Area review restructuring facility details finally confirmed – two weeks after revealed by FE Week

The government has finally confirmed that cash will be available for colleges to implement area review recommendations – almost two weeks after FE Week exclusively revealed details of the planned restructuring facility.

However, the Department for Business Innovation and Skills’ updated guidance on area reviews, published today, does not give a figure for the size of the pot.

Cash from the restructuring facility will be available to FE and sixth form colleges to “support recommendations arising from all waves” of the area reviews, the guidance says.

Colleges will be expected to seek alternative sources of funds for implementing the area review recommendations but “in cases where the required funding cannot otherwise be secured there is a restructuring facility available”.

As previously reported in FE Week, the “default position” of the facility, which is being held by the Treasury, “will be that where public funding is required it will be provided as a loan on commercial terms” and it will “cover only a proportion of the total costs”.

In exceptional cases, the guidance states, cash may be available as a non-repayable grant. This would only be available where the “combination of net liabilities” and “one off costs” would lead to “significant financial detriment to the financial position of one of the parties involved”.

Cash from the restructuring facility will be available until March 2019, although “any funding for waves one and two will largely be provided prior to March 2017”.

The guidance also reveals that colleges will no longer be able to apply for Exceptional Financial Support after implementation of the review recommendations for their area.

“A key objective of the reviews is that they result in resilient institutions in each area and therefore no further Exceptional Financial Support will be available for colleges following the implementation of review recommendations in the relevant area,” the guidance states.

“If colleges fail in future there should be a process which allows them to close in an orderly way which protects learners,” it continues.

“The government is proposing to introduce an insolvency regime for FE and sixth form colleges which would come into effect around the end of implementation of the area review process.”

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