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25 Mar 2009 : Column 104WH—continued
A more immediate financial issue faces Lambeth college. In its preparatory work at the Brixton technology centre, the college has spent a total of £1.8 million on
consultants’ fees, on the feasibility study and on detailed design proposals for the application in principle for funding that was to be submitted to the Learning and Skills Council in January for a planning application to be submitted at the end of March. However, the college has received only £200,000 from the LSC, with the remaining £1.6 million funded from college reserves. If the project does not go ahead, the college faces the prospect of having to write off £1.6 million in aborted fees, which it can ill afford to do. There is another reason why the college can ill afford this loss. The Clapham sixth form has cost it £21 million, of which only £5 million has been paid for by the LSC. The balance has been funded by a long-term loan that is costing the college £900,000 a year to service.
As my hon. Friend the Minister will be aware, the LSC has required all colleges undertaking phased property strategies to make their entire financial contribution in the first phase, on the promise that subsequent phases of capital works will be funded fully by the LSC, with the servicing of the loans then being funded by efficiency savings generated by the modernisation of the whole estate. However, the current suspension of funding for Lambeth college means that it has only been able to implement a part of its property strategy, but is having to service a loan that assumes full implementation of the strategy. In other words, the college’s reserves have been utilised in developing the Brixton scheme on a promise that significant capital funds would be available. I emphasise that that has been done with the active encouragement of LSC officers. I say to my hon. Friend the Minister in all earnestness that if no funds become available, the college will have no means to modernise its remaining estate and will have to make budget cuts to pay for serving the loan, which will mean reducing the educational service that the college provides to the residents of one of London’s poorest boroughs.
I have listened carefully to the words of the Secretary of State and I believe that he intends to minimise the financial losses suffered by the colleges. I expect Lambeth college to receive the most sympathetic treatment possible. But the sensible decision would be to let the Brixton scheme go forward, and I shall tell the House why—because it is a London scheme. The National Audit Office report shows clearly that progress in renewing the further education colleges’ estate has been significantly slower in the London region than elsewhere in England. Only 32 per cent. of the infrastructure was renewed by 2008, in comparison with 50 per cent. nationwide, but that is not—emphatically not—because management in the London colleges has been slow or inadequate in any way. I probed that point repeatedly with officials when they came before the Public Accounts Committee on 17 November 2008 and was repeatedly told that the complexities of the London urban environment slowed the process down. Indeed, the NAO survey shows that the average length of time it takes nationally for a project approved in principle to be approved in detail is eight and a half months, but the average time for projects in London is 16.5 months, which is twice as long.
I leave this thought with my hon. Friend: beware of chopping off schemes because they are late in the programme, because I strongly suspect that that will have a disproportionate impact on London, where the need is great. The need is certainly great in Brixton and we would like our new technology centre.
2.54 pm
Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow the right hon. Member for Streatham (Keith Hill). He makes a powerful case for London. He is fortunate to have had some investment in his college from the LSC; many hon. Members are still awaiting the first tranche. I place on the record that 28 hon. Members are in Westminster Hall this afternoon—an almost record attendance displaying the strength of feeling about this subject.
I want to make two brief points. The first is generic. This episode demonstrates an abject failure in one of the core responsibilities of Government. Government is about determining priorities, getting the resources for those priorities and ensuring that they are effectively applied. All over the country, our constituents want better hospitals, schools, roads and railways, but we do not spend money working up schemes unless there is some prospect of funding them. This fiasco has revealed a heroic waste of money by encouraging schemes to be worked up for which the funding is not and never was available. Many will be abandoned and others will have to be redesigned.
That is made worse by two factors. This Government have told us that with the introduction of three-year capital programmes there will now be greater certainty about them, which was not there before. They have also told us that they are bringing forward capital programmes, for counter-cyclical reasons, from year three of the current public expenditure survey round to year one. The Homes and Communities Agency is bringing forward money from year three to year one for precisely that reason. Yet here the opposite is happening, with capital spending at best deferred and at worst cancelled. This is financial incompetence for which, at the end of the day, Ministers must take responsibility.
My second point is specific to my constituency, although features will be replicated elsewhere. Two years ago, Cricklade college in Andover merged with Sparsholt college. At the time of the merger, I got a letter from the LSC saying:
“Current thinking is that there will be a required investment of up to £30m in Andover and £20 million in Winchester”.
It went on to say that these figures were indicative at that stage but ended:
“I would wish to reiterate the LSC’s commitment to ensuring an appropriate level of investment is forthcoming to support the ambitions of the merged college.”
The scheme is now at £100 million, reflecting the substantial encouragement given by the LSC to build for the 21st century, with the LSC constantly urging the college to raise its sights. At one visit, an LSC officer told the college that he hoped it would knock down the main administrative building because it looked dreadful. That was not in the plan and it remains not in the plan.
The college submitted its application in principle last November, expecting approval in February or March. It has got planning consent for the project from Test Valley borough council. The scheme is an integral part of the regeneration of the centre of Andover and it plans to cater for the large number of NEETs in a growing town. Then, along with 143 other colleges, we were told at the beginning of the month that the deal is off. There is considerable anger in the town about how this has been handled.
