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) has had
real success in redeveloping more than half of the FE college
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.
On 16 January 2009 colleges which had expected to receive multi-million
pound contributions for their projects, having received so-called
'Approval in Principle', 
were told that "a small number of applications that were
due for decisionboth in-principle and in-detailhave
been deferred from December to March."
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."
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,
was appointed to review the capital programme by John Denham and
the Chairman of the LSC, Chris Banks CBE.
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.
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,
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."
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),
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
and the subsequent Public Accounts Committee hearing in November
2008, 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
- 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."
- 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". 
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.