College schemes planned to cost double £300m fund

The 13 college schemes given provisional approval by the Learning and Skills Council in the past week had been estimated to cost twice the £300m of funding available, raising fears of cuts to the projects.

The LSC announced last Friday that it had selected 13 schemes to receive funding out of the 180 that had applied up to the point that it put the beleaguered programme on hold in March.

The body said the schemes would need to make “significant but manageable cuts” so the £300m budget could be shared around. However, a senior source said these schemes were originally priced to cost about £600m, meaning that swingeing cuts will be necessary in order for all 13 to go ahead.

Stephen Ratcliffe, chief executive of UK Contractors Group, said: “We’re still worried that there’s not going to be enough money in the pot for all 13. We feel the money is being spread quite thinly.”

The LSC has told colleges to scale back projects, maximise borrowing and consider other funding sources to increase their chances of getting schemes signed off.

It is also understood that the LSC is pressurising them to reduce contractors and consultants’ costs further, even after some drove down costs by as much as 20% earlier this year.

The LSC will begin a consultation in the autumn on how to prioritise the remainder of the schemes, which will now have to wait until at least 2011/12 to secure funding. The National Construction College, planned for Norfolk, is one of those that has been left in limbo.

Some colleges, including Birmingham Metropolitan, are seeking private funding to continue with their plans. It is understood that the government is encouraging those colleges that have missed out to club together to attract private finance.

The £5bn college building scheme was halted in March after it emerged the body had blown its budget by more than 150%.