Ministers inaction on reclassification sees college capital projects thrown into jeopardy

Shadow Skills Minister Toby Perkins highlights government inaction over the decision of the ONS to reclassify colleges as public bodies which has led to capital investment projects being thrown into jeopardy

The government’s response to the ONS decision on the reclassification of colleges – and government’s failure to work with the sector – has led to college building programmes being pulled at the last minute.

Further Education colleges have been left in limbo after the government’s response to the decision by the Office for National Statistics (ONS) to reclassify colleges as ‘public bodies’.

The ONS decision had been widely expected –  there had been a major review throughout 2022 – and in itself, it provides huge opportunities.

Despite the change in official status, colleges continue to be self-governing corporations with charitable status and with responsibility for their educational character, their own courses, contracts, and relationships with staff and students, but in future borrowing will appear on the national balance sheet and government is able to borrow at cheaper prices than colleges individually would be able to do commercially.

Most major towns and cities have a Further Education college and a coordinated approach to addressing Britain’s endemic skills shortages would be welcome, but typically this Tory government have responded by announcing that any Colleges working on capital projects that would have involved borrowing from the private sector have been suspended, and have not identified any alternative approach to financing capital projects via government borrowing.

Government have had months to prepare for the ONS decision

As government have had months to prepare for the ONS decision, it would have been reasonable to expect that they would have identified an alternative source of internal borrowing to replace commercial arrangements or allowed projects which had reached the final stages to go ahead, but this government have done neither.

Capital building projects have been ‘paused’

Now capital building projects been ‘paused’ for an indefinite length of time whilst Ministers figure out a plan going forward.      

FE colleges such as Kendal College have had college building projects pulled at the last minute. Kendal College had an ambitious plan to redevelop the local disused Westmorland Shopping Centre into a state-of-the-art new town centre campus. The campus would establish a new lecture theatre, science labs, IT and media spaces, to accommodate significant growth in student numbers.

Other college principals have told me off-the-record about their building programmes which are also at risk without urgent government intervention.

As reported earlier in FE News, I’ve written to the Education Secretary urging her to urgently investigate the situation with Kendal College, and others which are close to completing on building projects. I have also asked her to reveal how many colleges will be affected by her decision, and what her strategy will be for resolving this issue.   

Unreasonable mid-year changes are unacceptable

As the Association of Colleges (AoC) have pointed out to the Department for Education, it is unreasonable for mid-year changes of this scale to be enacted without consultation with the sector.

They have added that such actions destabilise the finances of colleges because they create uncertainty about capital projects and will delay completion of 2021-2 accounts

Although it is difficult to estimate the numbers affected, there is a small group of colleges which need to renew overdrafts, a much bigger group which have loans in place which will expire over the next couple of years and a third group, overlapping with the first two groups, expected to borrow money to support DFE approved capital projects.

The current approach would make the FE sector wholly dependent on capital grants from the government, which as Britain plunges towards Austerity 2.0 is only like to mean a further deterioration of the FE College estate.

Colleges need the tools to grow and take on more learners

At a time of skills shortages, it is vital that colleges have the tools that they need to grow and take on more learners. A Labour government would seek to work with our colleges and wider skills sector to enable them to succeed. 

This failure to plan for an outcome that was predicated and predictable and then to respond by blocking investment is so typical of the approach of the Tory government and is why a new approach under a Labour government, can’t come a moment too soon.