Trust between leaders and governors at a Hampshire college has broken down after the full scale of its deteriorating financial position came “out of the blue”, an FE Commissioner report has revealed.
Shelagh Legrave’s team found that Havant and South Downs College (HSDC), which teaches around 7,000 students across three campuses, entered severe financial distress last year after senior leaders lost control of finances.
Her report, completed in May but only published today, said governors were “not appropriately sighted on, or informed of, the financial risks developing” and that some board members told investigators the news of the crisis came “out of the blue”.
“The financial pressure the college was facing was more significant than had been initially recognised,” the report added. “Some [governors] were now questioning how they could regain trust in information they would be given as a board in the future.”
The Department for Education placed HSDC in formal intervention earlier this year following the discovery of mounting deficits that “shocked” governors, “inaccuracies in financial reporting” and “poor financial controls”.
Large-scale redundancies have since hit staff, and the college’s principal has decided to retire.
Governors in the dark
The FE Commissioner said the college has experienced a “significant fall” in 16 to 18-year-old learner numbers in recent years, with “consequent year-on-year reduction in income”.
Until summer 2024, the college’s management accounts and budget forecasts suggested a healthy position, with plans for a small surplus.
But by October, the finance team admitted that the year would end in deficit after “late identification” of expenditure.
Governors told the FE Commissioner’s team they were blindsided. Some had believed the college’s position was stable after earlier positive assurances from an external governance review and a ‘good’ Ofsted rating.
Ofsted’s report, published in May 2024, judged that “well-informed governors provide leaders with strong challenge, support and strategic direction”.
And an external governance review in July 2024 found that board structures and processes were “currently effective”. The external review noted that “governance provides senior management with one of its lines of defence” and that “the current approach should give assurance to stakeholders that the college is managing its assets prudently”.
But Legrave’s team found that financial reporting to the board had been “inaccurate”, and there was “risky reliance” on future land-sale receipts to fund an “ambitious property strategy”.
The college also did not report financial contribution by campus and although its recovery plan “addresses some inefficiencies”, it is “unclear if each individual campus is financially viable”.
There was also an “expressed concern from staff” that communication is “limited, mostly one way, leadership remote and closed, and that staff have not been kept informed of the issues that the college is facing”.
Legrave said: “There will inevitably be work the principal and executive need to lead and undertake to restore confidence and trust in leadership’s financial oversight and the information being presented to the board and to the wider college.”
An HSDC spokesperson said reference to governance and leadership by the FE Commissioner “was in February and is now outdated”, adding that there has been a “refresh of the leadership team since this date and the executive team work in a highly effective way with governors”.
Gast-off: Redundancies and leadership exit
HSDC’s principal Mike Gaston warned staff in July that “significant redundancies” were inevitable as part of a recovery plan.
As FE Week previously reported, the college planned to axe around 100 workers as it tries to bring its staff-cost ratio — which hit 72 per cent of turnover — back within the FE Commissioner’s benchmark of 65 per cent or below.
The University and College Union announced three days of strike at HSDC in June. HSDC said only one strike day was taken.
HSDC said today its restructure resulted in a staffing reduction “of 67.28 full-time equivalent (FTE)”, made up of “redundancies (42.91 FTE), retirements, resignations and post deletions”.
Gaston, who has led the college for a decade, has announced his retirement for early 2026 but will remain in post through the recovery process.
Governance overhaul
In response to the intervention, HSDC’s governors have created a new recovery, sustainability and accountability (RSA) committee to oversee “the developing financial sustainability plan”.
The board has also committed to redesigning its management accounts, producing campus-level financial analysis, and introducing clearer key performance dashboards for enrolment, curriculum efficiency and cash flow.
The long-term sustainability of the college “is in the control of the board and senior leaders, but it is recognised the path to financial recovery presents a major operational challenge”, Legrave’s report concluded.
HSDC said that since May, the college has appointed “new governors with expertise in finance, audit, education and stakeholder engagement” and “enhanced staff and student voice mechanisms to ensure inclusive decision-making”.
HSDC’s spokesperson said the college “acknowledges the findings of the FE Commissioner’s report and accepts its recommendations in full”.
“The report reflects a challenging period for the college, and we are committed to addressing the concerns raised with transparency, urgency and care,” they added.
A formal FE Commissioner “stocktake” visit is scheduled for November 2025.
I’m sure a certain person will come along to deliver a powder puff statement, along the lines of “no knee jerk reactions” to this news…
Enough is enough. It’s about time the AoC stood up to the minority who spoil it for the majority. They may even find that taking this stance (rather than turning the other way) may even give DfE confidence to start fully funding FE provision. I’m not saying that approach would guarantee it, but by continuing to either ignore or defend the indefensible it gives Whitehall an easy get out clause (why would we increase funding when a significant minority of your members act in this way?).
There is always a risk when colleges amalgamate that the previous poor practice of the ones that make it necessary continue. It will not work without a strong senior management team that has both financial and quality improvement expertise overseen by governors who have the right experience and who receive accurate reports about expenditure and teaching, learning and assessment. It can be done, as proven with some ‘basket cases’. It is unfair that some colleges are giving the sector a poor reputation in the DFE who hold our purse strings. Clearly they need to be attaching individuals to each new entity to monitor and report back directly to them, sooner rather than later. Ofsted take too long and have not got sufficient continuous oversight. I have been lucky enough in my career to work with some brilliant senior college managers, governors and inspectors who could give robust oversight to the department.