Local regeneration falls victim to building freeze

3rd April 2009 at 01:00
The fallout from the stalled college expansion and refurbishment programme will have a big impact on communities. Thousands of jobs around the country are at risk because of the capital funding crisis, Joseph Lee reports

All eyes have been on the Pounds 5.7 billion needed to meet the demand for new buildings in further education. However, colleges are increasingly highlighting the costs of doing nothing. These include lost jobs, training places that will never materialise and regeneration projects that will be left on the drawing board.

Just as in the past, colleges compiled reports about the economic and social impact they make, which in some cases found that every pound spent on FE brings seven pounds of benefits to the local community. They are now counting the cost of not investing in new buildings.

West Nottinghamshire College in Mansfield has calculated that over 20 years its local community, one of the most deprived areas in the country, would miss out on nearly Pounds 1.3 billion of benefits if its planned development did not proceed. The college building project would prompt the release of funds to develop a technology park nearby, potentially creating more than 600 jobs, not to mention construction work and apprenticeships.

That is a picture repeated across the country, as local authorities have sought to integrate college buildings into their regeneration plans, recognising that a revitalised centre of education and skills training could be just what most impoverished areas need.

Blackpool and the Fylde College's new Pounds 176 million campus, which is waiting for approval by the Learning and Skills Council, was intended as the centrepiece for the resort's town centre regeneration.

Pauline Waterhouse, the principal, said: "It means demolishing and replacing old guesthouses that are no longer part of the tourist economy. They are houses of multiple occupation, with significant social problems.

"Over the next four years, Blackpool is expected to become the fourth most deprived part of the country unless something is done."

In Birmingham, the Longbridge site of the former MG Rover factory - much of it derelict since its closure in 2005 - is waiting for Bournville College's new Pounds 84 million campus to kick-start its redevelopment.

And in the South, North Devon College's Pounds 125 million campus redevelopment in Barnstaple forms part of one of the largest investments the town has seen.

Each of these projects is worth hundreds of jobs to its local community, in addition to the teaching jobs and the planned expansion of student numbers.

These wider benefits to communities have raised the question of whether local authorities could help fund the construction work, with at least one college - Abingdon and Witney College in west Oxfordshire - receiving an offer of help.

A Local Government Association spokeswoman said councils were being encouraged to use their reserves in imaginative ways to help combat the recession: Essex County Council has become a source of loans for local business, she said, so helping colleges would not be too great a step.

However, several principals say their capital funding requirements outstrip their local authority's available cash, and some councils have seen their reserves plummet after investments in Icelandic banks.

Mark Dawe, principal of Oaklands College in Hertfordshire, instead called for the Government to recognise that further investment in colleges would be good value, not least because a large portion of the cost would come back to the Treasury in taxes.

"Colleges have to pay VAT on construction," he said. "There's income tax and national insurance for the workers, and corporation tax for the contractors. I'd guess that the Treasury gets back 40 per cent of the project in tax revenue."

Others say flagship government policies depend on the expansion of colleges.

In Norfolk, City College Norwich educates one in three of the county's teenagers and said it simply does not have enough student places.

Norfolk has one of the lowest rates of post-16 participation in education, but Dick Palmer, the college's principal, questioned whether it would be possible to raise the age of compulsory participation in education and training if colleges like his were not given funding to expand.

In one of several meetings that Sion Simon, the further education minister, held with worried principals on Monday, Mr Palmer handed over a 700-name petition to show the strength of local feeling.

It has been suggested that colleges might be able to increase their borrowings if financial rules were changed. However, some principals were doubtful this would make much difference. "We can't take on more debt," Mr Dawe at Oaklands said. "We can't afford the interest."

In the National Audit Office's progress report on the capital programme last summer, it warned that rising debts had contributed to the number of financially weak colleges increasing to 89 by 2007, while 40 colleges had borrowed more than 40 per cent of their annual income.

The report's verdict was generally positive, but it foresaw the failings of the capital programme. With no prioritisation of projects, the Learning and Skills Council failed to give precedence to colleges with the greatest need in its early stages.

It concluded: "The cost of renewing the remaining colleges is becoming more expensive, putting the affordability of the programme at risk within the limits of the LSC's capital budgets.

"The council will need to consider how best to prioritise funding or encourage colleges to use procurement strategies that require less upfront public funding."

Its warning went unheard.

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