A new £2bn programme to build schools under the private finance initiative is to be launched, Michael Gove, the education secretary announced on Tuesday as Treasury plans to save some £1.5bn on existing PFI projects came under heavy fire.

Despite mounting scepticism on both the Commons’ Treasury and public accounts committees over the way PFI has been used, Mr Gove said a new programme of between 100 and 300 schools will be launched to help deal with a growing shortage of school places and a multi-billion pound backlog of repair. The FT first reported last month that plans for a a new PFI programme were being considered by ministers.

In line with the James review recommendations, it will use more standardised designs, with more central procurement than the former Building Schools for the Future programme, which Mr Gove halted shortly after taking office. In addition, another £500m of additional capital is be allocated, to fund new places in areas of greatest need and a review of the funding formula for schools is being launched.

In a climbdown, Mr Gove has also agreed to pay contractual liabilities to six councils whose PFI schools he cancelled when some 700 projects were axed as the earlier programme was shut down. Subject to consultation, however, he does not plan to restore their projects although they will be able to apply under the new schemes.

Mr Gove’s fresh embrace of the PFI came, however, as Margaret Hodge, chairman of parliament’s spending watchdog, the public accounts committee, attacked as “pathetic” Treasury claims that it will save some £1.5bn on existing PFI projects.

The money will come from a range of measures that include mothballing parts of PFIs, subletting parts of them, and reducing maintenance and cleaning - but the sum, even if it is realised, will be saved “over the lifetime of the projects” the Treasury said.

Savings have been identified by pilot projects that include one at Queen’s hospital in Romford, Ms Hodge’s constituency, where she said that “whatever they say, most of the savings have come from cutting services, or by the public sector accepting more liabilities.”

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