Sixth form college leaders failed to spot ‘terminal’ finances

A sixth form college principal and governing body failed to identify its “now terminal” financial position, the Department for Education has revealed today in an FE Commissioner report dated June 2019.

Richard Atkins’ team was sent into Cheadle and Marple Sixth Form College after leaders asked the government for emergency funding to enable it to meet staff salaries and other operating costs, because its cash was “exhausted”.

His report said the college is “relatively small and lacks the critical mass to be sustainable on a stand-alone basis” and it can only continue operations with exceptional funding from the Education and Skills Funding Agency.

“The principal has not properly discharged her responsibilities as accounting officer”

During the commissioner’s enquiries, the college’s former principal, Jenny Singleton, claimed that she had relied on the previous finance director to “advise her if the college was in financial difficulty and she took comfort from the ESFA financial health grade and satisfactory audit opinions”.

“She claims that the substantial cash balances provided by asset sales masked the underlying true position of the college,” Atkins’ report said.

“In fact, the ongoing deficits and diminishing reserves had been clearly evidenced in the financial statements and management accounts over a period of several years.”

It added that she has “failed to make proper enquiry” and has not “properly discharged her responsibilities as accounting officer”.

Singleton left the college shortly after Atkins’ intervention in June. The previous finance director also left the college earlier this year after “inaccuracies and inadequacies in his reporting came to light”.

Cheadle and Marple Sixth Form College’s former chair, David Lambrick, who left earlier this year after being at the college as a governor since October 2011, came in for similar criticism.

“He advised that he had accepted the principal’s and finance director’s assurances as to the college’s financial strength and had taken comfort with what appeared to be substantial reserves,” today’s report said.

“He noted and gave weight to the ESFA financial health grade and unqualified audit opinions and had not identified the underlying financial position developing over a period of years.

“He accepts full responsibility for his personal failings and the collective failure of the governing body to fulfil its fiduciary duty.”

The report concludes that financial matters, strategic leadership and financial oversight have been “seriously lacking for several years” and forecasts have been “over-optimistic”.

A spokesperson for the college said that since the FE Commissioner visit in June, the deputy principal Sharon Burton has taken on the role of acting principal and Alison Hewitt is the new chair of governors.

“We are working closely with the ESFA and FE Commissioner team to explore solutions for the college, and the staff will continue as always, to focus on the delivery of high quality educational provision for the local communities that we serve,” she added.

In an accompanying letter to today’s report, the FE minister Lord Agnew said: “It is clear that there has been a serious failure of leadership, with wholly inadequate financial management.

“The governing body has also failed in its fiduciary duty to monitor the college’s financial position and to effectively challenge leaders and hold them to account.”

Atkins’ report said governors have “not understood their responsibilities with regard to insolvency” and should receive immediate training to remedy this.

“It is clear that there has been a serious failure of leadership”

As reported by FE Week in July, Cheadle and Marple Sixth Form College’s was handed a financial health notice to improve by the ESFA.

The college generated a £3 million deficit in 2017/18. A £7 million drop in income, which was blamed on a declining student intake and funding reductions, took the college from £15.6 million in 2010/11 to £8.3 million in 2017/18.

In order to make up for this shortfall, the college sold land to the Department for Education in 2017 for £6.3 million, to build two new free schools.

Atkin’s report said there is a “significant deficit” forecast for the current year.

The post-16 area review for the college recommended it convert to an academy and join a multi-academy trust.

However, the college instead proposed it join a federation supported by Liverpool Hope University, a move that was endorsed by the ESFA.

Cheadle and Marple Sixth Form College operates from two campuses in Stockport. It is rated grade three by Ofsted.

Atkins’ report did note that with the exception of apprenticeships, the quality of provision at the college, across both sites, is “good”.