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South Tyneside Council could be lumped with £7.6m PFI bill if closure of ‘inadequate’ school goes ahead

A South Shields council could be burdened with a massive £7.6m PFI bill if a poorly-rated secondary school in the area is forced to close, it has been revealed.

South Tyneside Council is facing the prospect of South Shields School, rated ‘inadequate’ by Ofsted inspectors last year, being forced to close due to declining numbers and its failed attempt at becoming an academy—and the council could be saddled with a £400,000-a-year bill as a result.

The 550-pupil school in Nevinson Avenue, South Shields, is funded through the government’s dedicated schools grant, which could be removed if the school closed.

Following the ‘inadequate’ rating by inspectors last year, the school launched a search for an academy trust to sponsor the school—however those efforts have yet to yield a sponsor for the school.

According to the Chronicle Live, the school, built in September 2011, was financed through a PFI deal that has 19 years left remaining, with added annual repayments running currently at £409,802, and will increase by the RIPX index every year.

In a document prepared for a cabinet meeting on 13 November, the council noted that there is “no financial saving,” and there will be “increased financial risk” to South Tyneside should South Shields School be closed.

The document said: “The funding for schools sits separately to council funding, within the dedicated schools grant. The council has supported the school financially to bring about improvements and has also supported the school with specific school improvement advice and support to improve attendance.

“The council will retain financial liability for the PFI contract, so there is increased financial risk rather than a saving.”

When asked whether the council could be levied with the major bill, cabinet member for resources and innovation, Cllr Ed Malcolm, said: "The answer is yes, that is why the council would have to quickly find another educational use for the building if the school were to close."

Lead member for children, young people and families Cllr Moira Smith said the regional schools commissioner has been unable to find a sponsor “largely due to the falling pupil numbers,” impacting the financial viability of the school and the quality of education the school can offer.

"In the absence of a credible sponsor, the local authority has no option other than to consult on the closure of the school,” she added.

"It is in everyone's interests to manage this at a local level so that we can help shape the best possible future for students of South Shields School."

A council spokesperson said: "The school was built under the Private Finance Initiative (PFI) in September 2011 and therefore has a number of years remaining on the contract.

"Currently the local authority and the school fund the PFI costs and these will need to continue to be met for the remainder of the contract. No decision as to the future of the school site has been made and this will not be considered until the outcome of the consultation process is finalised."

In October during the Budget speech, the chancellor announced that the government would not be agreeing to any PFI and PF2 contracts in the future.

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