A Berkshire college is exploring merger options after struggling with “serious cashflow pressures” that triggered government intervention this summer.
Newbury College’s long-term sustainability is being tested through a structure and prospects appraisal (SPA), which examines whether to stay as a standalone college or merge with another.
FE Commissioner Shelagh Legrave undertook an assessment of the college in July after the college fell into a “consequential slippage” of repaying funding advances.
The college blamed “complexities” in the planning system leading to delays in receiving receipts of its Mayfield Point site property sale.
Legrave’s report, published today but conducted in July, recommended leaders refresh its property strategy and create “more realistic” estimates for its income after its financial performance worsened from lower-than-planned student numbers and higher-than-expected English and maths resit provision.
The FE Commissioner also told the college to start an SPA process in the autumn term.
Newbury College was advised to explore a Structure and Prospects Appraisal (SPA) in March 2024 by the DfE’s place based team and the FE Commissioner’s office to test merger options “against the viability of a standalone option”.
The corporation initially agreed to the recommendation but paused the process in June 2024.
“The board has since reflected further and now considers undertaking a SPA would be judicious to ensure the college’s future sustainability,” today’s FE Commissioner report said.
The college said it is expected to complete the SPA in spring of next year and is exploring a range of “possible operating models” for the college.
The governing board has set up a SPA steering committee, thereby suspending the strategic development committee after the chair told the FE Commissioner it has “outlived its usefulness”.
The chair assured that the new committee was for “discussion not decision” but Legrave warned that its relationship with the wider board needs “careful thought” to maintain appropriate engagement with the whole board.
Legrave’s report described the college as “one of the smallest general further education colleges in England” with a “broad curriculum and a high cost base”.
“The sustainability of the college given its current size and its weak financial position, merits a need to consider the various strategic options available to the college,” the report said.
Newbury’s position ‘still fragile’
Newbury College is one of only a few FE colleges to operate under a PFI. The contracts, greatly expanded under New Labour in the 1990s, saw private firms build and operated public sector infrastructure and facilities, with above-inflation repayments scheduled over many years.
The college has since been crippled by the “very high” repayments costs of its PFI, due to end in 2027.
Its latest accounts show deficits from PFI payments amounting to about £460,000 each year since 2018-19, including massive deficits from interest payments. It was billed £154,000 in 2018-19 just for the interest.
The college will be free of the deficits once the contract expires and the FE Commissioner advised leaders to develop a transition plan by this December that details a “realistic” cost of procuring services needed once the PFI ends.
Meanwhile, Legrave noted that the college’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) in June 2025 has worsened for the year.
The college budget had assumed it would get extra in-year cash from the Department for Education for a growth in 16-18-year-old students, but they enrolled fewer learners than planned in 2024-25.
While the reduction in income was offset by growth in apprenticeship and higher education numbers, its pay costs were higher than its budget “largely” due to a higher-than-expected demand for GCSE English and maths resit provision.
The report said the college has undertaken a staff restructure, reducing management and teaching staff to “address its cost base”.
The report added: “While forecasts show an improving EBITDA, as a result of staff restructuring and the end of the PFI in July 2027, the position is still fragile, and the ongoing underlying financial position will always be challenging. The cashflow is also dependent on the receipts from the land sales and DfE’s consent to use the proceeds for working capital.”
Leadership changes ‘yet to be proven’
Newbury is currently being led by Lee Probert, contracted as interim principal until August 2026, who took up the post last December when Iain Wolloff retired.
Other recent leadership changes include Lee Jamieson, the new deputy principal, and Julian Tucker, a interim director of finance.
The FE Commissioner report said the “interim nature” of two of the three senior appointments means the strength of leadership at the college “has yet to be proven”.
She added that in light of the SPA process, permanent appointments might be “inappropriate” now and does cause “an element of uncertainty and fragility” to a leadership team that has already been through turbulence.
Regarding the governance of the college, chair of the corporation Sally Osmond told the FE Commissioner that leaders needed to provide more detail and data to the board after finding some reports “lacked focus” or were “too wooly”.
Lee Probert, principal of Newbury College, said: “We are pleased to receive the support of the DfE and FE Commissioner to undertake the review and evaluate future options for Newbury College to ensure that its long history is sustainable into the future.
“We continue to be focused on excellence for our students, embedding the key requirements for quality learning and developing skills for our communities providing ‘careers, not courses’.”
“Newbury College has been central to the development of thousands of students over the last 76 years and fundamental to the provision of key skills for businesses in the area.”
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