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Education and employment minister George Mudie has launched new ...
Education and employment minister George Mudie has launched new

criteria to assess the viability and affordability of private finance

initiative projects in further education.

During a visit to the Further Education Funding Council in Coventry

today, Mr Mudie said:

'I want to bring more private enterprise expertise to the further

education sector to improve the facilities and operation of colleges

so they can deliver the high quality education we want. Today's move

will make it easier for the further education sector to attract

private sector finance bringing the FE sector in line with central

and local government and higher education.

'There are already signed projects in five colleges worth

£22.4m with a further 146 potential project worth more than

£285m in 146 colleges. There is clearly considerable potential

for further PFI and partnership deals in the English FE sector, with

over 400 colleges ranging in size and location.

'Many colleges have a long entrepreneurial tradition and have been

involved in a range of partnership deals. The new arrangements for

encouraging PFI projects will strengthen further the relationship

they have developed with the private sector.

'The sign off arrangements for the various sectors should ensure that

only affordable and viable projects come to market. Private sector

organisations should be in no doubt about the quality of the

education projects they will be bidding for in the future.'

The new arrangements for the FE sector were drawn up by the Further

Education Funding Council (FEFC) in consultation with the treasury

taskforce and have its full endorsement. Adrian Montague, treasury

task force chief executive, said:

'I know the private sector has in the past had some eservations about

bidding for PFI projects in education, in particular concerns about

affordability and commitment. The FEFC's arrangements address these

issues head-on, and are based on the taskforce's own published sign

off process for PFI projects.'

David Melville, chief executive of the Further Education Funding Council said:

'The further education sector offers a range of opportunities for

private sector investment in capital development and modernisation.

The new guidelines which will encourage private sector participation,

whilst also ensuring that college project proposals are assessed on a

value for money basis.'

The introduction of the new sign off arrangements will help to build

on PFI/PPP activity. FEFC will apply them to all PFI projects with

an estimated capital value over£10m or to projects which have

a significant service element - such as IT, catering and sports

facilities. Those which meet the criteria will be 'signed off' to

notify prospective private sector partners that they have met FEFC's

PFI project assessment criteria, which include tests for viability,

affordability and the colleges' commitment.


1. A key recommendation of the Bates review of PFI was that projects

should be road-tested to ensure that they are commercially viable

before private sector interest is invited through advertising in the

European Journal. This is in order to secure market confidence in

the quality and affordability of projects coming forward.

2. The FEFC's sign off arrangements form part of its wider capital

support programme. These are set out in an annex of the FEFC's

revised Capital Support Circular, which is being issued to FE

colleges shortly. Further details about the new sign off

arrangements are available from the FEFC. Enquiries should be

addressed to Phil Head on 01203 86 3000.

3. HEFCE published similar sign off arrangements in April this year.

Enquiries should be addressed to Tim Russell on 0117-931 7468.

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