Ofsted to publish financial ratings for colleges and training providers

Plans for Ofsted to publish financial ratings as part of inspection reports have been announced – but full details are yet to be drawn up.

In November last year chief inspector Amanda Spielman told FE Week the watchdog could take a more proactive role in factoring in financial management when grading a provider, but said at the time it wasn’t within Ofsted’s remit.

In a surprising announcement yesterday, the Department for Education said it will, in future, work with Ofsted to “ensure all reports also include a rating for financial management and oversight within the school or college in order to ensure best practice is shared across the sector”.

The move will not be part of the watchdog’s new inspection framework, which launches this week. Ofsted told FE Week this is something for a “longer-term piece of work with the government”.

Currently, the Education and Skills Funding Agency uses a formula to annually apply financial health ratings to FE providers, which can either be ‘outstanding’, ‘good’, ‘requires improvement’ or ‘inadequate’ like Ofsted judgements, but they’re not published.

It is not clear at this stage whether the ESFA will, in the future, play a part in Ofsted inspections, or whether the watchdog will do its own financial health research and investigations to arrive at a rating.

The DfE could not provide any further details and Ofsted appeared to know little about the plans.

Reviewing financial management of FE providers used to be part of inspections some years ago, in conjunction with the Learning and Skills Council, before it was dropped.

This latest announcement comes after several college leaders and boards have come under heavy criticism from the FE commissioner for their management of the finances in recent years.

The most severe case was at Hadlow College, which was given a grade one by Ofsted, but has been subject to government investigations after financial irregularities were found. This included submitting partial information to the ESFA in order to secure a ‘good’ financial health. However, according to the FE Commissioner, had the ESFA looked at their published accounts they would have rated them as ‘inadequate’.

The scandal has led to the college becoming the first to go through the new insolvency regime and as reported by FE Week, the DfE last week announced that Dame Mary Ney would be leading a review into their own monitoring of college finances.

When quizzed about why Ofsted doesn’t currently factor in financial management into inspection reports, Spielman told FE Week in November: “We don’t have the remit to look at that side of colleges, and that’s something that’s down to the Department for Education to decide if it wants to shift the split. But it is important. They affect each other clearly. Neither we nor anyone else should say they’re completely independent of each other.”

Asked if Ofsted inspectors may take a closer look at college finances in future inspection frameworks, the chief inspector said: “There are a lot of different ways that you could cut this particular cake.

“If a conversation begins at some point about ways of taking that forward I’d be happy to have it.”