College restructuring support: still less than half of £726m fund approved

The government has approved around £330 million to cover the cost of implementing post-area review changes so far.

The figure, which amounts to 45 per cent of the £726 million on offer, was revealed in the latest Education and Skills Funding Agency progress report on the restructuring facility, which closed last month.

Although it is less than half of what is on offer, the final figure is expected to increase as last minute applications are signed off.

Up to 21 colleges have been approved to receive compensatory VAT funding

But it is likely that hundreds of millions from the fund will go unused.

Today’s announcement said that 76 applications have been received. A total of 30 of them were made from 31 sixth form colleges “expressing plans to convert to academy status”, but the “majority have not been allocated any funding to support this conversion”.

The ESFA received 46 applications to support restructuring within the college sector, but only 23 “have been approved to date”.

“From the restructuring facility, up to 21 colleges have been approved to receive compensatory VAT funding if the liability arises and funding has been provided for transition grants,” today’s update said.

It added: “The total allocation of restructuring facility funding is approximately £330 million. Total spend so far is approximately £226 million.”

Case summaries of providers that agreed restructuring funding prior to December 31, 2017, were also published today. You can find out who these are here.  Today’s announcement doesn’t however give details of which colleges have since received cash nor how much.

The restructuring facility, administered by the ESFA’s transaction unit, was designed to help colleges implement area review changes but has increasingly being used to support colleges in dire financial straits.

The application deadline was September 28 – although colleges will have until March next year to spend the cash.

In an updated guidance document for applying to the restructuring facility, the ESFA said last month that in order to ensure the “objectives of the programme can be best realised by March 2019 it is important that we prioritise funding to support those colleges and proposals that provide the greatest contribution to the restructuring facility objectives”.

“We are unlikely to be able to support all requests for funding,” it added.

“This might be because: the nature and type of funding required cannot be spent by March 2019; or the deal would need to be structured in a way that falls outside of the scope of available resources; or the proposal does not offer sufficient value for money.”

FE Week has previously reported on a number of colleges in dire straits that have received multimillion-pound handouts from the fund.

We are unlikely to be able to support all requests for funding

These include Hull College, which reportedly received £54 million from the fund earlier this year.

And include Lambeth College, which was expecting £25 million to pay off its exceptional financial support and bank loans, according to its 2016/17 accounts.

Despite these example, skills minister Anne Milton denied that the cash is being used as a bailout fund.

“This funding is not about propping up failing colleges,” she told FE Week in April. “Funding from the restructuring facility is only available after a rigorous assessment to help implement changes which will result in sustainable, effective institutions.”

The last update about the restructuring facility was released in April and showed that at that time over £300 million had been approved for 19 “significant” applications.

When the restructuring facility was first announced in 2016, the then-skills minister Nick Boles told colleges they would be “basically on your own” once the fund had been used up, without the “same level of ad hoc support” they had previously had access to.