Sixth-form colleges given access to government bailout fund

Sixth form colleges can now apply for government bailout cash, according to updated guidance published by the Department for Education this morning.

The college financial intervention and exceptional financial support guidance, first published in 2015, has today been updated to “include sixth-form colleges, which are now eligible for exceptional financial support”.

James Kewin, deputy chief executive of the Sixth Form Colleges Association, said it was “helpful” that arrangements for SFCs were now aligned with FE colleges.

“But the introduction of the insolvency regime means that arrangements for colleges in financial difficulty are likely to change again in the near future,” he warned.

“The vast majority of SFCs will not require exceptional financial support, but there is no question that ongoing funding pressures are having a negative effect on the financial health of the sector.”

He added that he was “pleased” the DfE was reviewing funding for the FE sector “in response to our joint funding campaign”.

EFS – which can come in the form of a grant or a loan – is only available to colleges that are “encountering financial, or cashflow, difficulties that put the continuation of provision at risk”, and which have “exhausted all other options”.

The government has indicated that these bailouts will be phased out with the new FE insolvency regime later this year, proposals for which were recently out for consultation

It’s not clear exactly how much money has been spent on bailing out struggling colleges.

Former skills minister Robert Halfon told parliament in January last year that the government expected to have spent £140 million in exceptional financial support by the end of March.

That figure is likely to have risen much higher since then.

FE Week has reported on cash-strapped colleges receiving multi-million pound bailouts, including £11 million dished out to 12 colleges in December alone.

According to the DfE at least part of this cash came from the adult education budget, which was underspent by £63 million in 2016/17.

One SFC that could benefit is Cadbury Sixth Form College. An FE commissioner report published in March reported a “series of financial items” that “could result in the college being at immediate risk”.

A cash-flow forecast for the college “indicated that external support for cash flow would be needed in March 2018”, according to the report.

Last month the current skills minister announced a review into how the current system of funding for FE meets the costs of high-quality provision.

But just two days later at hearing of the Commons education select committee the education secretary Damian Hinds cast doubt on Anne Milton’s announcement – and the DfE later confirmed that it was as “internal” review within the department.

The SFCA, along with other organisations including the Association of Colleges, launched its Support our Sixth Formers campaign last year, calling for more funding for learners aged 16 to 19.