This week saw the announcement that Tim Byles is leaving his post as the Chief Executive of Partnerships for Schools (PfS). Partnerships for Schools was New Labour’s agency created to manage the expenditure of hundreds of millions of pounds to rebuild or renew every Secondary school in the UK under the Building Schools for the Future programme (BSF). PfS was sitting pretty during the New Labour years and built an elaborate, perhaps even Byzantine structure for the procurement of schools involving both central control, and the devolution of responsibility for major decisions to the local level via the Local Education Partnership (LEP). The incoming Conservative government made no secret of the fact that they hated everything about PfS. The Tories believed the organisation reeked of the big government of Tony Blair, of central control, of bloated bureaucracy and the dead-hand of centralism stifling private sector entrepreneurial flair. When Michael Gove made a complete fool of himself in parliament with his inability to master even basic facts of the Building Schools for the Future programme (such as how many schools were being built), the lack of coherent statistics was blamed on PfS.
So it’s remarkable that PfS and Byles lasted a whole year under the new administration, but his departure comes as little surprise to people with insights into BSF. Byles is now leaving to create a ‘social investment company’. The exact meaning of exactly what the term ‘social investment company’ needs a little more scrutiny. But this week the press has been reporting the facts of the new venture; the new company called “Cornerstone” will “purchase surplus assets from the public sector, invest in the development of local service delivery and make a commercial return for the investors” (Financial Times 29th May 2011), it will provide a return for its investors and then give some of its profit to charity. The last part about the donations to charity appeared in the press as something to amaze readers, ‘fancy that’ we were supposed to exclaim, ‘fancy that, a company with the savvy of the private sector but giving its profits back to the community’. Of course the reality is that many companies above a certain size give money to charity, the crucial question is how much is being given and how these decisions on where to give the money are taken. What we need to understand about Cornerstone is that first and foremost it will be delivering a return for its shareholders and the mention of giving surplus to the charitable sector appears as nothing more than a slick piece of PR work for the moment at least.
Two other aspects of the venture trouble me. The first is Byles’ claim that his company will assist in the setting up of free schools by purchasing ‘surplus’ assets from the public sector and selling them back to organisations wanting to set up new schools. Little detail is given about the kinds of scenarios covered by these transactions, but I imagine a local authority could have buildings vacated as a result of cuts to departments. These could be refurbished to provide accommodation for schools. So once we strip away the fancy wording the in press release, Byles’ new company will act as a middleman, buying from the public sector, adding a premium to the assets, and then selling them back to the public sector for a change of use. In some ways this could be a valuable service, as it is difficult to see the public sector of itself being able to engineer processes to do this kind of matching of need with assets, but if the company was to become profitable, there will certainly be scrutiny of its charging structure. Any profits generated by Cornerstone won’t drop from the sky or self generate, they will come from tax payers in the form of the differential between the cost of the asset purchase price and its sale price, and some may find this hard to stomach.
My second problem with the venture is the timing of the announcement. The new venture has a name, it has named non-executive directors waiting in the wings, and an outline method of operation. And it has a new chief executive in the form of Mr Byles. It is clearly very close to launch, and very close to trading. The worrying thing is that Mr Byles has not left Partnerships for Schools- yet. Under normal circumstances there are guidelines about the period of time which can elapse before a civil servant can take up a position with a commercial interest (typically 3 months). This grace period is largely symbolic, after all business relationships formed on the golf course can withstand a 3 month hiatus before being renewed. No such period seems to be in operation here. The question is, for the final days of his tenure at PfS, can Tim Byles make the necessary separations between his role as a public servant charged with getting the best possible value for money for the tax payer, and his new role running a commercial for profit enterprise.