BSF Under the Coalition Government 2010
AMA Research, August 2010, Pages: 54
The new Coalition Government announced in July 2010 the cancellation of the £45+ billion BSF construction programme, but there is significant confusion on the timing and effects of the announcement.
This report reviews the impact of the announcement on 140 BSF schemes with a specific focus on:
- Background to BSF Programme cancellation – programme background, key problem areas, July announcement, market confusion.
- Impact of Cancellation – timing, scale and context – what does it actually mean for the construction industry?
- Status of BSF Schemes – as at July 2010 - list of 140 schemes stopped, unaffected, on hold, under review.
- Implications for Construction industry – impact on education construction, other education sectors, (Academies, ‘Free Schools’ etc.) changing mix between new build / RMI work. Autumn Spending Review.
Areas of particular interest include:
- Coalition Government announcement in July 2010.
- Impact of recent announcements on BSF programme - interpretation of cutbacks on programme - TIMING, SCALE and CONTEXT.
- Overview of schemes – stopped, unaffected, on hold and under review – as at July 2010.
- Analysis of 140 affected schemes by BSF wave, area, stage of procurement, project values and contractors and region.
- Opportunities for school building work – ‘Free Schools’, extension of Academies programme, Primary Capital Programme etc.
Key areas covered in the report:
BACKGROUND TO THE CANCELLATION OF BSF
- Brief background to BSF programme.
- Analysis of progress on BSF to date – update of programme developments in 2009-2010.
- Background to cancellation of BSF – confusion.
- Problems surrounding the BSF programme (delays, overspends, procurement problems).
- Coalition Government Announcement and review of early Coalition statements on education funding in general - and BSF in particular.
- Coalition Government – policy on education.
IMPACT OF THE CANCELLATION ON SCHEME PROCUREMENT
- Impact of recent announcements on BSF programme - interpretation of cutbacks on programme - TIMING, SCALE and CONTEXT.
- Brief analysis of commercial/legal implications of cancelling BSF including procurement structures, cancellation/abortive costs and recovery of bid costs etc.
- Procurement implications for future BSF and schools work.
- Financial saving to the government from cancelled projects.
FUTURE OF SPECIFIC BSF SCHEMES
- Overview of 140 schemes – stopped, unaffected, on hold and under review – as at July 2010.
- Analysis of affected schemes by BSF wave, area, project values, contractors, stage of procurement etc.
- Analysis of affected schemes by BSF region.
FUTURE OF SCHOOL BUILDING WORK UNDER COALITION GOVERNMENT
- Analysis of coalition government Review of Schools Capital.
- Future of school building work.
- Opportunities for school building work – ‘Free Schools’, extension of Academies programme, Primary Capital Programme, Estate Rationalisation, use of redundant commercial buildings.
- Potential switch to school repair & maintenance rather than new build.
- Next stages - Autumn Spending Review - timing, issues, budgets etc.
IMPLICATIONS OF THE BSF CANCELLATION FOR THE CONSTRUCTION INDUSTRY
- Key contractors affected by the announcement.
- Implications for future workload for contractors and wider supply chain.
- Implications for smaller constructionconsultants & architects - BSF makes up well over 50% of many firms’ workload.
- Potential switch to school repair & maintenance rather than new build.
1. INTRODUCTION
2. SUMMARY AND FUTURE PROSPECTS
3. ECONOMIC ENVIRONMENT
3.1 GDP
3.2 INFLATION & INTEREST RATES
3.3 UNEMPLOYMENT
3.4 HOUSEHOLD CONSUMPTION
3.5 STERLING
3.6 POPULATION PROFILE
3.7 CONCLUSIONS
4. OVERVIEW OF THE BSF PROGRAMME TO DATE
4.1 BRIEF BACKGROUND TO THE BSF PROGRAMME
4.1.1 Education Construction Overview
4.1.2 BSF Programme to Date
4.2 UPDATE OF PROGRAMME DEVELOPMENTS IN 2009-10
4.3. BACKGROUND TO THE CANCELLATION OF BSF
4.3.1 Procurement Problems Surrounding BSF
4.3.2 Public Sector Debt
4.3.3 Coalition Government Policy on Education
5. IMPACT OF CANCELLATION ON SCHEME PROCUREMENT
5.1 CONTRACTUAL ISSUES
5.1.1 Overview
5.1.2 Abortive Costs
5.1.3 Legal Action
5.1.4 Implications for School Places
5.1.5 BSF Cancellation – Cost Savings
5.1.6 Procurement Implications
6. FUTURE OF SPECIFIC SCHEMES
6.1 OVERVIEW
6.1.1 Regional Impact
6.1.2 Impact by BSF Wave
7. FUTURE OF SCHOOL BUILDING WORK UNDER A COALITION GOVERNMENT
