Michael Gove today cancelled Labour's school building programme, suspending projects for 715 new schools as part of the coalition's latest tranche of spending cuts, which also saw funding culled for new housing projects, school swimming pools and eco-towns.
The coalition has acknowledged for the first time that it is to target Sure Start in its austerity measures, primarily by finding underspends and reducing inefficiencies. But the Department for Education warned it would cut core funding for future Sure Start building projects as a "last resort".
The coalition government took its axe to a further £1.5bn in spending commitments, cutting £1bn from the schools budget and millions from the business department, communities and local government and the Home Office.
The announcement coincided with the education secretary's confirmation that the £55bn, 20-year Building Schools for the Future programme would be cancelled altogether. Some 706 new school buildings and services that already have contracts signed will go ahead, but 715 more will be scrapped.
Gove told the Commons that the scheme had been hit by "massive overspends, tragic delays, botched construction projects and needless bureaucracy".
He said: "There are some councils which entered the process six years ago which have only just started building new schools. Another project starting this year is three years behind schedule.
"By contrast, Hong Kong international airport, which was built on a barren rock in the South China Sea and can process 50 million passenger movements every year, took just six years to build — from start to finish."
Ed Balls, the shadow schools secretary, said: "Today is a black day for our country's schools, it is a damning indictment of this new Tory/Liberal coalition's priorities and a shameful statement from this new secretary of state."
The chief secretary to the Treasury, Danny Alexander, said he had identified £1.54bn in spending commitments made in the dying days of the Labour government that were not properly funded. They either relied on underspending in other areas across government or drawing on the reserve; money which was not ultimately available and would require further borrowing to fund. The departments involved have been told to reduce their spending accordingly this year.
The Department for Business, Innovations and Skills has been ordered to find an additional £265m in savings. A spokesman said that these had already been identified and included the loans to the Sheffield Forgemasters steel works and the automotive industry that had already been announced. The Communities and Local Government Department said that £220m previously announced for new housing will now not go ahead, but did not give details of where those cuts would fall. The Home Office will also have to find £55m.
The Department for Education said it was axing £169m worth of identified capital projects, adding that the remaining £831m would be saved by better financial controls on existing school building projects, including clawing back underspends and not allocating a £110m contingency fund. Specific projects that will be scrapped include: £24m worth of funding for co-locating services including health and social services on schools sites; £15m set aside for new swimming pools; a £2.5m schools contribution to the eco-towns initiative; £50m from a "Harnessing Technology Grant" to improve school IT; £50m from an improved IT system for social work; and £13m for the Youth Capital Fund to pay for activities for teenagers.
The Department for Education gave no figure on cuts to the Sure Start budget, but a briefing document said: "In the context of tackling the unprecedented deficit, we will need to manage down the capital expenditure from the Sure Start, Early Years and Childcare Grant (SSEYCG). We will do that by identifying savings and projected underspends in discussion with local authorities. Making cuts over and above those identified as savings and underspends will be a last resort."
Gove assured MPs in the Commons as recently as 7 June that no funding for Sure Start would be cut and that the programme would continue to expand.
A Whitehall source said the whole process of deciding how much of the Building Schools for the Future programme would be scrapped had been "bloody chaos", and that the weeks of uncertainty had cost schools, local authorities and the construction industry time and money in preparing for schemes which have now been scrapped.
"If they had decided earlier it would have saved a fortune," the source said.
Alexander said: "The reality is that these unfunded spending promises should never have been made, because the money was never there to pay for them. We did not make this mess, but we are cleaning it up."
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