ESFA intervenes as Leicestershire college group hits ‘serious cashflow pressures’

FE Commissioner to visit SMB Group due to ‘heighted risk’

FE Commissioner to visit SMB Group due to ‘heighted risk’

31 Aug 2023, 15:05

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A college group in Leicestershire has been placed in formal FE Commissioner intervention as it grapples with “serious cashflow pressures”.

The Education and Skills Funding Agency published a financial notice to improve for the SMB Group today.

The letter, dated July 27, said “serious cashflow pressures” leaves the college at a “heighted risk”. SMB Group must now put together an improvement plan which could include staff cuts, while the need for emergency bailout funding from government will also be explored.

A spokesperson for the college group said it was facing a number of “challenges” impacting the wider sector, “including the aftermath of Covid-19 and significant economic challenges”.

“As such, the college has proactively invited the FE Commissioner in early to support our efforts to remain an economically sustainable FE provider, whilst continuing to make strides with improvements to the quality of our study offer and ensure our learners get the best possible education,” the spokesperson added.

SMB Group, which has almost 3,000 learners on its books, was created from a merger of Stephenson and Brooksby Melton colleges in 2020. Last May, Dawn Whitemore, the group’s chief executive told the Melton Times the merger was a “lifesaver” for both colleges as one was asset rich and the other was cash rich, which enabled the group to go “from strength to strength”.

But it has faced multiple financial hurdles over the last year. 

In March its finance and resources committee warned that the group was facing a “very challenging” financial climate made up of high inflation and increased transport costs, amid a “smaller learner base”.

SMB Group recorded a deficit of £3.6 million in its most recent accounts despite aiming for a surplus, which it blamed on “increasing inflation and recruitment challenges”. Those centred around high agency costs and “having to match higher salaries to attract staff in a difficult marketplace”.

In October 2022, the group noted that it was facing a clawback of T Levels funding from the government after it had recruited 50 fewer learners than it was meant to. The group was downgraded from ‘good’ to ‘requires improvement’ by Ofsted in February 2023.

The FE Commissioner has now intervened to assess the “college’s capability and capacity to make the required changes and improvements”.

SMB Group must put together an outline recovery plan by the end of September, including financial planning tables, and plans to explore “further staff savings” in 2023/24 and 2024/25 alongside “a thorough review of curriculum areas”.

It must also submit a monthly cashflow template to the Department of Education, and explore the “potential for and, if necessary, the extent of any financial support required”.

The college must attend regular meetings with DfE, and if it is deemed that the college has failed to “take the necessary actions” within the timescales set out, the department “will take further action”.

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