Contingency fund set up to help colleges in trouble as move to bundle schemes with schools is mooted

At least 拢300m of public money has been spent on college projects that will now not go ahead because of the Learning and Skills Council funding fiasco, it emerged this week.

The LSC this week admitted it had set up a 鈥渃ontingency fund鈥� to reimburse colleges for some of this amount, but refused to say how much it had set aside.

The news comes as it became more likely that the college building programme will be brought under the management of Partnerships for Schools, which runs the 拢45bn 好色先生TV Schools for the Future (BSF) plan.

A senior college source said the LSC鈥檚 review found that 拢300m had been spent on aborted work.

A spokesperson for the Association of Colleges, which had originally estimated that 拢220m had been spent, said the figure sounded correct. He admitted that although colleges would pay their contracted debts to builders and consultants, firms that carried out work at risk were unlikely to reimbursed.

An LSC spokesperson said: 鈥淭he LSC will meet all its obligations to support the costs incurred by colleges in developing their proposals as set out in the capital handbook.鈥� The handbook sets out rules for paying out grant, limiting it to 拢1.35m a project.

colleges are hurting, but the contractors are always further down the line

Contractor

A contractor involved in the projects said it had all but given up on being paid for work cancelled. He said: 鈥淭he colleges are hurting, but the contractors are always going to be further down the line.鈥�

Colleges who have had their funding withdrawn last week wrote to business secretary Peter Mandelson to try to get the government to exempt them temporarily from VAT to make them viable with private funding.

The government spending watchdog, the Public Accounts Committee, this week suggested that schemes could be bundled with BSF schools.

Partnerships for Schools has already had its remit widened by the government to include initiatives such as the 拢7bn primary capital programme.

The Tory party is considering its education policy, and is understood to favour a more joined-up approach to investment.

The college building programme ground to a halt in March when 144 schemes were put on hold after the LSC over-committed its budget by more than 150%. Since then, just 13 colleges have been given the go-ahead, leaving the rest in limbo.

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