Deficit hits £10m in three years as KCC continues to seek merger solution

Kensington and Chelsea College is considering a fresh merger attempt as it runs down its reserves created by the controversial sale of a campus after years of being in deficit.

The latest set of accounts for the embattled institution, which received its fifth consecutive grade three report from Ofsted this week, reveal more than £10 million deficit in the past three years, having accumulated “significant” reserves of £34.6 million.

The cash, which is quickly shrinking, was built up mostly by the sale of KCC’s Wornington Road campus, sold to the local council for £25.3 million in 2016 despite local opposition.

A spokesperson said that while it does have healthy reserves, the college has been running operational deficits for several years, “which in the long term are unsustainable”.

In 2015/16, KCC had an operating deficit of £1.2 million; in 2016/17 it was £5.2 million; and in 2017/18 it was £3.9 million.

To tackle its financial difficulties the college attempted to merge with Ealing, Hammersmith and West London College last year.

The proposal was however canned by the FE commissioner Richard Atkins following a backlash from a local campaign group.

But it appears a different merger may now be on the cards.

KCC told FE Week it is considering two options as part of its structure and prospects appraisal with Mr Atkins’ team. One is a merger with Morley College.

The second option is to remain a stand-alone college, a route which is being developed with the help of the Save Wornington College campaign, which opposed the selling of KCC’s Wornington Road campus.

Campaign member Sam Batra said: “The Save Wornington College campaign has been influential in driving the standalone bid for KCC.

“Thanks to community activism there is a committed team in place currently working on the stand-alone vision for this venerable college.

“It’s probably the first time that a campaign group has been so involved in recruiting the right people to steer the course of such a project.

“Grassroots action is vital and nowhere less so than in North Kensington.”

A KCC spokesperson said the college had experienced operating losses and resulting financial pressures for “a number of years” prior to the proposed merger with EHWLC.

“These pressures were behind the sale and lease-back agreement of the Wornington Road campus,” he explained.

“After the merger proposal was provisionally agreed in 2017, EHWLC took over some of KCC’s services.

“The merger was then put on hold two weeks before the proposed completion date in January 2018 and then cancelled shortly afterwards.

“As a result, KCC then had to incur the costs of recruiting a new senior management team and restoring capacity in some key back-office functions.”

He continued: “At the recommendation of the FE commissioner, the college then re-entered the structure and prospects appraisal process which has associated costs.

“KCC also commissioned the Kroll report into the aforementioned campus sale.

“It is therefore the case that KCC’s financial problems were not caused by the failed merger, but some additional costs were incurred as a result.”

The Kroll report was published last October and found the sale of the Wornington Road campus was “plainly wrong” and was not in the interests of the community.

The chair of KCC’s board, Ian Valvona, who replaced Mary Curnock Cook last year, apologised on the college’s behalf for the “shameful” behaviour of the previous management team.

The sale of the Wornington site was led by former principal Mark Brickley in the face of falling income.

In 2012 the college’s income sat at £27.5 million but had fallen to just £9.25 million by 2016.

The Royal Borough of Kensington and Chelsea bought the site and outlined proposals to demolish the building and replace it with housing, which became controversial when the fire at nearby Grenfell Tower in June 2017 killed 72 people.