A Midland college has been warned about its “hand-to-mouth” financial situation by FE Commissioner Dr David Collins.

Dr Collins visited Birmingham’s 12,000-learner Bournville College (pictured), which has a current Skills Funding Agency (SFA) allocation of £8,495,746, in August after it was issued with a financial notice of concern by the in April.

In his report, published last week by the Department for Business, Innovation and Skills, Dr Collins praised the leadership and governance of the college and the quality of the provision offered to learners, which was rated good by Ofsted after a visit in May, but said it needed to do more to balance the books.

He said: “The college has successfully improved its quality and diversified its income streams over the last few years. It has grown by more than 5 per cent per year and predicts that it will be able to continue on this growth path into the foreseeable future. However, while this is an ambitious and commendable approach it is not without its risks.

“Not all projects have delivered the returns forecasted and a failure by the college to address inefficiencies in parts of the college’s operations has led to high levels of borrowing and serious cash flow issues.

“The present “hand to mouth” situation cannot be allowed to continue and there are opportunities to improve the position significantly if the college is prepared to bring its expenditure into line with sector norms. Fears that this will lead to a diminution of quality are not borne out by the evidence elsewhere.”

He said new projects or ventures into new markets needed “to be considered with a far greater degree of scrutiny by the governing body” and added that the college’s income base had “not been matched by an appropriate control of costs”.

College marketing director Alma Aganovic said: “We welcome the feedback from the FE Commissioner and are already in the process of implementing the recommendations from the report. The college would like to point out that last year we achieved a substantial improvement in our financial position which is commendable in the current climate. We were also recently inspected by Ofsted and achieved outstanding for leadership and management.”