A large college group is handing back over £9 million to the government following a long-running clawback dispute.
NCG had challenged an attempt by the Education and Skills Funding Agency (ESFA) to reclaim funding for delivery across the group between 2018-19 and 2020-21.
FE Week understands the case related to the application of funding rules in 16 to 19 and adult education budget funding streams, although it is unclear which specific rules were allegedly broken.
NCG, which runs seven colleges across England, previously told FE Week that after seeking legal advice, it disputed “certain elements of the clawback, including the application of current and historic funding rules”.
Financial statements for previous years suggested the repayment could reach around £8 million. But newly published accounts for the year ending July 2024 reveal that a heftier settlement was reached, costing the group £9.2 million.
NCG was chaired by former ESFA chief executive Peter Lauener from 2018 until he stood down in 2023 – three years earlier than planned.
The clawback doesn’t appear to have impacted NCG financially. Its 2024 accounts show a financial health rating of ‘good’, an EBITA (earnings before interest tax, depreciation and amortisation) of 4.45 per cent of adjusted income, and cash reserves of £10 million.
The group’s surplus for the year was £9,575,000 compared to a loss reported in 2023 of £3,698,000. But the “significant improvement” was a result of the sale of a “surplus asset” which earned a profit of £12,589,000.
Turnover increased from £146,819,000 in 2023 to £172,286,000 in 2024, primarily due to growth in NCG’s 16-to-19 contract.
The strong financial position led to the college giving staff a 6 per cent pay rise plus a £500 consolidated award which was paid to “all but key management personnel”.
NCG, which teaches around 25,000 students, was also judged as ‘good’ by Ofsted this month.
A spokesperson for NCG said: “The dispute, related to historic delivery from some years ago, was resolved almost a year ago. We did not make a legal challenge.
“Through robust financial management, we’ve maintained our financial strength and have been able to give above-benchmark pay awards each year. We have remained aligned with our strategic priorities and were delighted to achieve another Ofsted ‘good’ this month.”
The ESFA declined to comment.
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