Mismanagement of LSC's £5bn building programme could cost hundreds of millions in compensation for affected colleges

The mismanagement of the Learning and Skills Council’s £5bn college building programme could cost the public purse hundreds of millions of pounds in compensation for affected colleges.

The claim was made in a review from a parliamentary select committee, published today. It was described by its chairman, Phil Willis, as the “most damning” report on mismanagement that the committee has ever given.

The report also raises concerns about other budgets managed by the LSC, including Train to Gain and Adult Apprenticeship funding, which are facing similar problems of “overcommitment”.

The investigation into the further education programme, from the Innovation, Universities, Science and Skills committee, attacks LSC chairman Christopher Banks, his board and government officials for failing to spot early warning signs that the programme was in trouble.

As a result, “hundreds of millions” of pounds are likely to be lost refunding colleges for costs including land and consultants.

Speaking at the launch of the report, Willis said: “Through catastrophic mismanagement, this programme has come to a halt and many colleges in some of the poorest areas of the country will not have their estates built.”

The MPs also call on the government to review all quangos running capital programmes to ensure they are fit for purpose.

Through catastrophic mismanagement, this programme has come to a halt

Phil Willis MP

The college building scheme was halted in March after it emerged the body had exceeded its budget by more than 150%. Just 13 out of 180 schemes have been given provisional approval.

Minister for further education, skills, apprenticeships and consumer Affairs Kevin Brennan said:

“Since it began in 2001 our college building programme has rebuilt or renewed over half the further education estate, which the report acknowledges is a great achievement for both the LSC and government. A further 13 projects are expected to begin later this summer, alongside discussions on how funding should be prioritised over the next spending review period.

"The committee recognises this is still an excellent programme but one that has been compromised by poor management. 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 former DIUS began a review of the relationships with all our non-departmental bodies to ensure wider lessons are learned to inform the arrangements for the new Skills Funding Agency which will have closer ties with the new department of Business, Innovation and Skills.”

• Six councils have been given the go ahead to join the Building Schools for the Future programme. They are: Barnet, Bolton, Hampshire, Peterborough, Sunderland and Wigan.