There is now a revenue problem—picking up on what the right hon. Member for Streatham said—superimposed on the capital problem. Now the scheme is not going ahead, the auditors will not allow the college to capitalise the consultancy costs, totalling some £2 million. This means that the college will now turn in a deficit for the current year, which might allow the banks to allege breach of covenant and give them an opportunity to review the terms of any loan and fees for renegotiation.
I want two things from the Minister: first, a statement on the consultancy fees and some comfort—either reimbursement or an assurance that the fees can be capitalised because there will be a scheme; and secondly, an indication of what on earth happens next. My college would be happy to negotiate around a lower figure and to phase the scheme in over a longer period. What we cannot have is an indefinite stand-off.
2.58 pm
Jeff Ennis (Barnsley, East and Mexborough) (Lab): I congratulate the hon. Member for Southport (Dr. Pugh) on securing this incredibly important debate. I begin on a positive note, as a Member from Barnsley, and congratulate the Government on their programme so far and for the many improvements that have been made to college estates throughout the country, including in Doncaster college, which serves my constituency. I mention in particular the new Hub building in the centre of Doncaster, near the North bridge, which is providing an excellent learning environment for students.
Although I do not want to make too much of a political point, under the Tories the capital allocation of funding for colleges stood at not one penny piece. I am sure that all Conservative Members feel suitably ashamed about that. Money has been and is being well spent on the college estate throughout the country, and it is making a difference. Indeed, last week, the LSC published research showing the positive effects of huge increases in capital expenditure on colleges’ performance. It found that, for every additional £1 million spent, a college attracts an average additional 111 learners, and a typical £10 million project improves a college’s success rate by nearly 1 percentage point, as it encourages more learners to complete their qualifications.
My main problem is Barnsley college, but before I refer specifically to its problems, I shall set the scene of Barnsley’s overall educational position. There is no doubt that it suffers from a legacy of under-achievement throughout its school estate with low staying-on rates and so on. That is a legacy of its past industries—the staple one was mining—and I could speak about that for more than half an hour, but I will not do so.
The problem has been recognised by Barnsley’s local businesses, schools and the local education authority—so much so that it led to the Remaking Learning in Barnsley project, which started a few years ago around the turn of the millennium. That led to the council closing all 14 secondary schools in the borough, apart from the grammar school in Penistone, and replacing them with nine advanced learning centres, which will provide an extended secondary school environment, not just for ordinary schoolchildren, but for adult learners. It is the biggest Building Schools for the Future programme in
the country, with a capital value of more than £250 million. Yorkshire Forward has provided £20 million, and Barnsley council is dipping its hand in its pocket to the tune of £70 million, which shows how important the project is to Barnsley’s future.
It is difficult for an area such as Barnsley to regenerate itself, as I am sure you know, Mr. Benton, from your Merseyside experience. We are on the edge of two city regions—Leeds and Sheffield. In the current economic downturn, the number of claimants for jobseeker’s allowance in the past 12 months has risen by 85 per cent. in Barnsley, but by 61 per cent. throughout Yorkshire and Humber. The rise in Barnsley has been the greatest in Yorkshire and Humber. The town knows that it must adapt and develop to create new industries and a broader skills base throughout the borough, and that is exactly what Remaking Learning in Barnsley is all about. Barnsley college’s proposals are part and parcel of the borough’s vision and integral to the town’s future well-being.
I turn to Barnsley council, which has been in the media spotlight over the past few weeks. Barnsley college is the main provider of further education there, with 7,000 full-time students, including 800 A-level students who progress to universities throughout the country, 3,000 vocational students who progress to university or employment, 600 apprentices and 400 14 to 16-year-old learners. It provides opportunities and life chances to young people, adults and businesses. It also includes Train to Gain learners, work-based learning, tailor-made training and is an essential focus to help local people and businesses to gain skills employment and to prosper in the current climate. It is important to set the scene, so that the Minister has an idea of the impact that the current impasse will have if it is not resolved.
Barnsley college is a good case study, which is why the media have highlighted it. The college’s new build project was originally approved by the LSC in July 2007, 18 months ago, when the LSC expected the college to obtain planning permission, to design a first-class new building, to create temporary accommodation for staff and students and to demolish the existing main college building. Demolition is in progress, and the main college building will be totally demolished in the next few days. We are at the end of phase 1 and are about to start phase 2 of a three-phase scheme.
Detailed approval was scheduled for December 2008, but the LSC cancelled the meeting at the last moment and rescheduled it for January 2009. It never took place. The college has spent £12 million on the project, plus £1 million of funding from the LSC. That £12 million includes a £10 million bank loan, with the full knowledge and approval of the LSC. Barnsley college has completed what was required and expected by the LSC on time and on budget. We now expect the LSC to find the £50 million required for the new building on the main site. The alternative is for Barnsley college to be left as a building site, with redundancies for building contractors. Building was rescheduled to start in May 2009.
Barnsley college is successful and financially stable, but the current situation could put it at risk and make it technically insolvent. The Government have a legal duty to provide further education in Barnsley. The Foster inquiry is considering only how we got into this mess, not how to get out of it, and the fact that Mark Haysom has resigned this week provides a good indication of where the inquiry will points the finger.
