Page last updated at 10:33 GMT, Wednesday, 18 March 2009

Colleges in building funds limbo

building site
In some cases demolition and rebuilding is already underway

Some colleges have been left in chaos after embarking on rebuilding projects only to have promised funding withheld.

Eight schemes have been given the go-ahead by the Learning and Skills Council but another 144 around England have been put on hold indefinitely.

Colleges say they were told the money would be forthcoming and some have spent millions beginning work.

The government said action had been taken to discover how this situation had arisen.

The Association of Colleges has accused the LSC of mismanagement.

I don't think there can be any reason other than mismanagement. It's an incredible situation to be in
David Collins, President of the Association of Colleges

Brooklands College in Surrey was encouraged by the LSC to merge with a local sixth form college which was in an old building.

The college says that not only was it told by the LSC to rebuild but that its initial plans were not ambitious enough.

Staff and students have been moved out of the old building into temporary accommodation at a monthly rental of £80,000, with another £9m spent on preparatory work.

'No idea'

Then Brooklands was told its plans were not being given the final go-ahead.

"This was a successful college which is now in a precarious situation," said the principal, Colin Staff.

"If the LSC walk away now, it will take 25 years for us to pay off the money we have already spent."

He added: "I have no idea how they could have got themselves into this pickle. It just seems no-one has been keeping a tally."

Barnsley College has £9m in loans and has spent £2m on fees and demolition costs. Academic life is going on in temporary buildings and on half of its old main site.

Principal Colin Booth said he could have covered his debts if he had had a new building as an asset to borrow against.

As it is, he has had to put it against his budget - which he said meant the college would become technically insolvent.

'Heartbreaking'

The principal of South Thames College in London, Sue Rimmer, said she had gone ahead on the strength of a letter from the LSC saying the money for the project was ring-fenced.

So far £70m had been spent on a new building which might be wasted because she would have to send home the builders and everyone else involved if funding was not forthcoming by the beginning of April.

"It's heartbreaking for the staff and heartbreaking for the students," she said.

The total projected overspend across the country exceeds £3bn.

"It beggars belief," said the president of the Association of Colleges, David Collins.

"I don't think there can be any reason other than mismanagement. It's an incredible situation to be in."

He argues that the Treasury must intervene.

Although £3bn was a lot of money, he said, it would be the perfect public sector investment during a recession - with projects already planned, costed and in some cases begun, involving upgrading skills for when the economy picks up.

It is obvious that even at the current record levels of spending there are many more schemes currently in preparation than can be funded in this spending round
Government spokeswoman

And he said it would be a far better use of public money than covering the banks' toxic debts.

A spokeswoman from the Department for Innovation, Universities and Skills said: "It is obvious that even at the current record levels of spending there are many more schemes currently in preparation than can be funded in this spending round."

She added that Sir Andrew Foster had been appointed to conduct an independent review into the situation and he was due to report back shortly.

The LSC said in a statement that "it has always been perfectly clear that full funding and final approval was not guaranteed and that colleges were proceeding at their own risk".

The LSC was consulting the Association of Colleges and other bodies "to help identify a strategy for prioritising all future projects, and to understand what has already been spent by the colleges involved".

"Every effort will be made to complete this exercise quickly and to take into account the findings from Sir Andrew Foster's review, so that an announcement about future arrangements can be made as soon as possible."



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