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That is certainly true. If he ran the colleges, I guess that we would have had the same thing repeated in revenue terms as we have had in respect of capital bids.

The new clauses, plainly and simply, would improve the Bill. If I were in government in such difficulties, I would grasp the new clauses with both hands and take the view that the Opposition were trying to be helpful. Nothing in the new clauses is partisan. They are entirely consistent with the rest of the Bill. They would provide better lines of communication and better information to Ministers. They would prevent Ministers—whether Labour or Conservative—from finding themselves in the circumstances in which this Government find themselves in respect of FE. At a time of great economic uncertainty, the last thing we need is a Government who create more uncertainty, yet that is what all this has done.

We do not think that the LSC is perfect and we know that it needs reform—that is why we have outlined plans for a streamlined agency to fund FE—but we do not think that this is the right time to spend money on restructuring rather than on training.

The FE capital funding crisis shows what happens when Ministers are more interested in changing structures than transforming lives. Fallacy follows falsehood, and failure follows both. We need Ministers who mean and do what they say, not pass the buck. We need a structure for the funding and management of skills that is cost-efficient and effective. Most of all, we need a Government who trust FE to deliver the training to build the skills that our people want, our communities deserve and our economy needs.

Stephen Williams (Bristol, West) (LD): I welcome the new clauses that the hon. Member for South Holland and The Deepings (Mr. Hayes) has just spoken to. I met the new chief executive of the LSC, Mr. Russell, shortly after his appointment. First, we should thank him for his public service in taking on the poisoned chalice of trying to bring some coherence to an organisation that is not only in its dying days, but is dying in a sense of crisis and much public ridicule. Mr. Russell has already commissioned consultants to develop new criteria for an assessment against which college bids can be assessed. Both new clauses would complement that in-house procedure and review.

In DIUS questions last Thursday morning, this issue came up several times and the Under-Secretary of State for Innovation, Universities and Skills, the hon. Member for Birmingham, Erdington (Mr. Simon), was unable to say when the review being undertaken by the LSC will reach a conclusion so that colleges can get some clarity
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and certainty in this area—perhaps he will elaborate on that today—or how far the £300 million announced in the Budget will go.

7.15 pm

The scale of the problem that we face is indeed large: more than 140 different schemes up and down the country have reached various stages of application—either application in principle or detailed approval—while others are the subject of early discussions, although they are still incurring costs as part of their bidding. One such college is Star college, which works with adult disabled people. I have visited Star college. It is in the Cotswolds and has been mentioned on several occasions by my hon. Friend the Member for Cheltenham (Martin Horwood). My hon. Friend the Member for Yeovil (Mr. Laws), who has not yet returned to the Chamber, has asked me to mention also Yeovil college.

I wrote to Mr. Russell on his appointment, asking him to tell me the parliamentary constituencies in which colleges are waiting for detailed approval finally to be granted by the LSC—and 77 parliamentary colleagues have at least one college in their constituency that is at the detailed approval stage. For instance, my hon. Friend the Member for Brent, East (Sarah Teather) tells me that the bid made by the college of North West London in her constituency is essential for the regeneration of Wembley. My hon. Friend the Member for Colchester (Bob Russell) has two such colleges in his constituency—Colchester institute and Colchester sixth-form college—and I should also refer to Plumpton college, in the constituency of my hon. Friend the Member for Lewes (Norman Baker), and North Devon college, in the constituency of my hon. Friend the Member for North Devon (Nick Harvey).

Bournemouth & Poole college is near to the constituency of my hon. Friend the Member for Mid-Dorset and North Poole (Annette Brooke), who has been with us for most of the debate. She tells me that several million pounds have been spent on that college’s bidding process so far. I visited the college with my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg) in September last year as part of our party conference and saw the excellent training work that was going on there. It is a centre of excellence, in particular for catering. It is a shame if the students of that college are at all uncertain about the future facilities for their courses.

Mr. Hayes: The hon. Gentleman spoke well about these matters in Committee and does so again today. The point that I hope he will agree with is that this matter involves not merely the colleges that have received approval in principle, let alone those awaiting detailed approval, but many other colleges and, therefore, many other constituencies across the country. Unless the new clauses are accepted—I think the Minister will accept them—we could get into such a situation again.

