The government’s approach to college intervention takes too long, costs too much and is not effective in making them more sustainable, influential MPs have said.
A Public Accounts Committee report today warns that ministers “cannot keep putting sticking plasters over this gaping wound” as it delivers a damning verdict on how college finances are being managed while funding for courses has been cut.
It comes a week after the Department for Education’s FE white paper outlined plans for new intervention powers, and days after a college’s chair lashed out at the “failure” of government oversight on the day he resigned.
Based on evidence it received, the PAC states that colleges’ autonomy can “hamper” the DfE’s ability to protect learners and safeguard taxpayers’ money as, for example, colleges are free to borrow sums that they may struggle to repay, and to run with financial deficits year after year.
As reported by FE Week, MPs heard from the Education and Skills Funding Agency’s director of provider market oversight on how a college can “bury its head in the sand” to keep officials away until the last minute and that he would “definitely like more power”, while colleges themselves described the existing intervention regime as “very negative”.
During February 2020, the government was intervening in nearly half of colleges for financial health reasons and the PAC discovered how seven of them have remained in formal intervention for five years or more, while 75 colleges have been in and out of early intervention more than once.
Between November 2014 and March 2019, the DfE spent £253 million public money to bailout 36 colleges with cashflow problems. This emergency funding was originally intended to take the form of repayable loans, but much of the money is now not expected to be repaid, today’s report says.
It goes on to explain how two colleges – Hadlow and West Kent and Ashford – have been in the new education insolvency regime since mid-2019 and the ESFA expects these cases will end up costing it over £60 million.
Payments to the education administrators additionally amount to £6 million so far – a cost that was described as “gut-wrenching” by the DfE’s permanent secretary Susan Acland-Hood at a PAC hearing in November – and could increase further.
The PAC has now called on the DfE to set out within three months what actions it plans to take to improve its intervention arrangements, and how it will assess the success of these actions.
Today’s report builds on Dame Mary Ney’s 2019 report on college financial oversight arrangements, which recommended the ESFA develop a more nurturing relationship with colleges.
It also follows a recent National Audit Office report which found nearly three-quarters of a billion pounds in public funds has been spent on bailing out and restructuring colleges while core funding has tumbled by 20 per cent in real terms over the six years from 2013/14 to 2018/19.
Last week the DfE published its FE white paper which outlined plans to introduce “new powers” for the education secretary, so the government can “intervene quickly and decisively in cases where there are persistent problems that cannot otherwise be addressed, either with colleges not delivering effectively or where local providers are unable to deliver the skills priorities for that area”.
Through legislation, this strengthened power would enable the education secretary to take greater preventative action to tackle failure before it happens, as well as to “intervene locally to close or set up college corporations, bring about changes to membership or composition of governing bodies or review leadership”.
FE Week has reported extensively on the government’s expensive intervention regime in recent years, most recently at Hull College Group. Its chair Daf Williams resigned as the FE Commissioner’s team visited last Friday and shortly after FE Week revealed the new interim chief executive had launched an investigation into a £240,000 three-year rugby stadium naming sponsorship deal.
The college has been in intervention for a number of years and received a £50 million bailout in 2018.
Following his resignation, Williams told FE Week that he has a “strong view that if the charge that we have failed as governors is to stick”, then there is “also a failure on the part of our regulators”.
“They have had all of the same information as we have had over the last four years of intervention and if we have missed things not being done correctly then so have they,” he said.
“Whilst we as governors are all enthusiastic amateurs volunteering our time to try to help, they are specialist professionals from the sector, paid to spot these matters, which sadly they have not.”
Responding to the PAC report, skills minister Gillian Keegan said: “As set out in our Skills for Jobs White Paper, we will overhaul the funding and accountability rules so funding is better targeted at supporting high quality education and training that meets the needs of employers and individuals.
”We will also introduce new powers to intervene when colleges are failing to deliver good outcomes for the communities they serve.
“We will consider the PAC’s recommendations carefully and will respond in due course.”
You can read more proposals from today’s report here.