The first schools built under the controversial Private Finance Initiative were "significantly worse" than other new schools in England and Wales, says the public spending watchdog.

The Audit Commission says they lost out in terms of space, heating, lighting and acoustics.

It says the arrangement cannot guarantee better quality buildings and services or lower costs.

The government says the commission is using out-of-date examples and lessons have already been learned.

'Developing policy'

In its report, the commission says there are commitments up to 2005/06 to build or refurbish more than 500 schools using the PFI, at a cost of �2.4bn.

It looked at 17 of the 25 PFI schools opened up to September 2001.

Because it can take four years to deliver a project, it accepts these were earlier schemes "when policy and practice were developing".

But it says the quality of school buildings built via more traditional means was on average better than the early PFI schools and there was little evidence of design innovation.

Some school users were critical of important design aspects such as classroom size and layout compared with non-PFI schools.

Unit costs varied widely, with no clear-cut difference between PFI and traditional schools in either construction or running costs.

Cleaning costs appeared to be higher in PFI schools, though the commission says that probably reflected higher standards.

Important features and risks had sometimes been left out of project specifications.

Contract terms

"Most users were understandably pleased to have a new school," says the report.

"But they were less happy with some specific aspects of their buildings - for example, size, layout and environmental control."

A feature of PFI is that providers suffer financial penalties if they do not put right certain failures - but only if the failures involve a breach of the agreed contract.

"Some of the problems we found were covered by the specification (for example, a leaking roof).

"But others were not, for example, poor acoustics, which is both harder to define precisely as a performance measure and (often) not easily remedied once the school is built."

There was no evidence that the PFI schools were delivered quicker.

The report says it is too early to tell whether the long-term delivery of school accommodation will be better under PFI, or whether educational attainment will be enhanced.

"But this study of the early school schemes shows that the current process cannot guarantee, as a matter of course, better quality buildings and services, or lower unit costs."

It says a way must be found to ensure that a scheme does not fall short of the government's vision of higher achievement.

'Better value for money'

In response, the Department for Education said the schools in the Audit Commission's study were conceived between 1996 and 1998 when the government's top priority was arresting decline and piloting new ways of doing things.

Since then it had continuously refined and improved the process in the light of experience.

PFI made the person who built the school responsible for its continued good repair for the next 25 years - "a sensible use of public funds".

PFI projects were pursued only where they offered better value for money than the public sector alternative.

The School Standards Minister, David Miliband, said: "PFI has meant that an extra �1bn has provided better conditions for pupils and teachers in over 500 schools.

"This extra investment is on top of huge and historic capital investment in school buildings and facilities by this government.

"PFI has transformed many schools and this will help us transform standards."