§ Mr. Drew
To ask the Secretary of State for Education and Skills if she will make a statement on the reasons for the delays in notifying colleges of their funding allocations for 2002–03; and what instructions she has given the Learning and Skills Council to ensure that colleges, have adequate time to fulfil its requirement that corporations must approve a budget before the beginning of its funding year on 1 August. 
§ Margaret Hodge
[holding answer 10 July 2002]: It is hard to compare progress on final allocations in 2002–03 with earlier years since the process is now different. In the past, the allocation of funding to colleges did not take into account colleges' previous performance. The old system of funding led to some colleges bidding and receiving funding for unachievable growth targets, retaining funds which their performance did not justify (last year estimated at over £150 millions) which could more usefully have been allocated elsewhere, and ultimately having to pay the money back.
This year, as part of our drive to improve standards, performance and efficiency, and target funding where it can have the most impact, the Learning and Skills Council 646W (LSC) has used its budgetary discretion so that money is allocated more effectively. It has introduced new arrangements which will stimulate growth, particularly for 16–18 year olds and basic skills, by putting in place a more robust allocations process and challenging those providers who have consistently been unable to achieve their projected performance levels in the past. This process has led to detailed and at times protracted negotiations with some providers. However it has ensured that we no longer have millions of pounds sitting in college bank accounts not working effectively towards our priorities.
Despite this change which might have been expected to cause delays, by 5 July the LSC had made 313 (48 per cent) final allocations to colleges. This is well ahead of last year when only 16 per cent of institutions had received final allocations by the first week in July. We recognise however that there is still considerable scope for improvement and the LSC is looking at ways of doing better in the future so that final allocations can be made even earlier.