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PFI Academies

Volume 593: debated on Thursday 26 February 2015

Today, I will lay before both Houses a minute setting out the revised details of the contingent liability created by the provision of indemnities to local authorities where schools in private finance initiative (PFI) contracts become academies. Both Houses were previously notified of this indemnity by a parliamentary minute laid on 13 July 2010. The contingent liability has increased since 2010 due to the rapid expansion of the academies programme and a more streamlined PFI academy conversion process.

As a result of our plan for education we now have a million more pupils in good or outstanding schools than in 2010. The academies programme has been crucial to this, helping to transform thousands of historically poor schools across the country.

No expenditure has ever arisen under this indemnity, in respect of the 164 PFI academies to date. The likelihood of any of the indemnity being realised is very low and would only be realised in relation to an individual PFI contract. The overall PFI liability has not risen. The perceived increase is because of a redistribution of schools from local authorities to the Department as the academies programme grows in popularity.

The continuation of this contingent liability means that my Department will provide indemnities to local authorities when PFI schools become academies. Local authorities will not, therefore, be left with bills arising from the actions of an academy trust over which the authority has no control.

This will give more schools the opportunity to join the 164 PFI academies already open and enjoy the benefits that academy status brings.