The 7,000 students in Barnsley want to know how we will get out of the mess and resolve the problem, which is the main point that I and, I am sure, other hon. Members want the Minister to focus on. It is obvious that he cannot resolve it by trying to micro-manage his in-house budget. He will need outside assistance, and the only possible source is the Treasury. I want to know what discussions the Minister is having with Treasury Ministers and with the Association of Colleges. I am sure that he is aware that several colleges are considering the legal implications of the programmes being suspended, and I would like him to concentrate on that also.
In conclusion, the £55 million project is designed to contribute significantly to Remaking Learning in Barnsley. Barnsley college wants to improve students’ academic and vocational qualifications throughout the borough. In particular, we want to close the skills gap for the benefit of local businesses and inward investors. In short, Barnsley council wants to provide its people with the 21st century education and training facilities that it deserves. That is what the town deserves, and what we aim to deliver. The ball is in the Minister’s court.
3.8 pm
Mr. Graham Stuart (Beverley and Holderness) (Con): It is a pleasure to have a few minutes—I shall try to make it a few minutes—to talk about the state of capital funding for further education colleges.
Three colleges serve my constituency: Bishop Burton college in my constituency, East Riding college, which is predominantly in Beverley and Bridlington in the constituency of my right hon. Friend the Member for East Yorkshire (Mr. Knight), and Hull college. Two of those colleges—East Riding and Hull colleges—have been affected by this fiasco. We have heard powerful speeches today showing the real effect on marginal communities and the most vulnerable people in those communities from the Government’s failure to deliver their promised programme.
Unfortunately, Hull often finds itself at the bottom of the national league table for educational performance up to GCSE, but Hull college is outstanding, and it was told to be ambitious, to think big and to have 21st century buildings fit for 21st-century learners. The LSC told it to be more ambitious. Was that an aberration? Was the LSC on autopilot? Did the chief executive have a fit of ambition with no link to the Department? It is incredible. The colleges in my area and I hope that the Minister today will put to rest where that ambitions programme came from.
Was the LSC responsible? Is that why the chief executive has gone? Or were things driven by the Department? Did it want that message sent out all over the country? Are the Department and the Minister—whether personally or in his capacity as a Minister—responsible for what now seem to be the false promises that were made to so many communities around the country?
Notwithstanding Labour Members’ understandable words of congratulation to the Government on their investment in FE over the years and the comparisons with the Tory years, the sad truth in this time of recession is that, for all the billions that have been spent, the number of young people who are NEETs—not in education, employment or training—is the same as
when Labour came to power. Those 16, 17 and 18-year-olds are effectively washed up and do not see education and employment as offering them anything.
How much more important is it, therefore, to ensure that every penny that is spent on providing hope and opportunity to people in such a parlous situation actually reaches them. It is nothing short of a national scandal that a £10 million loan was made in Barnsley and that £1.6 million was spent in Streatham on consultants’ fees that might ultimately go completely to waste. It will not be enough to blame the LSC, which is the largest quango that this Labour Government have ever set up and which they are now seeking to abolish and to replace with not one body, but what, on closer inspection, looks more like three. That is the Government’s idea of streamlining. It is not enough to blame that quango—what we need from the Minister today is an honest statement of the Department’s role.
I turn now to East Riding college, which is perhaps more fortunate than some in many ways. This summer, it will have had support in principle for its funding for two years. As a result of the sale of its current site and moneys that it has raised independently, it is seeking funding of just £15 million for a completely new college in the centre of Beverley. That will take the college from the leafy suburbs—I live at the entrance to the current college, so I know from personal experience that it is narrow, dangerous and unsuitable—to the centre of Beverley. The new site will be close to the railway station and to where the new park-and-ride will be. It will also be close to the Swinemoor estate, which has many of its own issues and looks to the FE college to provide hope and promise. The project will cost £23 million or £24 million, and the LSC will be expected to fund just £15 million of that.
The college provides an increasingly good standard of education. At its last Ofsted inspection, it was graded good and it was improving in all areas. It hopes that it will be graded outstanding when it is next reviewed. It will serve isolated rural communities—the east riding is the largest single unitary authority area in the country—and cover the area all the way to the coast, marginal communities in many of the coastal towns and villages and the area to the west of Beverley. It offers opportunities to people who have not done so well at school, and it will give people a real chance to get into work and pay taxes. As other hon. Members have said, this will be an excellent investment by the Exchequer.
I hope that the Minister will tell us today who is ultimately responsible for the current fiasco and what he will do to ensure that the millions of pounds that should have been spent on front-line education do not go up in smoke. Obviously, I would also be interested to hear about the prospects for East Riding college and its move to the centre of Beverley. That move is the first phase in the regeneration of a large derelict area, which is an eyesore in the centre of Beverley. The project will not only regenerate the town, but provide hope for those with least in the surrounding community.
3.14 pm
Julia Goldsworthy (Falmouth and Camborne) (LD): I shall take only a few minutes because a great number of hon. Members still want to speak.
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