10 February 2010
Further education colleges that ran into financial trouble following the collapse of a flagship rebuilding programme are to be partly bailed out by the government.
A total of £34m is being given to 41 colleges by the Learning and Skills Council, which was forced to suspend Building Colleges for the Future just over a year ago after it seriously underestimated how many colleges would apply for grants.
The money is seen as compensation for sums that colleges spent on architects’ fees and other costs while preparing bids. The LSC declined to identify the colleges involved, saying information about their financial position was sensitive.
But it revealed that 20 of the colleges receiving cash were in danger of having their financial classification downgraded from ‘satisfactory’ to ‘inadequate’ while the others needed support to avoid their rating going down in future.
LSC chief executive Geoff Russell said he hoped the money would draw a line under the affair. ‘[It] will ensure that these colleges can move out of the “inadequate” rating and can move forward on a more secure financial footing,’ he said.
The Association of Colleges claimed the £34m represented less than 20% of the sums spent by about 150 colleges whose schemes had been approved in principle by LSC staff before the money ran out.
David Pullein, chair of the College Finance Directors’ Group, said only colleges in the greatest need appeared to be receiving help. Those that were in better financial health beforehand were effectively being penalised.
‘There will be loads of colleges that get nothing,’ he said.
The LSC is being abolished at the end of March, when capital funding for most FE colleges will pass to a new quango, the Skills Funding Agency.
