Contingency fund set up to help colleges in trouble as move to bundle schemes with schools is mooted

At least £300m of public money has been spent on college projects that will now not go ahead because of the Learning and Skills Council funding fiasco, it emerged this week.

The LSC this week admitted it had set up a “contingency fund” to reimburse colleges for some of this amount, but refused to say how much it had set aside.

The news comes as it became more likely that the college building programme will be brought under the management of Partnerships for Schools, which runs the £45bn Building Schools for the Future (BSF) plan.

A senior college source said the LSC’s review found that £300m had been spent on aborted work.

A spokesperson for the Association of Colleges, which had originally estimated that £220m had been spent, said the figure sounded correct. He admitted that although colleges would pay their contracted debts to builders and consultants, firms that carried out work at risk were unlikely to reimbursed.

An LSC spokesperson said: “The LSC will meet all its obligations to support the costs incurred by colleges in developing their proposals as set out in the capital handbook.” The handbook sets out rules for paying out grant, limiting it to £1.35m a project.

colleges are hurting, but the contractors are always further down the line


A contractor involved in the projects said it had all but given up on being paid for work cancelled. He said: “The colleges are hurting, but the contractors are always going to be further down the line.”

Colleges who have had their funding withdrawn last week wrote to business secretary Peter Mandelson to try to get the government to exempt them temporarily from VAT to make them viable with private funding.

The government spending watchdog, the Public Accounts Committee, this week suggested that schemes could be bundled with BSF schools.

Partnerships for Schools has already had its remit widened by the government to include initiatives such as the £7bn primary capital programme.

The Tory party is considering its education policy, and is understood to favour a more joined-up approach to investment.

The college building programme ground to a halt in March when 144 schemes were put on hold after the LSC over-committed its budget by more than 150%. Since then, just 13 colleges have been given the go-ahead, leaving the rest in limbo.