Hull College's vast debts exposed

An impoverished college which took a £54 million bailout did so after declaring a deficit of close to £13 million in a single year.

The revelation emerged from Hull College’s long-delayed 2015/16 accounts, which were finally published this week following pressure from FE Week.

There have widespread demands for greater transparency on the college’s dire financial situation, and last year’s accounts are still firmly under wraps.

The college “generated a deficit in the year of £9,329,000 before taxation” in 2015/16, compared with a much smaller loss of £492,000 the previous year. In addition to pension liabilities this left it with an overall deficit of £12.8 million.

As a result, its reserves had plummeted to negative £7,827,000 over the year, according to the accounts.

The college did not comment on the situation before FE Week went to press.

“How did they get in this mess? That’s something I’d really like to know,” asked Emma Hardy, one of three local MPs and a member of the influential commons education select committee.

“What safeguards or checks were not in place to allow the college to get into such financial difficulties? Why weren’t things identified earlier or problems dealt with earlier?”

Information about the college’s finances has been thin on the ground since the FE commissioner began his intervention 18 months ago.

His report, published last January, said the college had a “cumulative deficit of around £10 million over the past four years”, and a “further deficit in excess of £1 million” was forecast for 2016/17.

FE Week learned of the £54 million bailout from a member of staff from the college attending last week’s University and College Union congress in Manchester, as previously reported in the Hull Daily Mail.

It’s believed to be the highest single payout from the restructuring facility, but neither the college nor the government would confirm the figure, citing a confidentiality agreement.

Julie Kelley, UCU’s regional official, told FE Week that the college has refused to say where the money was going or what strings were attached.

“The only thing they will say is that a condition of the grant is that they have to get their staff costs under control,” she said.

“But because we don’t know what the underlying financial issues are we have no clear picture of how the college has gotten into the state that it’s gotten into.”

In addition to the as-yet-unpublished 2016/17 accounts, there is no sign of governing board meeting minutes on the college’s website.

It took three days to respond to a request from FE Week to see those minutes, and when the documents arrived they were heavily redacted.

Whole sections, including the CEO’s update, were marked “closed, commercially sensitive”.

A spokesperson defended the secrecy, insisting it “takes an honest and open approach to all our communications”.

“However, the terms of our grant agreement imposes certain restrictions on the disclosure of any information deemed not for public release at this point in time,” he said.

Any redactions were made “to minimise any breach of the agreement” or to its legal obligations on redundancy consultations.

Staff at the college are currently fighting leaders over plans to slash more than 200 full-time staff, and seven days of strike are planned for later this month.

Meanwhile, Mark Dawe, the boss of the Association of Employment and Learning Providers, hit out at the government over the lack of transparency surrounding this and other similar deals.

“How can it be that government funding of £54 million to a public body isn’t fully in the public domain?” he asked.

However, a spokesperson for the Department for Education defended the need for confidentiality over funds awarded to colleges from the restructuring facility.

“Publishing this information before the end of the programme could prejudice commercial interest,” she said.