By Tash Shifrin
The head of the agency responsible for progressing the government’s £55bn school building programme has denied that it planned to raid council pension funds to finance struggling schemes.
The head of the agency responsible for progressing the government’s £55bn school building programme has denied that it planned to raid council pension funds to finance struggling schemes.Tim Byles, chief executive of Partnerships for Schools, and Department for Children, Schools and Families permanent secretary David Bell were quizzed by MPs about the government’s flagship Building Schools for the Future programme. The MPs highlighted concern that Private Finance Initiative schemes were grinding to a halt because of the credit crunch.
The Treasury is under pressure to bail out stalled PFI schemes and is expected to announce rescue proposals imminently.
Research published by International Financial Services London revealed that the number of PFI projects signed off in 2008 had plummeted to the lowest level since 1995.
But Bell told a Commons Public Accounts Committee hearing on February 23 that, although the credit crunch had made the situation ‘tighter’, there was ‘still a lively market’ for financing BSF schemes.
Byles denied media reports that his agency had approached local government pension schemes for money to rescue local school building projects.
He told the MPs: ‘No… we have been in discussions with a lot of pension scheme advisers in the private sector.’ Some of these also advised public sector funds, but he added: ‘We haven’t spoken to any individual pension funds.’
After the hearing, Byles told Public Finance that he had talked to advisors to establish whether pension funds — which are major investors in the stock market and other areas — might consider investing in BSF. There was interest from private sector pension funds, and Byles said he thought this would be also be the case with public sector funds.
This was not a matter of individual ‘local government funds investing in their own area’, he stressed. He compared the potential involvement of pension funds with that of insurance giant Norwich Union’s commercial finance arm, which is already financing BSF schemes.
