Wednesday, 19 May 2010

Labour's over-commitment to cost Cornwall dear?

It appears likely that the lavish promises made during the death throes of the Labour Government my well cost Cornwall dear. According to news reports, it is likely that the Building Schools for the Future (BSF) programme - under which Cornwall was due to get enough money to completely refurbish 6 secondary schools - is to be cut. These six schools were simply the first tranche of a much wider school refurbishment programme.

Also at risk is Cornwall Council's cornerstone policy of a PFI scheme to build affordable housing.

It is usually a rule of new Governments that they do not renege on spending commitments that have been made by their predecessor. So that should make the BSF programme safe. Except that the new Government have found that Labour promised money that it did not have. As there was no money there to be promised, ministers have decided that the promise was not valid in the first place. Effectively, they are saying that Labour lied about having the money.

The new Government has, however, made a pledge to introduce the Lib Dem scheme of a pupil premium - an extra payment for pupils who come from the most disadvantaged backgrounds. Under this scheme, Cornwall is set to gain up to £22 million. That money would go directly to schools and it would be up to headteachers to decide how it could best be used to help pupils - whether by reducing class sizes, introducing Saturday schools or catch-up classes or even by using the money on school improvements. This money is not a replacement for the BSF funding, however. Clearly there will need to be a lot of lobbying by the Council of the new ministers.

Looking further than BSF, another Cornwall scheme that may be at risk is the Affordable Housing PFI bid. There are ten councils across the UK who are together bidding for £1 billion of PFI credits. As these bids have not yet been approved, it may seem that they would be obvious candidates for the chop. At a stroke the new Government would find £1bn of the £6bn savings it is looking to make. But there may still be hope for the scheme. As it is spread over a number of years, it may be that Treasury rules do not allow the whole saving to be written up in year one. In addition, the whole concept of PFI was first adopted by government because the money spent was off the government books. And so cutting the credits might not save the Government any money at all.

We will have to wait and see what Chancellor Osborne has to say on Monday.

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