Tuesday, 21 December 2010

B'muir update 1: Funding uncertainty

Despite the fanfare yesterday, there is still considerable uncertainty, both about the funding mechanism and the timing, of the replacement of Boroughmuir School. Here is an update on the financing details consequent on yesterday's Scottish Government announcement.   The Non-Profit Distributing model is fundamentally a complicated way of borrowing money.  Alternatively you could describe it as a variation of PFI or PPP I will just post the relevant part of the Council's briefing verbatim with a few comments below:

Schools for the Future Programme
The City of Edinburgh Council has already benefitted from this programme; the replacement of James Gillespies being one of the first tranche of 14 secondary schools supported under the programme announced in September 2009.
Support for only two further secondary schools in Scotland has been announced at this time - Boroughmuir High School and Campbeltown Grammar School.  The announcement from the Scottish Government represents an excellent opportunity to progress this much needed replacement project.  The level of funding support we will receive we will receive will be based on the same criteria applied to previous schools, which, for a new-build school, would equate to between half and two thirds of the cost.


Non Profit Distributing Investment
As part of the rercent Spending Review, the Scottish Government announced the intention to take forward a new pipeline of infrastructure projects through a Non Profit Distributing (NPD) model which it advised would need to include some of the schools for which support had already been announced.  We have been advised that the projects to replace both James Gillespies and Boroughmuir will be supported through the NPD approach. 
The NPD model will allow the Scottish Government to provide their support on a revenue, rather than a capital, basis.  The details regarding how this model will operate require to be clarified and discussions with Scottish Futures Trust have already been initiated.  We will need to work with the Scottish Government and Scottish Futures Trust to establish the most appropriate route to deliver the projects.
If I understand this correctly the funding actual capital funding is well into the future and, instead of the 80% provided to local authorities via the PFI, the amount is now the rather ill-defined 'half to two thirds'.

Note:  I will post on the timetable implications later today.

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