Page last updated at 14:25 GMT, Wednesday, 1 April 2009 15:25 UK

College building scheme 'flawed'

Building site at South Thames College
Many building projects have been affected by the situation

The collapse of a multi-million pound scheme to rebuild England's colleges was "predictable and avoidable", an inquiry has said.

Report author Sir Andrew Foster said poor management meant early warnings of an overspend were not acted upon.

A total of 144 colleges had building projects put on hold after the Learning and Skills Council ran out of money.

Sir Andrew said he had been incredulous at the "major mistakes" he had discovered during his investigation.

The former head of the Audit Commission was sent in by the government to find out why the college rebuilding project had been plunged into crisis - and to recommend ways to solve the problems.

He has said there is no "magical answer" - but has set out a plan.


The LSC was charged by the government to manage a £2.3bn budget for the spending period 2008-2011, but Sir Andrew's report said this was all but spent by Christmas 2008.

A total of 79 projects worth another £2.7bn had been "approved in principle" - but were now awaiting final approval.

These are now "in limbo", the colleges say, because they do not know if they will get grants for developments they have invested in planning.

Sir Andrew said the LSC had failed to keep a proper cumulative tally of projects it was allowing to go into the pipeline, which he described as "frankly incompetent".

And there was no prioritisation of these schemes, he said.

At the heart of the problem is the absence of a proper long-term financial strategy and inadequate management
Sir Andrew Foster

He also criticised government officials for failing to challenge the LSC's figures.

Sir Andrew said: "At the heart of the problem is the absence of a proper long-term financial strategy and inadequate management, information and monitoring.

"I have been forced to conclude that the crisis was predictable and probably avoidable. Certainly it could have been mitigated if action had been taken earlier."

A warning about a likely overspend was given to the LSC in a financial forecast as early as February 2008, he said, but this was not addressed or taken to the full management board there.

The body continued to sign off projects throughout the summer and autumn.

The priority now was for there to be a consultation to decide on criteria for funding the projects concerned, Sir Andrew said.

This should be based on the needs of colleges, rather than on a first-come-first-served basis, he added.


Colleges believed they had got approval to go ahead with rebuilding projects for which the LSC did not have sufficient funds and invested some of their own funds accordingly.

The Association of Colleges, which represents the colleges involved, said they had already spent a total of £220m, on architects or other services for example or on providing temporary accommodation.

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

Phase two, the £30m refurbishment of the grade 2 listed building for which the college got approval in principle, would be in jeopardy if funding was not forthcoming soon.

"If South Thames College doesn't get the funds from the LSC, the college will have to make the building workable incurring costs of £6.5m - £8m."

Martin Doel, AoC chief executive, said: "The report reveals mismanagement on an astonishing scale.

"Colleges that have had to invest heavily in preparing for these projects should be indemnified against any losses.

"We also need a quick, clear and fair resolution."


Sir Andrew's report laid most of the responsibility for the problems on "failures in general management and financial management of the LSC".

But he also added that monitoring by the Department for Innovation, Universities and Skills (Dius) "should have been more rigorous". Officials at Dius had told him they were not given "the full picture".

"The responsibility of Dius was to determine and monitor the implementation of broad policy. Effective implementation was the role of the LSC," Sir Andrew said.

At a news conference, he went further: "Senior officials at Dius could have and should have been more challenging about management information shared with them that could have called a halt to this expenditure much earlier."

Dius said it accepted Sir Andrew's recommendations.

We believe there will be no more money for the next three years
Andy Wilson, Principal, Westminster Kingsway College

The Secretary of State for Innovation, Universities and Skills, John Denham, said: "We have already made clear to all college principals that we will not allow any college to get into a situation where it cannot meet its financial obligations as a result of decisions taken by the LSC on the capital programme."

He added that any college concerned should speak to its local LSC who will "work with the college to agree an appropriate financial plan".

Last week, the head of the LSC, Mark Haysom, resigned from his £200,000 a year post, admitting there had been "failures" in the way the LSC had handled the project.

Another college caught "in limbo" is Westminster Kingsway College. It has benefitted from an earlier round of LSC investment with a state-of-the-art new building at its King's Cross centre.

But it has spent £1.5m towards plans for the re-vamping of its buildings in Victoria, where top chefs including Jamie Oliver, Antony Worrall-Thompson and Ainsley Harriott trained.

Plans for a new hospitality suite were approved in principle.

College principal Andy Wilson is pessimistic: "What we have now are delays and uncertainty.

"We need something speedy now to come up with criteria. Although, there is no point in having more criteria if there is no more money.

"We believe there will be no more money for the next three years."

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