I am today announcing the opening of a new capital loans scheme. The scheme will provide loans to colleges in England with capital projects, either underway or in advanced stages of planning, that have a funding gap because of restrictions on commercial borrowing following the Office for National Statistics decision to classify colleges as part of central Government. The college capital loans scheme is in addition to the package of measures we announced at the point of reclassification, including an additional £150 million allocation of capital grant funding to be provided in April 2023, an additional £53 million focused on delivering small-scale energy efficiency improvements across the college estate provided in December 2022, and investing £300 million in reprofiling of payments before the end of the current financial year.
The Department for Education is making great progress in transforming the further education estate. In the current spending review period, we are investing £2.8 billion in England’s college estate to build a world-class skills system that delivers the skills that the economy needs. This investment is improving the condition of the estate; providing new places in post-16 education; supporting the purchase of specialist equipment and facilities needed for T-Levels; and delivering the commitment to establish 20 institutes of technology across England. Most recently, we confirmed the £286 million FE capital transformation fund allocation. This will allow eligible colleges to prioritise and deliver projects to improve the condition of their estate.
I remain fully committed to the successful delivery and completion of all college capital projects benefiting from grant funding from my Department. All colleges delivering DFE grant-funded capital projects with evidence of intent to borrow commercially prior to reclassification will be eligible to apply for this new scheme. The scheme will also provide a route for meeting funding gaps faced by other capital projects being delivered by colleges themselves, including those funded by other Government Departments, subject to meeting the eligibility and assessment criteria set out in guidance published today.
We aim to offer loans to eligible DFE grant-funded capital projects by the summer, and self-funded capital projects by the autumn.
The new college capital loans scheme will ensure that our skills reforms stay on track, providing a ladder of opportunity that enables young people and adults to get good jobs and progress in their careers and build the skilled workforce that businesses need.
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