Firms are profiting as our schools crumble, Oldham MP McMahon says

A company that oversees the management of an Oldham school building where kids were ‘left shivering’ with no central heating last week is ‘paying out millions of pounds to shareholders’, an Oldham MP has claimed.

Oldham West and Royton MP Jim McMahon told parliament that Amber Infrastructure Group dished out £80m of shareholder dividends since taking over a contract for Newman College in Chadderton, though the company denies these claims. 

Speaking at an Education Questions session, Mr McMahon said: “When it comes to the funding of schools, shouldn’t the government just follow the money?

"Amber Infrastructure who own the Newman College in Chadderton took out £80m of shareholder dividends in the time that it has owned that PFI school. 

“But the heating system doesn’t work, the roof is leaking, affecting 30 classrooms and now two temporary classrooms have to be built to accommodate the pupils.

"Will the government intervene and say to the provider ‘If the money is there to take in dividends, it’s there to fix the roof too’?” 

The building of Newman College in Chadderton has been beset by problems since it was first built in 2011 through a Private Finance Initiative (PFI) scheme.

But Newman College has little control over the way repairs are dealt with, claims headteacher Glyn Potts. 

PFI contracts are held between the council and a private company.

In this case, the contract for Newman College is held between Oldham council and a firm called Oldham BSF Limited.

The firm is directly responsible for the construction and maintenance of the school. 

But the majority of that firm, which was owned by construction firm Balfour Beatty up until 2016, now belongs to an investment fund within the Amber Infrastructure Group. 

The complexity of the contract makes it difficult for the school to hold anyone accountable for the ‘unacceptable’ state of the building, Mr Potts claims. 

Amber Infrastructure denied that it had paid out to shareholders.

A spokesperson said: “We continue to work closely with the Council, College and the facilities manager to ensure Newman College’s facilities are maintained for the benefit of the local community.

“When there are issues with the College building or the quality of the services the Council pays for the College to receive, we work collaboratively with the College and the Council to fix them.

“The PFI company took over the management of the College in 2016 and since 2017, has not paid any dividends to shareholders.” 

But documents on Companies House seen by the Local Democracy Reporting Service show that Amber Infrastructure paid out £79.2m in dividends between 2017 and 2023. 

When this was put to the company, a spokesperson stated that it only ‘managed’ and did not ‘own’ the PFI company and wanted to be treated as two separate entities. 

Yet the companies are registered to the same address on Companies House with their directors appear to be drawn from the Amber Infrastructure roster. 

They also noted that the PFI company pays for any repairs needed at the school. 

However, the company also receives a monthly payment from the council to fulfil its obligations, though it can - and does - make percentage deductions if the company is not delivering the service.  

But Mr Potts has urged the council and the government to take more ‘stringent and impactful action’ against private companies who have left PFI schools with crumbling buildings, whose constant maintenance issues disrupt childrens’ educations. 

He told the Local Democracy Reporting Service: “We need a resolution to what is almost a weekly failure in the building since 2012, which is unacceptable considering this is financed by public money. 

“The children of Greater Manchester, our future generation, should be getting a smooth education.

"But they’re not - because of the complexities of a [PFI] contract.

"And that’s not just limited to here.

"This is a national issue. 

“I think the Department for Education needs to take a step back and think about the many, many thousands of children affected by this across the country - who are more often than not placed in areas of significant disadvantage because that’s where PFIs were targeted.” 

Damian Hinds, the Minister of State for Education, promised to discuss the college’s PFI contract with the MP after the parliamentary session. 

PFIs were introduced in the early 90s as a way to fund the building and regeneration of schools and hospitals across the country. 

They meant private companies funded construction - and the cost would be paid back with interest by locking schools and local authorities into 25 year-long contracts with the company. 

But schools have increasingly found it difficult to trace accountability, with contracts being sold off before the end of their lease. 

Newman College was constructed by BSF Limited, a company owned by Balfour Beattie, who subsequently sold its majority shareholding of BSF to the Amber Infrastructure, thereby transferring the contract to the new company.

The costs of repairs are paid for by the College and 40 per cent is paid by the council, largely through the Direct Schools Grant. 

A representative for Oldham Council noted that the council is only able to challenge PFI contractors over the terms of their contracts and that “such action incurs significant costs and will only be undertaken when the council is confident of success.”

They said: “In this case it is not clear what such action will achieve - the contract is clear that deductions are the sole remedy available to the council in respect of FM breaches and at this point in time no dispute has crystalised in respect of outstanding Deductions.” 

When contacted by the Local Democracy Reporting Service, a Department for Education spokesperson said:
“Well-maintained, safe school buildings are a priority for the department in order that they support a high-quality education for all children.

“We are aware that the PFI contractor has undertaken significant work to remedy both the causes of leaks and the issues with the heating system which is ongoing for a small number of outstanding issues.

“It is the responsibility of those running our schools to ensure they are safe and well-maintained.

"The PFI contractor and the council continue to work together to resolve the remaining issues and we will continue to push for appropriate resolution.”

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