Page last updated at 23:12 GMT, Thursday, 16 July 2009 00:12 UK

College funding fiasco condemned

Barnsley College
Barnsley College was one of 13 to get the final go-ahead for this year

MPs have condemned the "catastrophic mismanagement" of a college building scheme in England which could cost hundreds of millions of pounds.

The Learning and Skills Council, which ran the scheme, and the government are criticised in a report by the committee which deals with further education.

The LSC encouraged colleges to bid for funds and approved projects it did not have money for, their report says.

Ministers have acknowledged mistakes made and say lessons are being learned.

MPs on the Innovation, Universities, Science and Skills Committee say the government should review the way all such quangos operate, so that such a situation cannot happen again.

The LSC was charged by the government to deliver its programme to rebuild or refurbish England's colleges.

The MPs said that at the time building projects were being approved, the body had been preparing to be disbanded and "wanted to go out with a bang", and had encouraged colleges to "big up" their plans.

But there was no process for prioritising bids and by last November, when the alarm was finally raised, 144 colleges had together invested tens of millions of pounds in preparing bids and getting approval from the LSC.

Warning signs were missed and even worse, ignored
Phil Willis MP, committee chairman

Recently, it was announced only 13 of those projects would go ahead this year.

Committee chairman Phil Willis, a Liberal Democrat MP, said: "It really beggars belief that such an excellent programme which had showed real success in transforming the further education experience for students was mismanaged into virtual extinction.

"Warning signs were missed and even worse, ignored. LSC didn't notice as the total value of the projects it was considering began to overshoot the budget and a review which could have prompted action was shunted around committees and policy groups."

The report follows one by Sir Andrew Foster, who was asked to carry out an inquiry into what went wrong with the college rebuilding project.

Both reports talk of mismanagement by the LSC and also criticise the government.

The report from the committee concludes: "Both Dius (the former Department for Innovation, Universities and Skills) and the LSC are jointly liable for not recognising the weak points of a capital programme which suffered from no overall budget and poor management information but which was being heavily marketed by the LSC to colleges."

The MPs also said that the atmosphere at the funding body was one of being "de-mob happy", because it was to be wound up under government changes.

Gordon Marsden, a Labour MP on the committee said: "There was a sense that the LSC wanted to go out with a bang. They did - but not in the way they intended."

Lessons learned

The MPs recommend that arrangements for compensation for colleges costs be settled urgently and that colleges which want to press ahead by finding alternative funding be offered government help to do so.

Minister for Further Education Kevin Brennan said the college building programme, begun in 2001, had renewed or rebuilt "half the further education estate" and the MPs' report had acknowledged that this was a great achievement.

"The committee recognises this is still an excellent programme but one that has been compromised by poor management," he said.

"Ministers have acknowledged the mistakes that were made and have already made improvements to ensure rigorous management going forward, based on the recommendations of our own independent review.

The committee issues a timely warning
Martin Doel, Association of Colleges

Geoff Russell, LSC Chief Executive said: "I am confident that we have understood the lessons from the past and have adapted our working practices to the current funding environment.

"We are working together with the sector to explore alternative financing options to support more college projects to be built.

"The LSC has undertaken a review of the costs incurred by colleges to identify solvency issues as well as to assess the appropriateness of those expenditures. Of course, to the extent that privately funded projects can proceed, this issue can be largely mitigated."

Martin Doel, the chief executive of the Association of Colleges, said: "The committee issues a timely warning.

"Colleges need to be free to get on with the job of serving millions of students without having to endure mismanagement by a quango.

"The LSC must assist any colleges placed in financial difficulty as a result of preparing, in all good faith and with due diligence, for a building project. We are therefore pleased that the committee has recommended that arrangements for compensation for colleges' sunk costs are settled urgently.

"Colleges warmly welcome the committee's recommendations that there should be additional support for those who wish to raise alternative finance, as well as additional funding for innovation and for small projects."

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