7.1 REVIEW OF SCHOOLS’ CAPITAL
7.2 FUTURE OF SCHOOL BUILDING WORK
7.2.1 Options for School Building Work
8. IMPLICATIONS FOR THE CONSTRUCTION INDUSTRY AND WIDER SUPPLY CHAIN
8.1 ESTIMATED COST TO THE CONSTRUCTION INDUSTRY
8.1.1 Overview
8.1.2 Impact on Construction Firms
8.1.3 Implications for Smaller Firms
8.2 EDUCATION RMI MARKET
STATISTICS
TABLE 1: BSF – CURRENT STATUS OF -NO. OF SCHOOLS STOPPED, TBC, UNAFFECTED, OPEN, FOR DISCUSSION – AS AT AUGUST 2010 6
CHART 2: INTEREST RATES AND INFLATION (CPI) FROM 1992-2014 10
CHART 3: PDI & SAVINGS RATIO AT CURRENT PRICES 1992-2014 12
TABLE 4: EXCHANGE RATE FLUCTUATIONS 2004-2010 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 13
CHART 5: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION MID-2008 (‘000) 14
TABLE 6: EDUCATION NEW BUILD CONSTRUCTION OUTPUT 2004 TO 2009 – BY VALUE (£ MILLION AT CURRENT PRICES) 16
TABLE 7: BSF – SCHOOLS OPEN TO DATE – BY AREA, PROJECT TYPE (NEW BUILD, REFURBISHMENT) 18
CHART 8: PUBLIC SECTOR CAPITAL INVESTMENT - 2009-2016 (£BILLION) 23
TABLE 9: DEPARTMENT FOR EDUCATION – SPENDING CUTS 2010-11 (BY SECTOR) 24
TABLE 10: COUNCIL PREPARATION COSTS ON BSF – BREAKDOWN BY REGION (£M) 26
TABLE 11: BSF PROJECTS – BREAKDOWN BY PROJECT TYPE (CANCELLED & UNAFFECTED SCHOOLS) – % MIX BY NEW BUILD / REFURBISHMENT 31
TABLE 12: BSF – LARGEST CANCELLATIONS BY AREA 32
TABLE 13: BSF – CURRENT STATUS OF SCHEMES BY WAVE – SCHEMES STOPPED, UNAFFECTED, OPEN, FOR DISCUSSION 33
TABLE 14: BSF – SCHEME STATUS AS AT JULY 2010 – BY AREA, STATUS (STOPPED, UNAFFECTED, OPEN, FOR DISCUSSION), VALUE, STAGE OF PROCUREMENT, CONTRACTOR 34
TABLE 15: BSF – LEADING CONTRACTORS AFFECTED – KEY CONTRACTORS, SCHEMES, VALUE AND STATUS 49
TABLE 16: EDUCATION RMI MARKET £ MILLION 2003/04 –2011/12 51
CHART 17: EDUCATION NEWBUILD AND R & M TRENDS 2003 -2008 BY VALUE 53
AMA Research has recently published the 4th Edition of its Building Schools for the Future Report, focusing specifically on the coalition government’s recent announcement to end the 6-year, £55bn Programme in its current form and review all capital spending plans within the education sector.
Launched by the previous Labour government in 2003 and with a final investment of over £55 billion, the programme aimed to transform the entire secondary school estate. At the time of its cancellation in July 2010, BSF had so far delivered 186 new build schools across England. However, the programme represented one third of total capital spending in education and had been beset by delays and procurement problems.
With a major review into the future of schools’ capital expenditure expected to report by the end of the year, the new coalition government is not only aiming to reduce public sector spending - the cancellation of BSF is expected to save the government around £5 billion – but also to streamline the process of future building work within the education sector and ensure that money is not wasted on bureaucratic procurement processes, as was deemed to be the case with BSF.
The report also assesses the full implications for contractors and the wider supply chain of the cancellation of BSF and the opportunities for future building work presented by the ‘free’ schools concept and the progression of the academies’ programme – the main themes of the coalition’s education policy. Going forward, the focus within the education sector is likely to be on smaller packages of work than that seen under BSF, with a return to refurbishments rather than new-builds.
Information for this report has been collated from a wide range of sources including Government Publications, company literature and the Internet. In addition, our research background in related construction and building sectors has been used to provide a basis of understanding of the BSF Programme and key factors influencing trends and future prospects within the education sector.
Analysis of market developments has been based upon both quantitative and qualitative assessments of both primary and secondary source data. As with many of the renewable technologies, estimating the size of the UK market is difficult since there are no official or reliable statistics quantifying either the number of installations to date, or the annual sales of biomass boilers / installations into both the domestic and non domestic sectors. Industry sources indicate that in 2009 sales were estimated at around 1,100 – 1,300 residential, commercial and industrial installations.
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