Belfast Telegraph

Thursday 17 April 2014

£9.2m bill for empty school

Taxpayers are facing bills of more than £400,000 a year for the next two decades for a Belfast school building that will close its doors in a matter of months.

Balmoral High School is widely viewed as an embarrassing example of what can go wrong with Private Finance Initiative (PFI) deals.

Now, the projected future costs from the ill-fated scheme have been spelt out for the first time as a result of an Assembly investigation.

Balmoral High will close down next summer, just six years after it opened, due to dwindling pupil numbers.

But the Belfast Education and Library Board is still locked into the PFI agreement that involved the construction of the school and its upkeep over 25 years.

The deal for the building and maintenance of the school by the private sector brought the contractor valuable tracts of publicly-owned land plus an entitlement to ongoing payments until 2027.

The Stormont Public Accounts Committee (PAC) has been informed by the Department of Education that projected future PFI bills for the school are over £400,000 a year.

The charge for 2008 is £400,827, with annual increases to take account of inflation bringing the 2027 projection up to £531,877. The total sum for the full 20-year period is £9.26m.

With the Balmoral High closure date approaching, education bosses are urgently seeking a new use for the building in a bid to get some return for the continuing outlay.

A spokesman for the department today said: "Alternative suitable uses for the building and site have still to be identified."

This process could involve making the premises available to another Belfast school, turning it into an administrative base or even selling off the building.

The PAC has been told by the department that establishing a new use will require negotiation with the PFI contractor on future costs.

It seems highly unlikely that any company would ever agree to a cut in its projected future payments total. And a redesign of the building for an alternative use could push costs up.

The PFI contract for Balmoral also covered the construction of another Belfast school, Wellington College, by the same developer, a consortium called Northwin.

The PAC investigated the land deals in the contract, along with three other PFI arrangements for new school and college buildings.

It found that public land in the four contracts had been sold off to different PFI developers for £4.2m below their market value.

Some £3.4m of this shortfall involved land plots in the Balmoral High/Wellington College deal. In one of the sites in this Belfast contract - Rosetta near Wellington College - the education authorities failed to measure the plot before it was handed over. The developer gained an extra half acre of prime housing land prime land worth an estimated £400,000.

PAC chairman John O'Dowd today said government departments and other public bodies needed to learn lessons from the land deals examined by the Committee.

"They can't afford to make more mistakes like these. This was how not to do PFI," he added.

Mr O'Dowd also said: "The Committee is certainly dismayed by fact that Balmoral High School will be closing only six years after it opened."

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