Minister slams ‘financial crisis’ college’s oversight of doomed First4Skills

A college facing “financial crisis”, which posted a 2015/16 group deficit of over £15 million, has come in for fierce ministerial criticism for poor oversight of doomed apprenticeship provider First4Skills.

The Liverpool-based company went bust earlier this month, affecting around 200 staff and around 6,500 learners, after the Skills Funding Agency pulled its contract.

That was prompted by a grade four rating from Ofsted, following an inspection carried out in February, on First4Skills which was 60 per cent owned by City of Liverpool College.

The college was recently revisited by the FE Commissioner’s team, and the findings’ warning of “financial crisis” and the £15,349 million deficit, have now been published – along with a letter reflecting on them from apprenticeships and skills minister Robert Halfon.

In this, he said:  “Of particular concern is the college’s oversight of its majority owned independent training provider – First4Skills, where achievement rates have been below national minimum standards, and Ofsted have judged the provision ‘Inadequate’.

“This has led to the SFA taking the decision to withdraw funding from First4Skills and to seek alternative providers to support the apprentices.”

Reflecting more widely on the college’s finances, he said: “The college was re-referred for FE Commissioner intervention because of failures of financial management.

“Last year the college’s budget outturn was £8 million worse than planned, and it required £2 million exceptional funding from the SFA to continue operations.

“I understand that you accept that this represented a failure of financial controls, and that new systems have been put in place, as well as new senior financial staff. The £2 million loan has also been repaid. This is encouraging, but the college’s finances remain vulnerable.”

The college, which has five main campuses – all located in the Liverpool City Council Local Authority area – had an initial FE Commissioner intervention in December 2013 following an inadequate Ofsted inspection and an SFA  assessment of 2012/13 financial health as ‘inadequate’.

It exited this in November 2014, following an improved Ofsted judgement (‘requires improvement’) in April 2014, and improved financial performance (‘satisfactory’) in 2013/14.

But it was referred back for another FE Commissioner intervention after the college informed the SFA last January that it needed £2 million exceptional financial support to cover working capital requirements, prompting a further notice of concern in February.

Stocktake assessments were carried out by the FE Commissioner and two advisers in November 2016 and February 2017.

The latest FE Commissioner report summary said of this: “During the November stocktake the team were concerned about some of the college board’s responses to the 2015/16 financial crisis.”

It pointed out: “The group’s annual audited accounts for 2015/16 show a total deficit for the year of £15,349 million. The college budgeted for a group breakeven position before taxation.”

Ofsted inspectors blasted leaders at First4Skills, in the recent damning Ofsted report, for failing to “tackle the significant weaknesses identified at the previous inspection”, with the result that “outcomes for learners and the quality of teaching, learning and assessment have declined further and are now inadequate”.

“Strategic priorities focus disproportionately on maximising the company’s income at the expense of providing high standards of education and training for learners,” it said.

Trainers’ targets “focus on recruiting more learners and increasing their caseload, and not on the aspects of training and assessment that they need to improve,” it continued.

City of Liverpool College decline to comment on the minister’s letter or FE Commissioner’s findings.