Government pledge to spend £200m after 2011 may kickstart several schemes hit by LSC debacle

Colleges that have been left without money for building work after the Learning and Skills Council funding fiasco may be able to kickstart development next year under new government plans.

It is understood the government is considering making legally binding pledges to several colleges, promising them some of the £200m earmarked for spending after 2011.

Although it would not be able to give the colleges the cash until after next year, the confirmation of future funding would make it possible for them to attract sufficient bank loans to start development in 2010.

The move comes after the government announced in May that it would bring forward £200m from future spending allocated to colleges, on top of £300m of additional funding announced in the Budget. However, until now it has been unclear how this would work. At the time of the announcement, the government said the money would help between 20 and 25 colleges fund improvement work.

One source close to the programme said she expected details of how the £200m would be allocated to be announced imminently.

The money would help colleges who have been working to downscale plans since the £5bn Building Colleges for the Future programme ran out of money this year.

The problems arose after the Learning and Skills Council, which manages the programme, overcommitted its budget by more than 150%.

Of the 144 that were put on hold, 14 colleges were subsequently given a share of £300m of additional funding announced by the government. Of the remaining colleges, many have tried to create downsized projects that they can self-finance, but have so far struggled to attract private investment.

LSC spokesperson said: “The LSC has committed all of the available funds up until the end of 2013/14, other than £200m. We are in discussions with government about how best to use that funding and will work with the sector to ensure that it meets needs across the sector.”