A college group said its recovery plan will ensure an “even brighter future” despite it facing a £1.4 million funding clawback and the refinancing of a £4.7 million loan.
Warwickshire College Group (WCG) this week published its annual accounts 10 months late due to an audit by the Education and Skills Funding Agency (ESFA).
Its financial statements reveal WCG is in “dispute” with the agency over a “significant clawback” of up to £1.4 million for 2022-23, with a risk of further clawbacks from claims made in earlier years.
It comes a month after the FE Commissioner placed WCG in financial intervention due to “serious cashflow problems”.
But the college remains optimistic about its “positive future”, thanks to a “strong recovery plan” and new leadership team led by chief executive officer and principal Sara-Jane Watkins.
Debt prompts intervention
Pressures that led to an ‘inadequate’ financial health rating for 2022-23 included a deficit of £1.3 million on an income of £51 million, an outstanding loan of £4.7 million from Lloyds Bank and the ESFA clawback.
The ESFA clawback means the college group has also breached the terms of its loan, which must be refinanced by the Department for Education ahead of its 2027 final repayment date.
Reason for clawback kept secret
The ESFA commissioned auditors from Mazars to investigate the college’s funding claims last year, with a final report issued in May.
FE Week understands £1.1 million of the £1.4 million clawback relates to apprenticeship provision but the college did not respond when asked for details.
An ESFA spokesperson confirmed it had no plans to publish the auditor’s findings as the probe was not classed as a formal investigation.
They declined to comment on WCG’s case as it relates to an individual college.
Proud of progress
Watkins said: “We are proud of the significant progress made in reducing our debt over the years, allowing us to continually invest in first-class facilities.
“Our recent student recruitment success and our exciting new initiatives demonstrate our commitment to evolving and meeting the needs of young people and the communities we serve.
“We are excited to continue working with the DfE on our financial recovery plan and look forward to an even brighter future.”
The college group is responsible for about 13,000 students, including more than 2,000 apprentices, and has 1,300 staff across six colleges in Warwickshire and Worcestershire.
It’s made up of Evesham New College, Warwick Trident College, Rugby College, Royal Leamington Spa College, Moreton Morrell College and Pershore College.
Selling assets
To reduce its liabilities WCG has sold sites since its commercial debt peaked at about £23 million in 2014.
These include its old Rugby College site for £7.6 million, the controversial sale of its Henley-in-Arden site to Wasps Rugby for £6.5 million, and the sale and leaseback of accommodation blocks in Leamington for £5.2 million.
WCG also hopes to make a further £8 million from future sales, including the former Malvern Hills College building which it won permission to sell following a court battle with Malvern Hills District Council.
According to the college group, a specialist education provider is planning to take over the site “which will ensure it continues to serve the community with valuable training and educational resources”.
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