Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the number of college capital projects delayed as a result of her direction for FE colleges to suspend any capital projects which were likely to rely upon private sector borrowing arrangements.

Following the decision by the Office for National Statistics to reclassify colleges to the public sector, the department is supporting colleges to meet the requirements of managing public money while retaining many of their key areas of autonomy and flexibility. Public sector organisations may only borrow from private sector sources if the transaction delivers value for money for taxpayers.

A consents process has been put in place for any new commercial borrowing and the department aims to respond to requests from colleges as quickly as possible. Through this process, as of week commencing 9 January, the department has received 63 consent requests, of which 36 have capital projects as part of the request, from 24 colleges. We estimate up to 28 of consent requests relate to projects that are currently underway at 20 colleges.

The department is working through the consent requests and will seek to mitigate the risk of delays to capital projects as far as possible.

To take into consideration the new restrictions on commercial borrowing, the department will be providing an additional £150 million of capital funding that will be available to further education colleges, sixth form colleges and designated institutions in April 2023. In late 2022, the department published the allocations to ensure colleges have certainty about how much they will receive so that they can factor this into their plans.

To help colleges manage their cashflow, the department is addressing the historical issue of uneven monthly payments from central government for 16-to-19 funding and the adult education budget. The department is investing £300 million before the end of the current financial year by bringing forward payments. The new funding profile will better match colleges’ needs, recognising the challenging environment the sector faces.