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Every penny for building spent

Colleges look for other cash sources as pound;6bn of projects put on hold

Not one penny of the pound;2.3 billion of capital funding for college buildings remains, while the bill for unfunded projects on the drawing board stands at pound;5.7bn.

A full scale of the funding crisis became apparent on Monday, as Stephen Marston, director-general of FE at the Department for Innovation, Universities and Skills (Dius), met college principals and confirmed the money had run out a year early. It was the first time the department had admitted nothing remained of its capital budget for FE, and reveals a huge leap in the cost of renewing all of England's college campuses, which was originally expected to be pound;5bn and has now reached pound;8bn.

Colleges, which have sunk a total of pound;220m into design and planning costs in the expectation of having them reimbursed by the Learning and Skills Council as their bids progressed, will now have to rely on funding being found elsewhere.

Mr Marston told the principals: "The budget in this comprehensive spending review period is spent on projects that have been approved so far. The question is: can we find some more money?"

The last eight projects to win approval, earlier this month, had to have their timelines extended over five years so that part of their pound;300m cost to taxpayers could be found in the next spending review.

At the principals' summit to address the crisis, a number of ways of meeting the capital costs were examined, including loans from local authorities and changing the rules to allow colleges to borrow the full costs of construction, if viable.

However, with 80 per cent of the cost of pending bids reliant on funding from government, colleges accept it is unlikely that many would be able to proceed.

David Collins, president of the Association of Colleges and principal of South Cheshire College, said: "The important thing is that in the budget in April, the value of having ready-to-go projects that have been through planning permission is recognised. It's good for stimulating the construction industry, for the economy and for training.

"The emphasis is on whatever additional money can be found from the Treasury.

"The message we are getting is that there are large numbers of MPs who are concerned for their colleges and they are making representations to the Treasury as loudly as they are to John Denham."

But colleges face an uphill battle, with increasing pressure on the Government to rein in spending. A Dius spokeswoman said that the department believed that the Skills Secretary had fully explained the state of capital funding in his statement to Parliament on March 4, as far it was known at the time.

LSC Chief resigns

Mark Haysom, the chief executive of the Learning and Skills Council, has resigned over the failure to manage the Building Colleges for the Future programme properly.

He walked away with pound;100,000 in lieu of notice after five and a half years as head of the council. He is succeeded by Geoff Russell, who recently retired from KPMG, where he advised the Government on financial management.

After the statement to Parliament earlier this month by John Denham, the Skills Secretary, Mr Haysom ruled out resignation, but with the crisis now a political battlefield, he said he would pre-empt the verdict of Sir Andrew Foster's report into the failings.

He said: "I don't need to wait for that report to be published before making my decision because it will, I'm sure, confirm what I now know - that there have been failures in the way the LSC has managed the programme."

The investment to transform college buildings had been his proudest achievement, Mr Haysom said, and his resignation was a matter of "huge regret".

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