By Neil Merrick
05 June 2009
About a third of further education colleges face serious financial problems after last year’s collapse of a flagship rebuilding programme, finance directors were warned this week.
Speaking at the annual conference of the College Finance Directors’ Group, chair David Pullein said the outlook for FE was the gloomiest for a decade, with little end in sight to the general squeeze on public spending.
Many colleges were still struggling to pick up the pieces after the Learning and Skills Council suspended the Building Colleges for the Future programme in December.
Mark Haysom, chief executive of the LSC, resigned in March, three months after the council was forced to suspend its capital programme because it had run out of money, leaving college building projects in limbo.
Pullein, director of finance at Leeds College of Building, said the BCF ‘debacle’ was bound to mean more colleges were vulnerable financially. Usually about 15% to 20% were seen as financially weak, but the current crisis meant this could increase to as much as 30%.
Many had taken out loans and spent money up front only to be told that grants were no longer available. ‘Several colleges have millions of pounds invested in this,’ he told Public Finance ahead of the conference on June 2.
The overall situation was worse because the LSC had capped the sums colleges could spend on work-based learning through the Train to Gain scheme. There seemed little chance that the government would increase other budgets, he added.
The conference, held at Hinckley in Leicestershire, also criticised the reorganisation of FE funding, due to take effect next April. It would mean that colleges would answer to three different quangos as well as two government departments. ‘All of our funding is in silos and cannot be moved across,’ said Pullein. ‘You can overachieve in some categories and have money taken away in others.’
The bleak outlook was bound to mean significant job losses. ‘Numerous colleges are in the middle of consultation procedures over redundancies,’ he added.
Barry Lovejoy, head of FE at the University and College Union, said it was monitoring the situation. But, at present, there did not seem to be any more job losses than usual at this time of the year. ‘There are a handful of redundancies around but it’s not overwhelming,’ he said.
The LSC’s national council was meeting on June 3 to decide how to spend an extra £300m allocated for college building schemes in the Budget. No announcement is expected before the end of the month.
