college finance conference, 3 june 2014 workshop on capital funding and projects where we’ve come...
TRANSCRIPT
College Finance Conference, 3 June 2014
Workshop on Capital funding and projects
Where we’ve come from
Where we’re going to
Some tips
Julian Gravatt, Assistant Chief Executive, AoC
College capital projects
Some permanent characteristics
A College success over the last 20 years
College ownership and direction of projects
Mixed funding model (unlike schools)
Grant + Cash + Asset sales + Loans
New buildings customised for each College
Lots of extensions and second buildings
Capital expenditure also used for IT and equipment
Building Colleges for the Future
Government funded comprehensive College re-development
Colleges used to bid for funds from LSC
One by one bid assessment
Three tests: education, property, value for money
% grant calculated on basis of assessment of College finances
In 2009, LSC unable to fund projects it had approved
Now a matter of history but some colleges still not recovered
A number of colleges have good buildings in place
Capital funding up to 2009
Capital funding 2010 to 2015
Short-term funding
Coalition allocated money for Colleges in May 2010 budget
An extra £750 mil allocated to FE Colleges 2010 to 2015
Sixth form college funding handled separately by EFA
Lots of funds (ERG 1,2 and 3, CCIF, SICF, CCF etc)
Funding assumption has been 33% grants
Additional funding based on financial health assessment
Bids assessed in groups using a scoring system
Research on college capital projects carried out in 2012
College capital investment strategy (November 2012)
Positive impact of capital investment:
More student numbers Higher performance & satisfaction Increased employer engagement Income generation Economic regeneration
2013-15 priorities
Benefits to learners/economic growth Building condition Value for money
Some dates
Capital reference group
College involvement in the details
Advisory Group of Principals, FDs, SFA, BIS and EFA
Group set up in 2009 at request of then Secretary of State
AoC provides the secretariat. Minutes on AoC website
Advice to officials on practicalities
Final decisions on policy & bids made by Minister & SFA CEO
Some things are non-negotiable, for example-Annual budgets & spending-Use of bids-Requirement to fit policy priorities
Outcomes
Lots of lessons in last 12 months
Bidding didn’t work well initially, resulting in a bottleneck.
Two stage process (EOI, approval). Max grant £10 mil.
Projects have to be ready by September 2015.
95 projects awarded £433 mil in 2013-15 via CCIF.
SFA funding supports £821 mil in spending (ie average 53%).
There was an underspend in 2013-14 .
SFA allocated £114 mil in 2013-14 , £319 mil in 2014-15.
SFA spent £5 mil via SICF fund on equipment. 16 projects.
SFA introduced College Condition Fund (CCF) in December.
£48 mil to 114 colleges with worse buildings.
Outcomes
Those lessons
It pays to write a good bid.
It pays to be quick and to have a project on the shelf.
Bids always need to have something new.
Possibly a mismatch between different objectives.
Largest % grants go to those with weakest finances
Lead times cannot be compressed easily.
Bidding systems + annual budgets = underspends.
Austerity means responsibility sits with governing bodies.
Colleges need to work out their own priorities.
Some dates
The Good News
£330 mil allocated for FE/Skills Capital in 2015-16
Vince Cable promised a second year (2016-17) in November
The Not-so-good news
A completely new system for spending the money
Eligibility widened from colleges to “skills”
11 months on, not a lot of information about the process
Risk that budget could be pulled following election
Single Local Growth Fund
£330 mil 2015-16 for Skills Capital
39 LEPs
Different sizes and structures
LEP Economic Plans (March 2014) LEP Growth Deals (Summer 2014)
Cabinet office, BIS and CLG
Local enterprise partnerships
LEP process unclear
What will SFA role be in future Capital Projects?
Who will advise LEPs on capital/estate issues?
How will bids be assessed?
How will match funding requirements be handled?
Will LEPs divert money to other things?
How will colleges address serious maintenance issues?
How will need for 16-19 capital projects be addressed?
Unanswered questions
DFE capital funding
A game of two halves
New Coalition government cancelled the BSF programme
DFE’s capital budget cut by 50% in 2010 spending review
Priority was given to new free schools
Schools places crisis became pressing. Money found in 2012
DFE now works with Councils to plan places
Major school capital budget (£3bil/year from 2015 to 2020)
Current priority is new primary / secondary places.
Argument over free schools –vs-basic need in May 2014
Money can be used for new 16-19 schools, UTCs etc
£60 mil/year for Sixth form colleges. £30 mil for growth
Capital funding
2010 to 2015 2015 to 2020
DFE Schools Capital budget cut by 50% in 2010£5,000 bil in total for new placesSome money routed via councils£1,500 mil for new free schools
£21,000 mil budget for 6 years
£2,000 mil for new school places£2,000 mil for school rebuilding
DFE 16-18 c£65 mil/year SFC buildings£30 mil/year 16-18 growthSome new 16-19 free schools
Nothing yet earmarked
SFA £600 mil spent on pre-2010 projects£750 mil via ERG, CCIF, CCF etc
May yet have a role
BIS (outside SFA) £1,000+ mil for Research
Student loans capitalised
£330 mil/year for 2 years via LEPs£80 mil in 2015-16 for national projects
Capital projects
Colleges need to make their own decisions on projects
Investment can increase income, rationalise space, reduce costs & meet employer needs. Why else do a project?
Government has been a good funder in the past but is now unreliable and runs one-year budgets
LEPs now hold the ring and may be allies in making projects happen
Worth having bid-ready projects and a property strategy