Colleges to ask for cheap loans to restart building

20th March 2009 at 00:00
Principals to discuss local authorities lending money as a way to complete suspended projects

Colleges will consider asking local authorities for loans to complete their stalled building projects at a special summit on Monday.

Principals from all 144 colleges whose building plans are affected by the funding logjam have been invited to the meeting by the Association of Colleges to search for a solution to the crisis.

Among the ideas to be discussed is the possibility of councils lending colleges money to complete their campuses at preferential interest rates, possibly as low as 1 per cent.

The Learning and Skills Council brought its capital programme to a sudden halt in December after it became clear that the Pounds 5.7 billion value of pending projects far outstripped its Pounds 2.3bn budget.

David Collins, the AoC president and principal of South Cheshire College, said: "Local authorities get a low loan rate and colleges are important in their communities."

Abingdon and Witney College has already received an offer of support from West Oxfordshire District Council to complete its Pounds 30m rebuilding, which is seen as crucial to regeneration plans. "Their support has been quite outstanding," said Teresa Kelly, the principal.

Dr Collins said the colleges also hope that more funding would be made available from the Government to ensure the building programme could be completed, and they would be examining whether some projects could be scaled back.

He said the crisis was a public relations disaster for the Government, which had invested more in FE capital than ever before, but was suffering political fallout from the mismanagement of the funding.

An LSC report on the impact of capital investment in colleges may help their case. It notes that the building programme up to December had created 10,000 jobs and that each Pounds 1m spent had led to an extra 111 students. A typical Pounds 10m project tended to increase success rates by 1 per cent, encouraging more students to stay on.

The Conservatives have gone on the offensive over the delayed projects. David Willetts, the shadow skills secretary, branded the LSC report "a sick joke" while so many colleges were left in limbo.

"While ministers boast about the impact new buildings can have on further education, colleges all over the country have had their building projects suspended. It is dishonest for ministers to claim the building industry is benefiting on the basis of a report that was completed before the capital freeze began," he said.

In the Commons, David Cameron told the Prime Minister: "MPs on every side will contrast what you said with the fact that 144 FE colleges - the exact organisations we need to retrain people who are unemployed - are having their building projects halted. There is this enormous gulf between what you say every week and what your Government is actually doing."

Sion Simon, the FE minister, described the Tory leader's attack as "cynical nonsense", adding that when Labour took power in 1997, FE had no capital budget at all.

Editorial, page 6.

Letters, page 7.

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