Stephen Williams: I thank the hon. Gentleman for his intervention. I think I said that there are two formal parts to the process: approval in principle and approval in detail. Many other colleges are involved in early discussions, but have none the less incurred costs. Some have commenced work and are part way through their building programme. Many of us have been shown photographs of part-demolished Barnsley college by
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the hon. Member for Barnsley, East and Mexborough (Jeff Ennis). I could mention many other colleges on the list—for instance, South Devon college, in the constituency of my hon. Friend the Member for Torbay (Mr. Sanders). When he was in the Chamber earlier, he told me that the scheme is worked up and ready to go. Work could start tomorrow and all that is needed is approval to proceed.

It is not at all clear from the Budget debate, DIUS questions last week or various Westminster Hall debates on the topic how the £300 million brought forward in the Budget will help in the current financial year. It appears from the letter sent by the Secretary of State for Innovation, Universities and Skills to vice-chancellors and college principals on 22 April that, as well as the £300 million for the current financial year, 2009-10, there will be a planning assumption of a further £300 million a year from 2011-12 to 2013-14. That totals £1.2 billion and rather implies that the capital budget for 2010-11, which is the next financial year—I know that I am mentioning many years—has been raided to bail the Government out in this financial year. Perhaps the Under-Secretary will confirm whether that is the case, because the £1.2 billion over five years clearly does not correspond to £300 million for each year. One year must be missing, and it appears to be 2010-11, which of course is the year straight after the next general election.

Mr. Graham Stuart: The hon. Gentleman has put his finger on an important point. In many areas, the Government appear to have adopted a scorched-earth policy. They are raiding future budgets in order to bolster their current popularity as they approach a general election which, as they are increasingly aware, they are likely to lose.

Stephen Williams: That is an excellent point. It is indeed a political scorched-earth policy. Not only are the Government producing money from budgets allocated for the period after April 2010, but many tax rises are due to be introduced immediately after the next general election.

When the Minister replies, he should bear in mind that what the sector needs is more certainty about how the extra £300 million for the current financial year will be spent. A rationing exercise will clearly be necessary. Not all the bids currently lodged with the LSC can possibly be funded from that £300 million. Many bidders, indeed most, will miss out, and the sooner they know that, the better. All of them will have incurred bidding costs and planning fees, and will have commissioned architects to help them to draw up their proposals and submit them to the LSC’s capital board.

Following a survey of its membership, the Association of Colleges calculated that 30 of its colleges had spent at least a quarter of a million pounds on bids, and 18 had spent more than £5 million. All that expenditure may be in vain if the capital programme does not go ahead. Many of the bidders will want to know whether their costs will be met by the LSC. The irony is that those costs, not only for the colleges at either end of the range but for the 100 or so in between, will probably be close to the £300 million allocated in the budget. There is an urgent need for an assessment of what is required by the further education sector—which is the purpose of the new clauses—and for clarity from the Government on the funding criteria that they will apply in future, through the LSC.

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The hon. Member for South Holland and The Deepings began by observing that further education was crucial to our economy, and I shall end my speech in much the same way. The FE college system is essential to helping people to negotiate their way through the current recession, and even more essential to ensuring that we emerge from the other side of it with a world-class, well-skilled work force. We must meet not only the industrial demands that we will face in the future, but the demands of climate change. We shall need skilled engineers to meet the 2020 targets on which consensus has been reached. There is no point in setting such targets if we do not have the engineers and technicians to meet them. The FE sector has a crucial role in bringing those skills to the workplace and the design board, and it deserves rather better than the ineptitude that it has suffered from the Government so far.

Mr. Andrew Turner: I want to highlight the problems that the freezing of the college building programme has caused on the Isle of Wight, although I believe that there should be regulated annual audits in all areas to establish what capital is spent.

