Shortfalls in T Level and adult learner recruitment have contributed to “serious cashflow issues” and triggered government intervention at a small college in Cumbria.
Lakes College has been handed a £1.5 million emergency loan by the Education and Skills Funding Agency to alleviate “short-term” pressures.
Aside from lower-than-expected enrolments the college’s financial woes have been caused by a “significant” upfront investment in the college’s STEM apprenticeship academy over the past 12 months – on top of sector-wide low funding rates and rising inflation on costs.
In a government financial notice published yesterday, the ESFA told the college to prepare for an FE Commissioner stocktake visit in October, followed by a structure and prospects appraisal due to complete by the end of March 2025.
The college’s latest accounts for the 2022/23 financial year show turnover of £15 million, a deficit of £2 million and an EBITDA (earnings before interest, taxes, depreciation, and amortisation) of -9.9 per cent against a target of 2.1 per cent. The FE Commissioner’s benchmark of education-specific EBITDA is 6 per cent or more of total income.
Lakes College, a founding member of the National College of Nuclear, was judged as ‘good’ overall by Ofsted in March this year. At the time of inspection, there were 900 learners on vocational programmes, 300 adults, 1,000 apprentices and 64 students with high needs.
The college offers T Levels in health, education and childcare, digital, business, engineering and construction. It was 10 per cent below enrolment targets on the flagship new technical courses in 2023/24.
Lakes College principal Chris Nattress told FE Week that the “relatively small” loan from the DfE is expected to be repaid in full by Autumn 2027.
He said the college now has a “revised, robust” financial plan which includes “an appropriate business model to ensure we continue to support all of our learners, apprentices and employer partners”.
The college’s underlying position and arrangements going forward are also “solid and sustainable” as it has no other borrowings.
ESFA’s financial notice said the college’s financial recovery plan should explore staff savings and include a review of curriculum areas. Nattress said the college has not implemented a compulsory redundancy programme and will “continue to deliver necessary savings via increasing our operational efficiency”.
Nattress added: “I am confident that the FNTI will have no direct negative impact on the day-to-day running of our Ofsted ‘good’ rated college, ensuring we continue to deliver our high standards of teaching and training to all our learners – and employers – as well as supporting continued growth within the college.”
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