The Committee said the Council has "behaved recklessly" by approving too many projects and allowing colleges' expectations of financial support to outstrip what it could afford by nearly £2.7 billion.
Edward Leigh MP, Chairman of the Committee of Public Accounts, said: "The programme had looked promising in its earlier stages. It had stimulated capital investment in the further education estate, much of which was in poor condition, and completed schemes generally provided good value for money. However, by early 2008, the Council was no longer controlling the flow of projects which were becoming unaffordable. The Department's oversight of the Council was remiss for it failed to recognize that this was going on.
"The future of the programme is now beset with considerable uncertainty which must be dispelled as soon as possible. Some colleges are heavily committed to projects on which they have incurred costs. Some straight talking is needed from the Council so that colleges in this position are aware of the difficult decisions they will have to take.
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"There remains a risk that some colleges are taking on more debt than they can reasonably service. The Council must keep under close review the financial health of the further education sector, especially in the current economic downturn."
Mr Leigh was speaking as the Committee published its 48th Report of this Session which, on the basis of evidence from the Department for Innovation, Universities and Skills and the Learning and Skills Council, examined progress on the programme of renewal of the physical infrastructure of further education colleges in England.
In 2001, the newly established Learning and Skills Council (the Council) took over a programme of capital works in the further education sector. The programme was needed to renew an estate that was too large, with much of it in poor condition and no longer fit for modern educational purposes. By March 2008, a total of £4.2 billion of projects had been approved 'in detail', including grant support from the Council of £1.7 billion, and about half of the estate had been renewed.
Since April 2008, there has been a very serious failure in the management of the programme, with the Learning and Skills Council failing to introduce measures to prioritise projects and control the total cost of the programme. It approved 'in principle' 79 colleges' projects, which required nearly £2.7 billion of Council funding more than it could afford. Following an independent review, the Department for Innovation, Universities and Skills (the Department) and the Council have applied needs-based criteria to inform decisions on taking the programme forward.
(CD/JM)
