
Tim Warneford, a consultant who works on CIF applications for schools, said that taking out loans would now be ”a greater issue for those trusts with reduced financial resources”, with many facing, what he called, “extremely harsh financial headwinds” resulting from energy cost increases and the impact of teacher pay rises.
The DfE says that the “priority” for CIF funding is to address “significant condition needs” and to keep buildings “safe and in good working order”, so projects usually focus on health and safety issues, building compliance or condition issues.
A small number of school expansion projects are also accepted, but only from those with “good” or “outstanding” Ofsted reports, and only if there is a demonstrable need to expand.
Applications have to be made by December, with outcomes released in late spring or early summer.
When schools apply to CIF, their applications are scored out of 100, with “project need” accounting for 60 points, “project cost” 25 points and “project planning” 15 points.
“Funding sources” is part of the criteria for the project cost element, with guidance saying: “To score maximum marks there will be a significant (and affordable) contribution from other sources or via a CIF loan”, with applicants needing to contribute more than 30 per cent of the cost to score six points - the maximum for this category.
Rachael Warwick, CEO and executive headteacher at the Ridgeway Education Trust in Oxfordshire, which is eligible for CIF, said that the high contribution rate required, and the rising loan rate, meant that the “wealthiest schools and trusts are likely to be the most successful with CIF bids instead of those that need the investment most”.
The DfE stresses in its application guidance that “the overriding element of any application is project need”, which accounts for the most points in the process.
Though some involved with the process have previously told Tes of their frustration that trusts with bigger reserves can often use these to get full marks on the project cost element of the application.
Full information and criteria for CIF can be found on the DfE website.
