Colleges may have taken on more debt than they can afford in the wake of the reckless behaviour of a Government agency charged with a massive further education rebuilding programme.
The future of the Government scheme to rebuild England’s colleges has been left hanging in the balance by the conduct of the Learning and Skills Council, which was berated by MPs on the Commons public accounts committee.
MPs accused the LSC of building up expectations that it could not meet, as well as for its serious failures in managing the programme.
Around 144 colleges saw their building projects frozen by the LSC in December last year after the money ran out.
A report by the Commons select committee found that the LSC had approved building projects for 79 colleges which required funding totalling almost £2.7 billion more than it could afford.
It was only after the Government made an extra £300 million available that 13 colleges, including Bournville and Sandwell, have now been given the go-ahead to proceed with their building work.
Bournville is relocating onto the former Rover car site at Longbridge in a £72 million move, while a new £80 million Sandwell College campus is to be constructed at West Bromwich.
“There has been a very serious failure in the management of the programme, with the LSC over-stimulating the demand for funding and mismanaging the approval process,” the report said.
“The council was reckless in allowing colleges’ expectations of financial support to build to levels far in excess of what the council could afford.”
The cross-party group of MPs said there was now “considerable uncertainty” about the future of the programme, and called for this to be resolved as soon as possible.
The newly merged Sutton Coldfield and Matthew Boulton colleges are still hopeful of their planned £42 million development at Perry Barr.
The report added: “The department must meet its commitment that colleges will not be allowed to get into a situation where they cannot meet their financial obligations as a result of decisions taken by the council.”
And it said there was now a risk that some colleges are taking on more debt than they can afford.
By the end of 2007/08, 23 colleges had long-term debt exceeding 40 per cent of their annual income, the report said.
Committee chairman Edward Leigh said: “The future of the programme is now beset with considerable uncertainty. Some colleges are heavily committed to projects on which they have incurred costs.”
In a submission to the committee, the Association of Colleges said that a survey of 168 colleges found they have already spent £215 million in capital expenditure on stalled projects, and £187 million will be written off if projects do not go forward.