FEfocus Editorial - We must look for winners in capital lottery

3rd September 2010 at 01:00

When the Iran-Iraq war broke out, Henry Kissinger famously quipped: "It's a pity they can't both lose." In litigation, however, both sides losing is utterly routine, and in many cases inevitable. And when it comes to the dispute between Grimsby Institute of Further and Higher Education and the former Learning and Skills Council (LSC), it is a pity that they both could not win (page 2).

That is not out of any sympathy for the LSC's conduct, which was so staggeringly negligent in failing to keep a running total of the sums it had committed with its capital budget that it outdoes any satirist of the carefree spending in the Gordon Brown era.

If it had been hammered in court for these failings, no one would have shed a tear. Judge Langan, not called upon to examine the events leading up to the freezing of the capital programme, still felt moved to describe it as a "debacle". But it is a fact of judicial review cases, where someone is challenging a public authority, that it is not the authority which loses, but whoever is the beneficiary of its policies.

The case may have been splendidly listed as "The Queen on the application of Grimsby Institute of Further and Higher Education versus the Learning and Skills Council" - we always suspected Her Majesty took the collapse of the capital programme badly - but in reality, it was college versus college. For Grimsby to have won would mean another would not get the money for a rebuild.

It may yet appeal, and the question of who is right in law will have to be settled by more expert minds. But more interesting is the question of whether justice has been done. Or, to put it another way, given the situation we are in, where a capital programme to improve every college's buildings was disastrously mismanaged and ran out with more than 100 institutions still needing work, what is the best way of spending the last of the remaining cash?

Had Grimsby won, the LSC was clearly expecting a flood of similar claims, which would easily total pound;200 million. The dregs of the capital budget, held back by the LSC until this case is resolved, would be entirely used up to reimburse colleges.

There is not necessarily anything wrong with that. Grimsby may or may not have a case in law that it was unreasonable not to cover its costs in developing a plan that the LSC should have known it could never fund. It seems reasonable that it at least has a moral case, however: it has lost substantial sums, which could have benefited its students, through a disaster which it could not have foreseen, but which others should have.

But last year when the Treasury made extra funds available, it did so on condition that it was spent on buildings, not compensation. If it was to spend more cash, it wanted to see something tangible for it, as well as slowing the tide of stories of prefab classrooms and leaky roofs. This is a political calculation, but it is a common sense one, too.

The process by which 13 colleges got buildings approved last year may have felt like a lottery. But that description will be particularly apt if new projects are approved with the remaining pound;200 million, in that a million here and there from a large number will effectively be pooled to create a handful of big winners.

But there are worse things than lotteries, and unless the college equivalent of Lotto lout Mikey Carroll is found - and it is not easy to imagine any principals blowing the money on racing BMWs around the campus - the new buildings will serve their purpose long after the money lost by each college is forgotten.

The hardship felt by uncompensated colleges should not be underestimated: for a lottery, the stakes are unusually high. And while there is never a good time to lose millions of pounds, just before a recession and a spending squeeze is a particularly unfortunate one. But in this instance, it is probably more important for someone to win than for no one to lose.

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