Head of PfS resigns to run company specialising in buying and refurbishing public sector buildings and then selling them back. Should we be concerned?

Janet Downs's picture
Tim Byles, chief executive of Partnerships for Schools (PfS) has resigned. He will be head of a social enterprise called Cornerstone which will donate its surplus to charity. Cornerstone is backed by John McDonough of Carillion and Rod Aldridge, founder of Capita, who also runs academy sponsor the Aldridge Foundation. Mr Gove is said to welcome this new enterprise possibly because Mr Byles hopes that the scheme will help provide free schools.

But exactly what is a “social investment company”? Its prime concern is to make a “commercial return for investors. It is, in fact, the same as any profit-making company and in giving to charity it will be doing no more than many companies do already. So it would appear that the donation of “surplus to charity” is no more than PR spin.

There are two further worrying aspects :

Cornerstone wants to buy “surplus” assets from the public sector, refurbish them and sell them back. The company’s profit, therefore, will come from the taxpayer in the form of the difference between the cost of purchase and its sale price. If a surplus public-owned asset needs refurbishment then would it not be cheaper to put the work out to tender? And if Cornerstone becomes the preferred vehicle for the provision of new schools, then is this unfair competition?

Mr Byles is quoted as saying his social enterprise scheme is a “new form of PFI”. The Private Finance Initiative (PFI) has been a financial disaster leaving the country with debts which will take years to pay off. Is the Government really considering a similar initiative?

The second concern is that Mr Byles has not left PfS yet the new venture is very close to trading. The guidelines rule that a civil servant can take up a position with a commercial interest only after a certain period of time - usually three months. The question is: will Mr Byles be able to separate his public service responsibilities at PfS from his new role as a head of a commercial enterprise? Is there not a conflict of interest?
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Fiona Millar's picture
Tue, 31/05/2011 - 20:22

There are several other aspects to this story that need more investigation. If this company is to buy 'surplus' assets from the public sector, will that be at a commercial price, or at a knock down price at the request of the DFE? Remember that the new Education Bill allows Mr Gove to order local authorities to hand over land and buildings for use by free school providers. It isn't clear yet whether LA s will be recompensed for effectively losing valuable land from their estate and therefore from their local communities.
If these companies and social enterprises are purchasing this land at commercial rates where is the money coming from? Some of the potential free school sites that Mr Byles already has his eye on (judging by the PfS Free Schools Kit) are worth millions.
The second point is that if this is to be a 'new form of PFI' Byles must have a longer term contractual arrangements with Cornerstone in mind. The real asset for the BSF partnerships was not just the money they earned from the building projects but the longer term revenue they were to accrue from the facilities and IT contracts, to which Mr Byles was adamant BSF schools had to sign up.
Presumably the deal with Cornerstone will be school buildings plus fixed term term, but hard to break, rolling contracts for other services. In other words less, not more , autonomy for schools.

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