BSF axe leaves preferred bidders in the dark

On the chopping block: 14 BSF projects which have reached preferred bidder status face individual reviews

All new spending on the Building Schools for the Future (BSF) project has been frozen, with 14 projects that have reached preferred bidder status facing a case-by-case review.

Education secretary Michael Gove addressed Parliament this afternoon to announce that his department is slashing its end year flexibility requirement to carry over unused budget by £1bn in 2010/11. Resultantly, £156.5m will have to be excised from capital budgets "where commitments are no longer affordable".

BSF is to be scrapped, resulting in the immediate cancellation of 715 school rebuilding or refurbishing projects. Projects which are underway or have " reached financial close" will still go ahead. A decision has not been reached on the 14 projects that have appointed a preferred bidder.

"I will be looking [at them] in more detail to see whether any should be allowed to proceed," said Gove.

The education secretary claimed he will "take into account contractual obligations already entered into". But Gove asserted he "cannot sanction any more spending" until the conclusion of a review into education spending. The review team is to be led by Sebastian James, group operations director of DSG international. It will report back to Gover prior to the Autumn spending review and is expected to reach its conclusion by the end of 2010.

"The capital review team will look into every area of capital spending in order to ensure that we do not waste any more money on a dysfunctional [programme]," said Gove.

The education secretary launched a scathing attack on what he characterised as the unnecessary bureaucracy and excessive spending of BSF. He claimed the scheme has accounted for a third of the Department for Education's capital expenditure since its inception.

He poured scorn on the nine "meta-stages" which must be concluded before a project can begin in earnest. BSF has been beset by "major overspends, delays and botched construction," he said.

"Given the massively flawed way in which it was designed and led, it is no surprise that BSF has not hit any of its targets," he said.

But shadow education secretary Ed Balls slammed the BSF decision and implored Gove to clear up exactly what schools will be affected.

"He knows the names," said Balls. "I believe he has a duty to tell the public. He should publish [a list] now."

Balls described BSF as a "once in a generation chance" and claimed today represented "a black day for our country's schools". He also sought to highlight the effect today's announcement will have on suppliers.

"How many public sector jobs does [Gove] think will be lost as a result of today's decision?," he said.