Government reviews college building programme finances

28 January 2009

Skills Secretary John Denham and Chris Banks, chair of the Learning and Skills Council, have appointed Sir Andrew Foster to lead an independent review into the operation of the programme to build and renovate further education and sixth form colleges in England.

Sir Andrew, former chief executive of the Audit Commission, will review the circumstances that have led to the current position of the Building Colleges of the Future programme, managed by the Learning and Skills Council (LSC) and what lessons can be learned. He will assess existing LSC processes and consider how they can be enhanced to deliver more effective management of the programme in the current economic environment and beyond.

Chris Banks chair of the Learning and Skills Council said: "The hugely successful FE Capital programme has seen nearly 330 colleges, and 700 projects benefit so far. Only 42 colleges have yet to benefit from investment. The success of the programme to date has raised the ambition of the sector, with growing numbers of colleges looking to increase available opportunities for learners and employers alike. This, in turn, has led to an increase in demand for capital funding.

"Sir Andrew Foster is well respected, and with his sound knowledge of the sector, his recommendations will assist with future financial planning, and inform how the programme effectiveness can be improved, both in the current economic downturn, and for the long term future."

Skills Secretary John Denham said: "The programme has been a huge success to date and funded nearly 700 projects at 330 colleges. Government investment in capital projects will amount to £2.3 billion between 2007 and 2010, while in 1997 not a penny was available. More than 250 projects are currently under way and funded by the LSC - helped by the recent decision agreed with the Treasury to accelerate £220 million from future budgets to help beat the downturn. This money will be spent to bring forward building, benefiting learners and regenerating communities. But it's right that we look at how the programme is working and Sir Andrew Foster is well placed to do that."

Recent National Audit Office and Public Accounts Committee reports have acknowledged the success of the programme and, as announced in the last Pre-Budget Report, investment of £110 million for 2009/10 and a further £110 million for 2010/11 will be brought forward. This is not affected by the recent LSC announcement.

However, the pace of demand for funding by colleges overall has increased. This is because projects and the scale of Government funding they require are becoming increasingly ambitious.

In addition there are early signs that the ability of colleges to raise their own funds for to help pay for proposed projects is being affected by the downturn. Many proposed schemes rely on either the sale of land or other assets and on the ability of colleges to gain financial support from the banks. This may have an affect on the private funding available for schemes.

The LSC has been working closely with colleges that intend to submit bids to look at the individual current positions before making further funding decisions. As a result of this the consideration of a small number of applications that were due for decision - both in principle and in detail - has been deferred from December to March.

The 253 colleges that have been given approval in detail and either have work under way or have been previously been given the final go-ahead for works to begin will not be affected. The LSC will be in contact with colleges that are in the process of submitting or working up bids as part of this process.

The Treasury announced that capital spending would be brought forward in their Pre-Budget Report published on 24 November 2008. For further details, see:http://www.hm-treasury.gov.uk/prebud_pbr08_pressindex.htm

4. The NAO's report, Renewing the physical infrastructure of English further education colleges, published on 11 July 2008, found that the further education capital programme was enabling colleges in England to make good progress in renewing and rationalising their estate, replacing poor quality buildings with high quality, more suitable facilities. The report found that when colleges were incorporated "much of the physical infrastructure was in poor condition, many buildings required urgent health and safety-related repairs, were unattractive to potential learners, unsuitable for modern learning, inaccessible to people with disabilities and inefficient to run." See http://www.nao.org.uk/pdf.aspx?page=2855 for a pdf of the report and
press notice.

5. Since then, the Government has invested huge sums of money into the renewal and modernisation of the further education sector. Between April 2001 and March 2008, the Learning and Skills Council approved colleges' projects at the final detailed application stage with a total cost of £4.2 billion and grant support totalling £1.7 billion.