Contractor BAM says its 11 projects on hold cost £22m a month

The shelving of the government's £2.3bn further education build programme is costing the government and the construction industry £22m a month.

Richard Gregory, chief executive of BAM Construct UK said the firm had 11 college projects at the Approval in Detail stage with the Learning and Skills Council (LSC) - the government body in charge of the programme.

Each of these projects was costing the government and the industry £2m per month, he said, because of the need to retain project staff. The government has said that 79 schemes are at approved in principle stage, requiring funding of £2.7bn, £400m more than has been set aside for the programme. Only eight have full approval to proceed and a further 65 have applied for funding, leaving 144 on hold.

It has asked former Audit Commission chief executive Andrew Foster to complete a review of the problems with the programme, which it expects to report in April.

Gregory said: “Each of these projects has serious employment implications both for designers and the local supply chain. For example, the AIP/AID process involves around a thousand design staff. Given the significance of these projects for local economy and employment in these areas, one hopes and assumes the LSC will be approving further substantial funding at the next opportunity.”

Building was the first to report on the problem in January.

Junior skills minister Sion Simon told the BBC that the government accepted there had been major problems with the programme, with the LSC given approval in principle to programmes without having the funding to meet them. He also appeared to pledge to help colleges put in financial difficulty by the shelving of the £2.3bn further education build programme. He said: “"Mistakes have been made and that's why we've appointed Sir Andrew Foster to look into those mistakes and why. We will expect the LSC to deal urgently with their situations. We are absolutely not willing to see colleges go bust.”

The comments followed an earlier interview by the BBC with Colin Booth, the principal of Barnsley college, who said the shelving of the programme had made his college “technically insolvent.”

Shadow further and higher education secretary David Willetts told the BBC the situation represented "quite an extraordinary catalogue of incompetence" on the part of the government.

The BBC reported a survey of college principals by the Association of Colleges which found that delaying college build programme could cost them £151m.