Lucky 13 win Pounds 500m but must still trim rebuilding expenses

3rd July 2009 at 01:00
Approved projects outstrip fund but LSC confident colleges will make cuts to start work this autumn

The "lucky 13" colleges to have their bids for capital funding approved by the Learning and Skills Council will have to cut their costs before they can proceed.

The funding body has Pounds 500 million available for the building plans but the projects it has approved to start work in September would outstrip its budget, it said. So they will be expected to look again at the cost of contractors, their borrowing and other sources of funds in order to cut the requirement for LSC cash.

David Hughes, national projects director at the council, said: "We are trying to reduce the costs of the 13 as far as possible. It might be that we can free up some more money."

He admitted there was a "theoretical" risk that all 13 projects might not be able to go ahead, but said the council was confident colleges could achieve the savings.

The LSC said it had considered 180 proposals from colleges all over the country for the additional cash, which was made available after its Pounds 2.3 billion fund ran out earlier than expected last December. Mr Hughes refused to say how large the necessary savings are, arguing that colleges would just try to meet the target rather than reducing costs by the maximum amount possible. The LSC said the shortfall was "significant but manageable".

The colleges selected to proceed with their building plans were relieved, but also concerned about whether they could further reduce the costs, which they had already cut during the bidding.

Norman Cave, principal of Bournville College, said he had cut the cost of his rebuild on part of the former Rover MG factory in south Birmingham from Pounds 84m to Pounds 73m during tendering and by reducing some materials costs.

He said: "We are absolutely relieved as a college. There was a great deal of expectation and I'm happy that has been met. But we need to meet with the LSC to go through what efficiency savings can be made. I don't know what more opportunity there is to bring down costs."

Disappointed colleges will have to wait until April 2011 for any new announcements, when Pounds 200m is expected to be made available, plus any more capital agreed in the next comprehensive spending review.

The decision has left those waiting to rebuild or refurbish college buildings questioning the fairness of the process, although the LSC says it consulted widely and produced "transparent and objective" criteria for assessment.

The Conservatives have complained that all the approved projects are in Labour constituencies, although only 60 per cent of all the bids by colleges are in these areas.

Steve Billcliffe, assistant principal at Abingdon and Witney College, in the Tory leader David Cameron's Oxfordshire constituency, said he felt urban and rural colleges had been treated differently.

As selection progressed, more emphasis was placed on the potential impact of new buildings on areas of deprivation, giving urban colleges an advantage, he said.

"Our project has just as severe a timeline as any other," he said. "We have demolished buildings, we have temporary accommodation costing us Pounds 40,000 a week and we've incurred Pounds 3m of additional costs. We have 57 temporary classrooms, stacked three high."

The college is now working on its "plan B", saying it cannot wait until 2011 for capital funding approval. Among the options to fund its Pounds 30m rebuild is a loan from West Oxfordshire District Council and a private finance initiative proposal from Barclays Bank.

Editorial, page 6

The winning bids

Barnsley College

Bournville College

Furness College

Hartlepool College of FE

Kirklees College

Leyton Sixth Form College

The Manchester College, Wythenshawe

North West Kent College

St Helens College

Sandwell College

South Thames College

Tresham Institute, Corby

West Cheshire College.

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