Bids from two north-east colleges to merge with an embattled neighbour have been snubbed by the FE commissioner.
FE Week understands that Newcastle College and Tyne Coast College were both in the frame to amalgamate with Gateshead College, which has been undergoing a structure and prospects appraisal with the FE commissioner after a £6 million black hole was found in its books.
But the FE commissioner has now recommended to the government that a merger is taken off the table and the appraisal has instead concluded that Gateshead should remain standalone.
Following the news, NCG, which runs Newcastle College, said it wants to see Gateshead “go from strength to strength” and that it looks forward to “being able to work with Gateshead, both as a respected neighbour and as a community of excellent FE practitioners”.
Tyne Coast refused to comment.
A Department for Education spokesperson said the recommendation awaits ministerial sign-off and is subject to a series of conditions – which they would not disclose.
The Education and Skills Funding Agency and the FE commissioner, Richard Atkins, would “continue to work closely with the college to monitor progress and support a long-term sustainable solution to provide high-quality opportunities for learners,” the spokesperson added.
Gateshead said it was “delighted” with the recommendation, which “is not only good news for all our staff and students but also our regional partners, who wanted us to remain an independent college.
“Whilst we don’t underestimate the hard work that lies ahead, this shows confidence in our ability to deliver the recovery plan and recognises everyone’s efforts to maintain a high-quality teaching and learning experience for all of our students throughout this challenging time.”
Gateshead College had to call in forensic auditors after discovering in October 2019 that it would have a £6 million deficit in its 2018/19 financial statements.
The FE commissioner conducted an assessment of the college in December 2019 and found the underpinning cause of the shortfall was “a failure by the board and the senior leaders at the college to address the very significant reduction in income that was the result of the loss of the European Social Fund contract”.
Gateshead had, in fact, been in deficit for years, but this had been disguised by a misstatement of certain bills, reads the commissioner’s report.
The deficit had been worsened by “incorrect” budgeting of around 40 per cent for subcontracting costs, which was a “major” cause of the size of the deficit.
The DfE delayed the publication of FE commissioner report because of the Covid-19 pandemic, so the assessment of Gateshead was only published earlier this month.
In a letter accompanying Atkins’ report dated from July, skills minister Gillian Keegan said: “It is clear that significant failures in leadership and governance have allowed for the serious deterioration of the college’s financial position.”
Principal Judith Doyle, once the highest-paid in the country, resigned from the college in January, followed by the chair, John McCabe, that same month.
Trouble-shooter Andy Cole is now running the college, with former Middlesbrough College principal John Hogg as chair, and a financial recovery plan has been developed.
Atkins’ report shone a light on how remuneration for senior leaders and postholders had included an annual pay award “significantly” in excess of that paid to college staff, and that pay rises for senior management were given without regular performance review or appraisals.