Spend, spend, spend? - the mismanagement of the Learning and Skills Council's capital programme in further education colleges - Innovation, Universities, Science and Skills Committee Contents


The Building Colleges for the Future programme was a flagship endeavour for the Department for Innovation, Universities and Skills (DIUS) (as it then was) and the Learning and Skills Council (LSC). Through it the neglected Further Education sector was finally getting the infrastructure it deserved. Many colleges, and through them learners and the wider community, have and will continue to benefit from iconic building projects. But, as we set out in this report, no-one was keeping an eye on the total amount of money which was being committed and the value of applications coming forward. In December 2008 it suddenly dawned on the senior management of DIUS and the LSC that the total potential cost of projects which had received 'Approval in Principle' exceeded the capital budget and many more applications were in the pipeline.

Far from trying to damp down increasing demand in 2008 the LSC had been encouraging it. The extent to which LSC regional staff were actively involved in "bigging up" projects is still a matter of dispute between the colleges and the LSC, but there is no doubt in our minds that the LSC's language—particularly the use of phrases like "once in a generation opportunity" and even in January 2009 "there is a strong association between new buildings and high achievement"—was building up a 'bid now, and bid big' culture among colleges, which contributed to the funding crisis.

This report draws on the excellent work of Sir Andrew Foster who was asked to review the capital programme in January 2009 and pulled no punches with his criticism of DIUS and the LSC. We have also had the opportunity to look forward and assess the steps DIUS (now the Department for Business, Innovation and Skills (DBIS)) and the LSC have taken to move the programme forward. As we considered our Report the LSC announced that 13 colleges have been placed on a shortlist where they may receive money if their bids are scaled down. We analyse how this has been done, and also assess the latest state of discussions about compensation for the vast majority of colleges who will not receive funding for their projects in the near future—an important issue which has not yet been resolved.

There are also wider lessons in this report—both for management of other LSC programmes, such as Train to Gain and adult apprenticeships, and for the Government. We note significant comments made by the then Secretary of State for DIUS about the problems that can be caused by the use of Non-Departmental Public Bodies (such as the LSC), which we recommend should be considered across the whole of government. We consider the tension which can exist between demand-led and needs-based provision, and call for clarification of the concept of "informed demand". We also review how this problem partly arose from a series of Machinery of Government changes and the prospect of the abolition of the LSC in 2010.

While this is a very difficult situation for those colleges which have not received funding it is not without hope. As the Association of Colleges recently stated "colleges have a long history of innovation and resourcefulness that they can tap into when seeking alternative funding streams, given the chance." There is clear potential for colleges to collaborate with HEFCE or with local authorities, and we note that LSC has begun belatedly to support this joint work—such efforts must continue and be given top priority as a way for the Council to make amends for its mistakes.

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