Tuesday, 09 February 2010 20:21 An extra £34 million of funding will be provided to 41 colleges to help them cope with the fallout from developing capital bids that have failed to proceed. However, the new support package is still less than a fifth of the amount colleges spent on ill-fated projects.

The Learning and Skills Council (LSC) pledged last September to protect any college facing financial trouble as a direct result of aborted capital projects.

Following a wide-ranging review, support has now been cleared for 20 colleges at risk of losing a 'satisfactory' classification without financial help. LSC will also support 21 qualifying colleges with a score only just within the 'satisfactory' financial health classification.

Geoff Russell, LSC chief executive and chief executive-designate of the Skills Funding Agency, said: "The action we have announced today will ensure that these colleges can move out of the ‘inadequate’ rating and can move forward on a more secure financial footing. Our commitment to support colleges to develop capital bids is set out in the LSC’s capital handbook and we have met these commitments.

"We also recognise that a number of colleges have experienced significant difficulties as a result of writing off these development costs. Ministers agreed to mitigate these difficulties and undertook a review of the costs incurred by colleges to identify such issues, as well as to assess the appropriateness of expenditures.

"The additional money we are now providing draws a line under the capital funding issue. However, we will as always continue to work with colleges that find themselves in financial difficulty to find solutions that optimise quality training and education."

Julian Gravatt, assistant chief executive of the Association of Colleges, warns the funding boost fails to go far enough to help colleges, which are still reeling from the recession.

"While we welcome any funding aimed at helping colleges affected by the Learning and Skills Council mismanagement of the capital building programme, £34 million is less than 20 per cent of the amount that colleges spent, with due diligence, on projects that were eventually shelved," says Ms Gravatt.

"Colleges have acted with typical innovation in response to this problem and have scaled projects down in order to deal with new economic circumstances. Some colleges will borrow more in order to support essential investment, but they cannot fill this gap on their own.

"A small amount of extra Government funding - separate from help for colleges with immediate financial problems - would lever new college investment and allow them to deal with urgent problems in their own estates while providing much-needed facilities."

Jason Rainbow

(Pictured: Geoff Russell, LSC chief executive and chief executive-designate of the Skills Funding Agency)