Governors of a land-based college have been criticised by the FE Commissioner for a “lack of urgency” in addressing financial issues which have resurfaced multiple times since 2015.
Kingston Maurward College in Dorset has been placed in early intervention three times over the past seven years, most recently in December 2020, due to deteriorating financial performance.
A report published by the FE Commissioner yesterday detailed the results of a November 2021 visit. The report said that while the current leadership had stabilised prior to the Covid-19 pandemic, “financial risks are accumulating”.
Risks include a “substantial” Education and Skills Funding Agency clawback following an apprenticeships audit, repayment of a Coronavirus Business Interruption Loan Scheme (CBILS) loan, two large grant-funded capital projects, bank covenants being broken, and limited cash reserves particularly during the February and March low points.
The report said governors are now aware they are “facing several difficult and critical strategic decisions regarding the future financial viability and sustainability of the college”.
Despite this, the FE Commissioner’s team warned that there “continues to be a lack of urgency” among governors, and “too willing an acceptance of reasons for the lack of pace and progress in addressing issues – particularly in relation to overall planning, process improvement, assessment and analysis related to financial planning and efficiency improvements”.
The report also accused leaders of the college for being “overly optimistic about student growth potential in a sub-region with a flat demographic”.
Responding to the report, Luke Rake, principal of Kingston Maurward College, told FE Week that he did not believe there is a lack of urgency.
“But the FE commissioners are entirely entitled to their view and we respect it,” he said.
“The FE Commissioner’s team have been very supportive in helping the board focus on key metrics and areas of improvement.”
Rake explained that the pandemic has made things more challenging for the college with a larger than usual commercial component that, due to government-imposed restrictions on trade, had meant a significant loss of income in the last two years.
One issue raised by the report is that there is still a “danger” that governors and senior leaders are overly optimistic about student growth potential.
Rake told FE Week that current recruitment data is strong and the college has grown student numbers for the last three years.
“We will not know until enrolment whether we are overly optimistic, but at the moment feel our current levels of optimism may be justified based upon the data we have,” he said.
“Recent funding allocations for the next financial year show significant growth in funding due to not only student number growth, but also improvements to retention as well.
“There is always a risk we have been too optimistic. There is similarly a possibility we haven’t been optimistic enough. We shall see in September,” Rake added.
A key financial risk highlighted by the report is that the college faces a “substantial ESFA clawback”.
Since the FE Commissioner’s visit in November 2021, Rake said that the college has successfully argued a business case for the adult education budget clawback, after his college only spent 51 per cent of its allocation in 2020/21.
However, Rake said the college has an ongoing audit which has highlighted a “potential risk around apprenticeships”. This has “yet to complete and any final figures are yet to be determined”, he added.