Another bailout for troubled college with merger in sight

An embattled college has been handed another tranche of bailout cash to stay afloat as its journey to a long-awaited merger nears its conclusion. 

City College Southampton received an additional £3.76 million in emergency funding in 2021/22, according to its recently published accounts, taking the total amount of lifeline financial support to £11.67 million since 2017. 

The Education and Skills Funding Agency has also agreed to provide more emergency funding during the current academic year to ensure it can continue operation until its merger, which is planned to take effect from August 2023. 

Terms of the grant agreement create a “low probability of conversion to a loan in the future”, the accounts state. 

But the college is having to repay £522,000 of its adult education budget after failing to deliver a quarter of its allocation in 2021/22. 

City College Southampton’s accounts also reveal that an audit has identified “compliance issues” in relation to apprenticeship funding. 

According to the financial statements, action “has been taken” and the issues addressed by the college through “investment in additional and specialist staff as well as system resources and an additional funding advisory audit to review progress and compliance”. 

The college told FE Week the audit was not part of an ESFA investigation and claimed the compliance issues have not resulted in the agency clawing back any funds. 

Due to the continued injection of ESFA bailout funding the college “believes it will be able to continue in operation and meet its liabilities over the period ahead of the planned merger”, the accounts added. 

And while it breached bank covenants in 2021/22, Santander “is continuing to be supportive”. The college’s ESFA financial rating continues to be ‘inadequate’. 

City College Southampton, which has 4,000 students and 220 staff, is currently being led by deputy FE Commissioner Martin Sim as it heads towards a merger with Eastleigh College and Fareham College. 

Multiple previous merger attempts involving City College Southampton – one of which included Eastleigh College – have been rejected since 2016 when the FE Commissioner said City College is not sustainable as a standalone college. 

This is the second three-way merger proposal on the table for City College Southampton – the previous plan was to join with both Itchen Sixth Form College and Richard Taunton Sixth Form but this was abandoned in 2020. 

It is hoped that a three-way merger between City College, Eastleigh College and Fareham College will create a financially strong network of college campuses. 

The proposal forms the outcome of the Department for Education City-wide Solution (CWS) project Southampton, which got underway in late 2020 and concluded in May 2022. 

A spokesperson for the colleges said: “Subject to due diligence, public consultation, and securing necessary funding, City College, Eastleigh College and Fareham College remain confident that the three colleges will merge in August 2023 as currently planned.”