IT leasing code should be on the curriculum

According to Jon Leslie, the channel must not deal directly with state schools on IT leasing arrangements as the latter are ill-equipped to negotiate a good deal

I was scandalised when I heard that one primary school appears to have been ripped off in an IT leasing deal. The school wanted a photocopier and the supplier offered 100 ‘free' laptops to sweeten the deal. The school apparently thought they would be free, but in fact they turned out to cost £3,700 each. It couldn't pay and it went into debt.

But this was allegedly not an isolated incident. Apparently, 10 per cent of all schools in the area have suffered in such IT leasing deals. If that's true, then dozens of schools may be facing huge, unexpected costs when it comes to their IT.

Now this has surely got to stop. This kind of incident can't do the channel any good either.

So we think the Department of Education should set up a code for IT leasing in schools. The aim would be to ensure that schools secure the best suppliers and enjoy the safest and most cost-effective ways of financing equipment. These issues are surely all the more important in these tough times when there are cuts in the public sector.

It is not enough for the British Educational Suppliers Association (BESA) to advise schools to deal with established IT suppliers only. BESA should also point out that it is illegal for state schools to deal directly with suppliers. The law stipulates that such expenditure should go through the schools' local authorities.

Secondly, a tender process should be mandatory. The local authority should decide, along with the school, the best way to fund expensive equipment – whether that be buying kit in cash or leasing it over time.

It is quite clear from the events mentioned above that schools are not themselves equipped to negotiate complicated leasing agreements. In my view, schools are very vulnerable to a hard sell. Therefore, I believe it makes sense to leave it to the local authorities and their advisers.

It is my belief that such advisers should be from an IT leasing company. We would be happy to volunteer – we have organised IT leasing deals with some 80 educational establishments over the years, including the Royal Grammar School and the University of Liverpool.

If we were doing the advising, we would be talking to local authorities to recommend a code of practice that would become mandatory for every state school. We would then seek to establish an approved panel of technology vendors – such as resellers or other third-party providers – through discussions with top OEMs.

We would immediately point out to local authorities any possible pitfalls in IT leasing agreements.

We also believe there is danger in rent-only contracts. Restrictive rent-only agreements may hit schools with a large ‘balloon' payment at the end of the lease, if they want to keep the kit. At present, bursars and head teachers are not experienced enough with leasing finance to escape lock-in to onerous leases that for them are not fit for purpose. Schools should be saying ‘no' to technology deals in this case.

I believe also that schools should be very suspicious of seductive ‘free' laptop incentives like the one that plunged the school described above into debt.

In my view, a partnership between local authorities and the right leasing company would enable the parties to pool their knowledge of the market and the mechanics of IT leases with the financial resources of the education departments. We think the leasing company should be affiliated to the Finance and Leasing Association.

I believe passionately in this issue and am asking the channel to end the forging of restrictive and punitive IT contracts with schools. These not only harm schools, but alienate IT leasing companies and starve children of access to IT.

The points above are intended as the basis for a code of practice that would save schools from poor deals in future.

Jon Leslie is managing director of Reality Finance Solutions