Treasury sets aside £560m for college restructures

Treasury sets aside £560m for college restructures

> Plans leaked to FE Week reveal ‘facility’ at Treasury until April 2019
> AoC welcomes ‘necessary’ support for area review transitional costs

The Government is planning a fund worth more than £500m to help colleges put in place any area review recommendations, FE Week can reveal.

But colleges will still be expected to shoulder at least part of the bill for any changes themselves.

Information on the fund, described as a “restructuring facility”, was included in draft guidance to the Area Review Advisory Group on 27 January and seen by FE Week.

In a section headed “Current thinking on the restructuring facility” the paper reads: “There will be a restructuring facility available to support, where necessary, the implementation of the recommendations of area reviews by further education and sixth form colleges.”

It goes on: “The objectives of the facility and the criteria and processes for considering applications for access to the facility remain to be finalised and approved by ministers.”

The document does not give a size for this facility, but FE Week understands it to be £560m.

Unusually, the college fund will be administered by the Treasury.

When asked why this was the case, a spokesperson for the Treasury said it was due to “uncertainty over which institutions may need access to the facility and the timing of this funding”.

Martin Doel, chief executive of the Association of Colleges, welcomed news of the fund.

“Area review restructuring funding is necessary to underwrite transitional costs and with early reviews now approaching the final stages, there is a need for the Government to publish details of how a restructuring fund facility might operate,” he told FE Week.

According to the draft guidance, one expected objective of the fund is “that the cost to government of implementing any given change is minimised”.

As a result, colleges, supported by local authorities and local enterprise partnerships, will be expected to foot the bill themselves “wherever possible”.

“Where access to the restructuring facility is required, there will be a strong presumption that any funding will be by way of loan,” it continues.

A “transaction unit” of experts across both the Skills Funding Agency and the Education Funding Agency will consider applications.

“Any approvals will be made by ministers as part of a governance process which will include external as well as internal consideration,” it continues.

The Treasury will also have to approve applications.

A spokesperson for the Treasury confirmed that the fund would be available from April this year until April 2019, but declined to comment on the size of the pot.

Any loans provided would be on “commercial terms” and would cover just “a proportion of the total costs identified”, the spokesperson said.

The first wave of the government’s area reviews of post-16 education and training were announced in September, with each review expected to last three to four months.

However, as reported by FE Week in January, the process has been running behind schedule.

Further details of the fund will be published later this month, the Treasury spokesperson said.

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Editorial : Area reviews won’t be cheap

Setting aside £560m until April 2019 for restructuring and mergers is a bold move at a time when many will question whether it could be better spent on frontline provision.

Slashed budgets for non-apprenticeship courses have caused huge distress and anger, which came to a head recently with protests over English for Speakers of Other Languages cuts.

And the announcement coming in the same month as disappointment over 16-18 growth requests won’t go unnoticed.

But the long game here is to stabilise colleges’ financial footing which for many is looking ropey at best — as this edition’s investigation into the dramatic increase in financial notices of concern has exposed.

And the Treasury is right to keep a close hold on the purse strings, making sure the money is spent as intended.

However, mergers and restructures can prove expensive and reap few immediate rewards.

So the Government may not get its ‘loan’ back, but if it serves to incentivise the college leadership team to implement difficult but necessary decisions then so be it.

Nick Linford