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Michael Gove announces new PFI school-building programme, acknowledging ‘deep disappointment’ at cancellation of Labour’s Building Schools for the Future Up to 300 schools will be rebuilt under private finance schemes with an “upfront cost” of around £2bn, Michael Gove has announced in the Commons. The first of the restored schools is due to open in September 2014, the education secretary said in a statement acknowledging the “deep disappointment” caused by his cancellation of Labour’s school-building programme . Gove said the government will cover the contractual liabilities of six councils after it scrapped Building Schools for the Future. It will offer to pay the costs they have run up with private contractors, which run into millions of pounds. Luton council has said the late cancellation of the scheme left it with liabilities of £3.6m, while Waltham Forest said it stands to lose £275m. But the cancelled programmes will not be reinstated. Instead, between 100 and 300 schools in the worst condition nationally will be rebuilt under a new PFI scheme. The new school building scheme will be “rigorously policed” to ensure it does not incur the excessive costs of previous PFI projects, Gove said. Gove told the Commons that BSF, which triggered the worst political crisis of his first year in office, did not prioritise the greatest need or procure buildings as cheaply as possible. From now on, schools should be built to a standard design to save costs, he said. Gove announced a further £500m to fund more school places in areas where population growth has put classrooms under pressure. The preferred option will be a free school or academy. A baby boom has triggered record shortages of primary school places for this autumn and the number of pupils in state primary schools is projected to increase about 14% from 3.96m last year to 4.5m by 2018. The rise will be steepest in London. The PFI scheme goes partway to meeting a shortfall in capital funding which includes an estimated £8.5bn school repair bill. Gove said that £1.4bn had been made available this year to deal with maintenance. PFI, which involves private contractors paying upfront for schools and hospitals then leasing them back for up to 30 years, has become increasingly expensive since the financial crisis. The government has been warned against PFI by its own spending watchdog , the national audit office. Schools currently being built under PFI will be expected to improve energy efficiency, let out floor space, and reduce decorating costs in order to shave budgets, the Treasury announced separately on Tuesday. The government has also launched a consultation on a new “national funding formula” to even out disparities between the operational cash distributed to schools in different areas. Gove said: “At present, similar schools in different areas can receive very different amounts of funding for their pupils. “This is not fair on headteachers, on teachers or on pupils.” This reform could see individual school budgets set from Whitehall, effectively bypassing local authorities, although Gove said there would be “appropriate room for local discretion”. Shadow education secretary Andy Burnham questioned whether the government saw any future for local authorities in education. An “all-academy world” in which schools were directly funded by central government would look very different to the existing system, he said. Ty Goddard, director of the British Council for School Environments, an association of councils, schools and private contractors, said: “Today’s announcement recognises the profound need for investment in our school buildings. A decent school environment matters. “Key to the new capital funding programme’s success will be a common sense approach to allocation, which takes into account the needs of schools which apply. “We must guard against some of the problems that were a hallmark of early PFI-funded schools.” The National Association of Head Teachers welcomed the consultation on a national funding formula. Russell Hobby, the NAHT’s general secretary, said: “For too long, schools have suffered with inconsistent and unclear funding. Inexplicable differences across local authority boundaries have led to similar schools receiving more than £1,000 per pupil difference in levels of funding. “This is completely untenable. “The consultation shows that thinking around school funding is heading in a sensible direction but we realise that there is still a long way to go. Issues such as support for small schools, meeting the cost of pupils with special educational needs and funding across the whole of the school sector are complex.” School building programme Schools School funding Primary schools Private finance initiative Michael Gove Jeevan Vasagar guardian.co.uk