The government is working on a plan to bring colleges in England back into public ownership, FE Week understands.

Work has begun on a White Paper to be followed by legislation, after recent attempts to financially stabilise the sector with an area review programme and restructuring funds totalling around half a billion pounds were deemed to have failed.

The number of colleges in formal intervention over their finances, currently more than 30, continues to rise and government bailouts have not stopped in recent months despite attempts to end them last March with the introduction of a new education administration regime.

But it is understood that civil servants have concluded the first and so far only colleges to be put into administration, Hadlow College and West Kent and Ashford College, have been both too slow and too costly.

This newspaper first revealed the government was working on a new FE Bill in January and last week Gavin Williamson (pictured), the education secretary said the reforms would be “revolutionary” – but until now the potential for the nationalisation of the college sector was unknown.

A key option being considered is to reverse legislation introduced in the Education Act 2011, which removed the need for colleges to seek consent before borrowing from banks and limited government powers to intervene where a college is being mismanaged or is performing poorly.

Government is understood to be concerned that even in instances where a college has been issued with an inadequate financial grade, an inadequate Ofsted assessment, received bailout funding and placed into ‘Administered College Status’, the college governing body remains independent.

This means the government has no overall control of which courses are run, whether they must merge and with whom, and more generally how they spend public funds.

Government powers became so limited under the 2011 Act that in May 2012 the Office for National Statistics took colleges in England out of the public sector classification.

It is understood Williamson and the team around him are becoming increasingly frustrated by this inability to step in when they deem there to have been leadership failures.

In his annual report for 2018/19, the FE Commissioner, Richard Atkins said that in the severe problems he saw “they were frequently the result of poor governance and leadership over a number of years, resulting in weak decision-making”.

The government has started to parachute in paid chairs from their National Leaders of Governance programme as well as investing in a Strategic College Improvement Fund – but this has not gone far enough, and the general lack of control will now be addressed.

Work on the White Paper has picked up a pace in recent weeks, as concern over college finances has heightened with the coronavirus. It is led at the DfE by Keith Smith, who was redeployed from the Education and Skills Funding Agency.

Smith is working closely with Williamson but reports to Paul Kett, director general for HE and FE at the DfE.

Another key civil servant is Matt Atkinson, who was initially drafted in from PWC to oversee the college restructuring deals and is now director of the provider market oversight team.

FE Week understands Atkinson will take over the FE Commissioner’s team when Atkins finishes his second two year contract this October.

There has been tension between the FE Commissioner’s team, which is part of the DfE, and the ESFA’s intervention team, something that could be revealed once the Dame Nay report into college financial oversight is published.

The Department for Education did not deny the plan to take greater control of colleges.

A spokesperson said: “The education secretary has already made clear that we are working on a White Paper aimed at delivering ambitious reform in our vital FE sector.

“The FE sector is playing a pivotal role in making sure more people can access the high-quality education and training they need to progress and will support our economic recovery following the Covid-19 outbreak. Our reforms will build on and strengthen the excellent work already happening across the country and will ensure the FE sector is at the heart of every community.

“We have been working very closely with the sector on the development of the reform programme from the start and will continue to do so. We will outline further details in due course.”

David Hughes, chief executive of the Association of Colleges, when asked about the secret plans said: “Ministers and officials are already engaging us as they shape their reforms and I am confident that will continue.

“It is too early to be sure where it will end, so it would be wrong to pre-judge what the reforms should be or to rake over old problems when what we need to be doing is to work on a better system for the future.”