Bonuses for staff at blundering government agency hit £10m

Figures obtained by the Yorkshire Post reveal that in the year the Learning and Skills Council was forced to stop 79 redevelopment plans nationally because of a 2bn funding shortfall, it rewarded its own staff with payments of 4,868,463 for the organisation's overall performance.

The funding body, which has now been axed, paid staff a further 4,945,446 in bonuses in the final financial year before it was replaced. These payments included 334,768 to staff in Yorkshire. The largest individual bonus was 25,075 paid out last year.

The man who led a Parliamentary investigation into the fiasco has called the figures "the final insult" for staff and students affected by building projects that were hit.

Ten further education colleges in Yorkshire had schemes which had previously been given approval in principle stopped by the LSC when the agency realised it could not afford them all.

Barnsley College was one of the worst hit, as it had invested 10m in developing a new campus and had begun demolishing old buildings when the LSC revealed the extent of the funding crisis.

It eventually had its funding approved but eight schemes at colleges in Bradford, Beverley, Grimsby, Halifax, Rotherham, Scunthorpe and Wakefield were all shelved.

Former Yorkshire MP Phil Willis, who led an inquiry into the funding blunders for the Commons Innovation, Science and Skills Select Committee, hit out at the LSC for the bonus payments it made.

Mr Willis said: "I think this really is the final insult which adds to the injury that was caused.

"When you think that this was the worst management of a public procurement project that most people can ever remember, the bonuses are farcical.

"Tens of thousands of students will have returned to colleges with outdated accommodation this year while people in the organisation responsible have been rewarded in their bank balances. It sums up everything that was wrong with the LSC."

Mr Willis, the former Harrogate MP, helped produce a damning report into the funding mistakes last year which blamed "catastrophic mismanagement" of the project and called for colleges to be compensated for the money they had spent on preparing building work.

The Grimsby Institute of Further and Higher Education took the agency to the High Court earlier this year in an attempt to get back the 3.7m it had spent developing a new campus. The further education college argued that it was due compensation because the LSC failed to warn colleges that funding was running out and that they should scale back their plans.

The institute lost its legal battle two months ago, however, when a judge dismissed the challenge.

The Learning and Skills Council was responsible for funding further education until it was replaced earlier this year by the Skills Funding Agency, which now funds further education for adults, and the Young People's Learners Agency which pays for 16- to 19-year-olds.

A Freedom of Information request has revealed that from 2008 until it closed the LSC awarded staff bonus payments worth 9.8m. The 2bn shortfall for college rebuilding projects came to light in March last year.

A spokesman for the Skills Funding Agency said: "Bonus payments to staff were subject to organisational performance and are based on the achievement of public sector agreement targets set for us by Government. In March 2009 these targets were met or exceeded.

"We are very clear that bonus payments, even when targets have been met, are subject to affordability."

It has not been possible to identify how much money was given to staff working directly on the Capital Programme for Further Education. However, all members of the LSC's management group did waive 40 per cent of their bonus last year.