The Isle of Wight College is the only further education institution on the island. For many islanders, it represents the only opportunity to receive further education before entering the workplace. Employers value colleges as a source of training, especially during a recession. As the island has relatively high unemployment, taking a college course can make a real difference to someone’s prospects, but all that is now in jeopardy. The freezing of funds promised to the council has not only indefinitely delayed vital renovation work, but cost the college more than £2.3 million in development fees alone. It would have cost a great deal more had the college not benefited from the common sense and prudence of its principal, Debbie Lavin—common sense and prudence that the Government and the LSC evidently lack.

The Government are guilty on a number of fronts. There is evidence that the Department for Innovation, Universities and Skills and the LSC knew about a possible overspend as early as February 2008. Mrs. Lavin says that the college was encouraged to continue with the building project until as late as December 2008. DIUS and the LSC were too slow to respond, having had a good eight or 10 months in which to flag up a problem. During that period, colleges—blissfully unaware of the impending crisis, and egged on by the national LSC—spent money, made plans and, in some cases, tore down old facilities. Fortunately, that did not happen on the Isle of Wight. If the colleges had known then what the LSC and DIUS knew back in April—or February—2008, they would not have been so hasty. DIUS Ministers and the LSC should not have encouraged colleges to go ahead if they did not have the money to see the projects through. Colleges throughout the country are now paying the price for the delay. Temporary cabins are being hired in which to teach students, and fees for retaining contractors and professional advisers continue to be paid.

Adding to all the financial woes, the Government are muddying the waters by further complicating an already complex system. The ineffectual LSC is to be abolished, only to be replaced by three new bodies. That has led to
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further confusion and worry, especially as there is no evidence that the more complicated system will be any more efficient.

The Government are seeking to gloss over the whole issue with their announcement of £300 million earmarked for colleges. We have not been told where the money will go, but it is clearly an insignificant sum in comparison with the scale of the crisis. This is akin to putting a sticking plaster on a disembowelment. We need transparency in regard to further education funding, so that we all know where we stand. New clauses 1 and 11 will help to clarify the situation for the House, colleges and the public. This sorry affair cannot be allowed to happen again.

Sir Andrew Foster’s independent and damning report on the college building debacle highlights the existence of Government and LSC incompetence at almost every stage of the process. The LSC chief executive did the albeit late but none the less honourable thing, and fell on his sword. Why have not DIUS Ministers taken their responsibilities just as seriously? Or were they and their officials kept ignorant as well? I can tell the House that it was ignorance. The LSC made decisions—or perhaps it is better to say that it did not even make them—in a state of failure. That is the problem, and we must put it right.

Mr. Simon: Most of the speeches that we have heard have ranged far beyond the scope of the new clauses. I understand why Members wanted a general debate about the further education sector as a whole, and about the FE funding situation in particular. Those are serious matters which are of great concern to Members throughout the country, to their colleges and college principals, and to the corporations of those colleges. Many of them are represented by lay individuals who might feel very exposed and concerned about the position they are in. I understand that Members are constituency representatives—and, indeed, are sometimes Opposition Front Benchers with that job to do—and that they will want to make their points and to seek answers from the Government.

7.30 pm

With your permission, Mr. Deputy Speaker, I propose to speak initially to the new clauses themselves, which have so far received relatively scant mention in the debate, after which I will move on to try to respond to some of the general issues, and in so doing I will be at your mercy as to how wide and generally I may stray and for how long you think it will be appropriate for me to carry on speaking.

Mr. Hayes: The hon. Gentleman says he understands why Members have ranged widely. If he does understand that, why have we had no debate in Government time on Sir Andrew Foster’s report, because that would be a more appropriate way of dealing with these matters than by addressing these new clauses?

Mr. Deputy Speaker: Order. I think what the hon. Gentleman has just said rather underlines my intervention earlier. I allowed him to make a rather wide-ranging introduction to his amendments, and therefore I owe it to the Minister to let him at least reply. However, I hope that Members of all parties will recognise that there are
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still quite a lot of groups of amendments to be debated, so we do not want to spend an extended amount of time on this group—although let me stress again that, in fairness, the Minister must be given some opportunity to reply to the general nature of the debate.

Mr. Simon: I am very grateful for that, Mr. Deputy Speaker.

