Hadlow College scandal and government response is an FE watershed moment

17 May 2019, 9:30

FE Week’s story of Hadlow College being the first to be taken through a new education insolvency regime is a massive watershed moment.

It is the culmination of two years of policy and legislative work that civil servants are keen to put to the test.

The Treasury had become fed-up with the Department for Education quietly bailing out colleges with multi-million pound hands-outs known as exceptional financial support.

So where take-overs or mergers couldn’t solve the problem, it was felt new legislation was needed to protect learners whilst allowing the institution to go into administration.

But letting a college go bust means potentially leaving lenders like Barclays Bank out of pocket, so the Treasury set-aside £700 million fund to help colleges pay off their DfE and bank debts early.

Just over half of the restructuring fund, as it was named, was used before it stopped taking applications last September.

And in January the new college insolvency regime became law, leaving Hadlow College to face being the first test case.

The DfE appears to have not entirely ended hand-outs, with £40 million already committed “where it was essential that funding was provided”.

But with financial irregularities and investigations into the scandal swirling around Hadlow Group, there was perhaps an inevitability that insolvency would follow.

So the government is unlikely to take the blame and the Association of Colleges has been quick to blame previous management and governance, rather than funding constraints.

And in terms of personal gain, it is worth reflecting on the fact that by the time the financial irregularities had been exposed the salaries of both the deputy principal and the principal had more than doubled to over £200,000 each.

It seems Hadlow College has been picked for putting through the insolvency regime, as opposed to West Kent and Ashford, because it is in the most financial trouble and being a specialist agricultural college with so many subsidiaries it is presumably the most difficult part of the group to find new owners.

As the local MP and senior Conservative, Tom Tugendhat, is right to say it would be a huge loss to the local community were the college to be lost, but sadly this could well be the result.

The wider question is whether this test case will lead to college insolvencies becoming anything more frequent than what the skills minister predicted would be “rare”.

If there is a positive to be taken from this tragedy it is that it will be a massive wake-up call to governors concerning their responsibility in stewarding such high value assets.

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  1. Agree regarding governing boards/bodies. I’m a school governor and although we do our best within our level of skill. knowledge and understanding to challenge the senior leadership team – we end up endorsing what they tell us is the truth. If they were incompetent or criminal how would we know?. Then when it goes wrong we are clearly identified as being wholly responsible. Perhaps the system itself is not fit for purpose – either go all the way to a business or back to a bigger schools inspection and audit regime?

  2. John Reilly

    Hang on a minute……..didn’t any of the Governors of this College ever ask a simple question of these two Senior Staff along the lines of “what experience do either of you have of creating or managing business parks, mining museums etc etc?” Was no Risk Management ever conducted?