Historic Newcastle PFI deal protects workers

2 May 02
A £90m Private Finance Initiative scheme for schools in Newcastle was this week heralded as 'the future of local service provision in the region', after a historic agreement extended workers' benefits.

03 May 2002

Newcastle City Council has avoided the creation of a two-tier workforce by becoming the first local authority to extend the transfer of undertakings (Tupe) regulations to existing and new staff for the lifetime of a 27-year contract to build and operate six new schools.

After two years of discussions, the council, public sector unions, private contractors and school representatives unanimously applauded the decision to maintain the authority's commitment to single status.

Lynne Robson, regional representative for the public sector union Unison, praised the council for its 'progressive stance over Tupe' and for 'ensuring that workers were a consideration in the contract negotiations'.

She added, however, that Unison would have 'preferred to see the council turn down the PFI deal and keep its services and staff in-house'.

Frank Jordan, finance and procurement manager at Newcastle City Council, said the authority had 'gone to extraordinary lengths' to protect staff by ensuring that those who transferred to the private sector would retain access to the local government pension scheme and receive pay awards in line with the public sector.

'We have not let the private sector dictate the terms and conditions of this contract and that's why we believe it is a historic deal that will bring enormous benefits to the council's staff and the region,' he said. 'Heads of the schools and our own education personnel have been involved in the negotiations from day one and they appreciate what the private sector can achieve for them.'

Under the deal, the government will provide £47.1m in PFI credits, while a consortium, called Focus Education and led by construction firm Bovis Lend Lease and the Halifax Bank of Scotland, will be responsible for designing, financing and managing the construction of the six schools.

Each school will receive new furniture, IT equipment and 25 years of maintenance at no extra cost to their existing budgets. Work is expected to be completed on all six sites by 2004.

Jordan also revealed that the Labour-led council, which has previously opposed the widespread use of private firms, views the schools' contract as a catalyst for further PFI projects in the region.

'We are looking to extend this to projects such as street lighting and libraries, but would be keen to secure the support of unions and other interested parties first,' he added.

The council's Cabinet member for education, Keith Taylor, said: 'This approach shows that where a local authority is clear in what it wants and inclusive in its approach, PFI can provide the investment communities need.'


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