New clauses 1 and 11 are not necessary. In terms of new clause 1, an ongoing benchmarking programme already exists. As part of the capital investment programme, almost all further education colleges—some 98 per cent.—are already participating in an existing property benchmarking programme called eMandate overseen by the LSC, and that programme will continue under the chief executive of skills funding.

The eMandate programme captures data on an annual basis from all participating colleges in the FE sector. Those data include information on the quality of their estate and their estate management costs. Participation in the eMandate programme is open to all FE colleges and is compulsory for any college that wants to apply for public capital funding for building. We simply do not need the kind of stocktake described in new clause 1, because precisely that process already exists, and because nobody has suggested that a lack of that kind of information caused the problems with the FE capital programme.

Mr. Hayes: So the hon. Gentleman is saying that, in almost all cases, we know the state of college buildings, yet there was no relationship between that information—which presumably came to the Department and Ministers—and the business of encouraging capital bids. That is inconceivable, is it not?

Mr. Simon: It is not inconceivable at all. The problems with the colleges were to do with financial management, not with a lack of information about the state of the estate, or with the quality or the cost management of the builds themselves. The Foster report came to the explicit and clear conclusion that this was a good policy let down by poor implementation, and the manner of that implementation was not at all of the sort described—or apparently rectified—by new clause 1.

Mr. Graham Stuart: I simply do not understand that reply. Surely there should have been a needs-based assessment of what needed to happen to the buildings in the FE sector. How else could anyone properly approach this? Without that, it is not possible to assign priorities or to ensure that there is the most prudent use of public money. That is what perhaps most irritates my constituents. They realise that the Government have simply wasted millions of pounds on unnecessary projects, and that now tens of millions of pounds will be wasted on consultants’ fees for projects that will never proceed.

Mr. Simon: As the hon. Gentleman said, one of the key conclusions of the Foster report is that the programme should have been much more needs-based, and it is clear that it must be more needs-based in future. The reason why it was not needs-based was not because good information did not exist about the state of the FE estate; that information was being collected. The problem was that it was not used effectively. New clause 1
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would set up the paraphernalia to collect that information, but that paraphernalia already exists. Good information already exists, but the right things were not done with it. New clause 1 is therefore not the answer to this problem.

Mr. Stuart: It seems to me that that form of methodology applied to that level of spend is a strategic issue. Does the Minister therefore accept ministerial responsibility for failing to ensure that, in terms of that fundamental way of dealing with such huge sums, the Government, rather than the LSC alone, failed to do what they should have?

Mr. Simon: No. Foster was very clear that this was a good policy let down by poor implementation. He was also clear that— [Interruption.] The hon. Gentleman mouths “whitewash” from a sedentary position, but it was a very high-quality impartial report. The hon. Member for Isle of Wight (Mr. Turner) said it was damning. It was not damning of Ministers; it was clear and explicit that the responsibility of Ministers was the direction of policy, and that the policy was a good one, but that the implementation of the policy was the responsibility of the LSC and that is where the policy was let down.

Mr. Stuart: I am extremely grateful to the Minister for being so generous in giving way. Can he share with the House a single report commissioned by this Government, who are now in their 12th year in office, that has been damning of Ministers?

Mr. Simon: I shall move on to new clause 11. The new clause also raises the question of parliamentary scrutiny, but it is also superfluous because its measures already exist in the Bill. Paragraph 7 of schedule 4 requires the chief executive of Skills Funding to publish an annual report and accounts covering expenditure on all areas, including capital. That report will be laid before Parliament. I hope that that, together with the commitment of my right hon. Friend the Secretary of State to return to the House with a statement in due course, will give Members some reassurance about the level of parliamentary scrutiny. If the hon. Member for South Holland and The Deepings (Mr. Hayes) wants to have a debate in Government time, he will, as he knows, need to come back on a Thursday and talk to the Leader of the House rather than me—my pay grade is considerably beneath considering such matters.

We do not need new clause 11 in order to have transparency and parliamentary accountability, and we do not need new clause 1 in order to have good information about the state of the FE estate.

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