Over £1m of public money paid in grants for failed mergers

Over £1m of public money paid in grants for failed mergers

More than a million pounds of public money has been spent on mergers that subsequently collapsed, FE Week analysis has revealed.

Details of the area review transition grants awarded to general FE and sixth form colleges to date were finally published by the Department for Education today, after FE Week repeatedly pushed for the information over the last 10 months.

Analysis of the payments showed that of the £5.6 million awarded so far, almost £1.04 million was specifically meant to support 11 mergers that since failed or significantly changed.

A total of 84 grants have been made to 50 FE colleges, 33 sixth form colleges and one specialist designated institution.

According to government guidance published last year, the grants were “to ensure providers can access the best change-management skills, and have the capacity to make the changes at the pace required”.

The size of the payments varied depending on the scale of planned changes – with mergers involving more than two institutions, or two institutions with a combined turnover of more than £25 million, attracting higher sums.

It’s not clear whether colleges with failed mergers will have to repay the cash; FE Week put the question to the DFE, but did not receive an answer before publication.

The largest failed grant was for £200,000, to South Cheshire College, and was intended to create a single Cheshire-wide college from the four in the area. But it later broke into two separate mergers, with South Cheshire joining forces with West Cheshire College in March, and Mid Cheshire College and Warrington Collegiate merging on August 1.

Bury College was awarded £100,000 for a proposed three-way merger involving Bolton College and the University of Bolton – yet Bury was dropped from this plan in April.

Barking and Dagenham College also received £100,000 for its failed partnership with Havering College.

And Stockport College got £100,000 for a three-way merger with Oldham College and Tameside College, which was subsequently called off by the FE commissioner.

South Staffordshire College was granted £100,000 for its partnership with Walsall College, scrapped in May.

The City Literary Institute in London – the only non-FE college or SFC to receive a transition grant – was awarded £100,000 for its link-up with Kensington and Chelsea College, which was called off in February.

The three collapsed Tees Valley mergers were also supported to the tune of almost a quarter of a million pounds, with £100,000 each going to Darlington and Middlesbrough colleges for their link-ups with Stockton Riverside and Redcar and Cleveland Colleges.

Hartlepool College received £49,500 for its failed merger with Hartlepool SFC.

And Farnborough College of Technology and Guildford College were each separately awarded grants of £50,000 and £37,500 respectively to explore the possibility of a merger – but talks between the two were paused back in February.

Looking at the wider picture, 26 of the 84 grants awarded so far were for mergers that have either completed or are still underway, totalling £2.24 million.

A further 29 grants, worth a combined total of £1.3 million, were awarded to SFCs to convert to academy status.

The remaining 18 grants, worth £1.01 million, cover a range of different outcomes including shared services, collaboration, setting up apprenticeship companies and, in one case, a “fresh start”.

An FE Week Freedom of Information request revealed last December that £726 million had been set aside by the government to cover the cost of implementing area review recommendations – of which £12 million was to cover transition grants.

That came after repeated rejected requests to the DfE over the size of the pot, and how many grants had been awarded, going back to October.

A week ago, the DfE published the reports into the final two waves of the reviews, bringing the process to a close.

At the time David Hughes, the chief executive of the Association of Colleges, warned that despite the government cash, colleges were still “funding the majority of upfront costs of these structural changes themselves”.

Area review transition grants awarded for mergers that subsequently failed: