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

1  Introduction

The Committee's inquiry

1. Further Education plays a central role in developing the skills of young people and adults. The recent programme of capital investment run by the Learning and Skills Council (a non-departmental public body (NDPB) of the Department for Business, Innovation and Skills)[1] has had real success in redeveloping more than half of the FE college estate.[2]

2. However, in December 2008, after three years of considerable and welcome expansion, the LSC suddenly froze consideration of applications which were due for decision.[3] On 16 January 2009 colleges which had expected to receive multi-million pound contributions for their projects, having received so-called 'Approval in Principle', [4] were told that "a small number of applications that were due for decision—both in-principle and in-detail—have been deferred from December to March."[5] It began to become clear that as the Rt Hon John Denham MP, the former DIUS Secretary of State, told the House of Commons on 3 February, "many more schemes [were] currently in preparation than [could] be funded in this spending round."[6] On 27 January 2009 Sir Andrew Foster, former Chief Executive of the Audit Commission and author of the major 2005 report on FE, Realising the Potential,[7] was appointed to review the capital programme by John Denham and the Chairman of the LSC, Chris Banks CBE.[8] Mark Haysom CBE, the Chief Executive of the LSC, resigned on 23 March, shortly before Sir Andrew Foster's review, A Review of the Capital Programme in Further Education, was published on 1 April 2009.[9]

3. We launched our inquiry following an open call for topics for hearings which we called "Subjects for Scrutiny: have your say". The 157 Group, which represents 26 of the largest colleges in England,[10] asked us to investigate what had happened, arguing that "the hearing would add value in giving clarity and transparency to an important issue which needs perspectives, debate and insight from a range of angles to facilitate sector and public confidence in how this issue is being dealt with."[11] We held the first evidence session with Mark Haysom CBE on 13 May and the second with the 157 Group, the Association of Colleges (the representative body for the 369 FE colleges in England, Wales and Northern Ireland),[12] the Learning and Skills Council and the Department for Innovation, Universities and Skills on 20 May. We also held a private meeting with Sir Andrew Foster. We are grateful to all those who submitted written and oral evidence.

4. In this report we draw extensively on the 2009 Foster Review and the evidence we have heard to comment on how Sir Andrew's recommendations are being taken forward. We have not sought to re-run Foster's thorough analysis, but rather to build on it. In our concluding section we set out wider issues that should be noted by other government departments. This inquiry has also taken account of the report published by the National Audit Office in July 2008, Renewing the physical infrastructure of English further education colleges[13] and the subsequent Public Accounts Committee hearing in November 2008,[14] on which we comment in Section 6. The Public Accounts Committee Report will be published shortly.

5. Analysing what happened has proved to be a challenging task because the LSC is a complicated organisation with a large number of boards and committees operating at both national and regional levels. The sequence of events is also important. We therefore annex to the report a timeline showing the key events during 2008 and 2009 and append charts from the 2009 Foster Review which show the organisational structure of the LSC.

6. DIUS was merged with the Department for Business, Enterprise and Regulatory Reform (BERR) on 5 June 2009 in a surprise machinery of government change to create a new Department for Business, Innovation and Skills. Thus there are now multiple layers of transition. It has already been announced that the LSC is being wound up in 2010 (subject to the passage of the Apprenticeships, Children, Skills and Learning Bill through Parliament) and from that date:

  • local authorities will have responsibility for commissioning and funding all education and training for young people up to the age of 19, with "a new slim-line non-departmental public body, the Young People's Learning Agency (YPLA) [to] support and enable local authorities to carry out their new duties."[15]
  • responsibility for post-19 education and training will be transferred to the Chief Executive for Skills Funding who will head up the new Skills Funding Agency (SFA). The Agency will oversee "a new demand-led approach to adult education and training". [16]

7. We expect that the new Skills Funding Agency will be overseen by the Department for Business, Innovation and Skills. We look forward to DBIS's response to this report and trust that it will work with the LSC speedily to establish transition arrangements in which the FE sector and others can have confidence.

1   The Department for Innovation, Universities and Skills-DIUS-at the time the evidence for this inquiry was taken Back

2   A Review of the Capital Programme in Further Education, Sir Andrew Foster, March 2009, para 8. Referred to in this report as "the 2009 Foster Review" Back

3   Ev 37, para 7 and Annex [Association of Colleges] Back

4   The 2009 Foster Review notes that "there was a two-stage applications process for projects with a gross cost in excess of £10 million: Application in Principle (AiP) in which the overall shape, scale, phasing and educational case for the project were agreed and Application in Detail (AiD) in which the detailed specification and cost schedule were agreed." (p 13) Back

5   Letter from Mark Haysom to College Principals, 16 January 2009 [not printed] Back

6   HC Deb, 3 February 2009, col 719 Back

7   Realising the Potential: a review of the future role of Further Education Colleges, Sir Andrew Foster, November 2005, Department for Education and Skills Back

8   Denham and LSC appoint Sir Andrew Foster to review College building programme finances, DIUS press release, 27 January 2009 Back

9   2009 Foster Review. See also HC Deb, 1 April 2009, col 70WS Back

10   Ev 40, para 1 Back

11   As above, para 3 Back

12   Ev 36, para 1 Back

13   National Audit Office, Renewing the physical infrastructure of English further education colleges, HC (2007-08) 924, July 2008  Back

14   Uncorrected transcript of oral evidence taken before the Public Accounts Committee on 17 November 2008,
HC (2007-08) 1201-i 

15   Department for Children, Schools and Families (DCSF), Apprenticeships, Children, Skills and Learning Bill: summary of proposals in the Bill, Department for Children, Schools and Families (DCSF) Back

16   As above Back

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