Jarvis Bankruptcy Would Cause Chaos For Schools and Universities

1.30.00pm BST (GMT +0100) Mon 5th Jul 2004

The possibility that Jarvis Plc may go bankrupt by the end of the month could result in chaos for dozens of schools and universities across the country, Liberal Democrat Shadow Chancellor Vince Cable warned today.

Dr Cable has written to Education Secretary Charles Clarke asking for urgent clarification of whether any contingency plans are in place in case Jarvis does declare bankruptcy. Jarvis Plc has secured numerous contracts to rebuild and maintain schools under PFI terms, and manages student accommodation facilities at a number of universities. The firm's share price has fallen dramatically in the last few days with real fears that Jarvis may not be able to survive beyond the end of July.

Dr Cable said: "Dozens of schools and universities around the country will be left in the lurch if Jarvis goes bankrupt.

"They are relying on Jarvis to provide vital services, managing university student accommodation, building and maintaining new school classrooms and other facilities.

"In my own constituency alone, I am concerned that if Jarvis does go bankrupt, this will result in a serious disruption of services and much needed refurbishment for local schools. Setting up new contracts with new providers while extricating schools from their current contractual arrangements with Jarvis and any receivers called in could be a very lengthy process.

"I have today written to Charles Clarke asking the Education Secretary to give urgent attention to this matter, and give clear guidance to schools and universities on what they should do in the event that Jarvis does go bankrupt.

"There are precedents for PFI companies going broke. This happened with Laings and the new National Physical Laboratory in Teddington. New contracts led to completion but there was a major hiatus while this took place.

"Parents and teachers need urgent clarification that there will be no disruption or crisis within schools or universities if Jarvis is unable to continue operating.

"The Liberal Democrats, while not opposed to PFI in principle, are less enthusiastic about its use than Labour. Very often contracts are entered into for the wrong reasons, without long term value for money judgements. Public sector negotiators are also unskilled in negotiating such large, long-term contracts. While the Government may well see PFI as a convenient way of off balance sheet accounting, there is too much secrecy and insufficient safeguards to protect the public purse when these contracts go wrong, or run over-budget."