The Department for Education forked out £1 million to settle a legal dispute at a college group under investigation and already relying on government bailouts to survive, FE Week can reveal.
The department paid off BAM Construction after West Kent and Ashford College (WKAC) was ordered by the High Court to pay outstanding debts for the construction of a state-of-the-art teaching building in November.
This is the latest revelation about the financial scandal embroiling the Hadlow Group, which runs WKAC, and is now looking for two new board chairs and half a dozen governors after the previous holders quit.
The group has been receiving an unknown amount of exceptional financial support from the Education and Skills Funding Agency, as well as visits from the FE Commissioner.
The commissioner met the agency last Friday to decide what advice to give to the education secretary: bail out the group, or let it become the first college to become insolvent.
BAM Construction was contracted to build the new Elwick Road building for Ashford College in 2015, and finished it in 2017.
Ashford College, part of West Kent and Ashford College, was adopted by Hadlow College in 2014 after K College collapsed. The Hadlow Group was then formed to run Ashford College, Hadlow College and West Kent College in Tonbridge.
WKAC accumulated a debt of £1 million for the Elwick Road construction work, and, according to a BAM spokesperson: “Despite our making a number of attempts to negotiate payment of this debt, the college failed to settle.”
The case was taken to the High Court, which found in favour of BAM and ordered WKAC to pay the £1 million bill, which the DfE covered.
According to BAM, the college has now paid most of the outstanding debt.
The High Court case was not the last monetary problem for the £26 million building – which features a recording studio, a hair and beauty salon, and a lecture theatre.
The project received support from Ashford Borough Council, which gave WKAC a £2 million loan in February 2015 to deliver phase one of the development – the £26 million teaching block.
The college loan was converted into a grant in September 2018, meaning it did not need to be paid back when the teaching block was completed.
In July 2016, the council gave the college a further extra £1 million, again on the basis that they would not need to pay it back as long as a further phase of development was completed, a technologies block known as “phase 1a”.
The technologies block was never completed and it is understood that the council now wants their £1 million back.
The February council cabinet meeting agenda lists a relevant report and a request from the college for an extension on phase 1a completion until March 2021.
However, after FE Week reported – the day before the meeting – that the FE Commissioner had visited the Hadlow Group, deputy principal Mark Lumsdon-Taylor had resigned and principal Paul Hannan had gone on sick leave, Ashford Borough Council leader Gerry Clarkson pulled the item off the cabinet’s agenda.
At the cabinet meeting, Clarkson said: “Following the recent news that came out only yesterday about changes to the management of the West Kent and Ashford College, and having not received any further detail or an official position from the college at this stage, it is felt prudent to withdraw the cabinet report on the Ashford College campus.”
Asked whether the college can continue with phase 1a without support from the council, a group spokesperson would only say: “We understand and respect Ashford Borough Council’s decision on this and value the close working relationship we have with them.”
The Hadlow Group declined to comment on the court case.
Asked to confirm if the Department for Education had spent £1 million to settle the college’s legal dispute, a spokesperson said: “The ESFA is working closely with the colleges to maintain stability and to ensure that education for learners is not adversely affected and appropriate steps are taken to manage public money.”