The House of Commons Public Accounts Committee (PAC) will publish the results of its inquiry into the financial state of the sector on Wednesday (December 16).

The report on ‘Overseeing Financial Stability in the FE sector’ is expected to feature conclusions drawn by PAC members from an evidence session it held on October 19.

The committee declined to reveal details of its findings ahead of publication, but it is likely to reflect, for example, on comments made during the hearing by permanent secretary for the Department of Business, Innovation and Skills (BIS) Martin Donnelly.

He looked ahead to how he expects the sector to look after post-16 education and training area reviews have been completed across the country, as reported in FE Week.

“I think it’s pretty clear that the number of college is likely to continue to decrease,” he told MPs.

“We don’t have a target. Our concern is that we end up with very resilient colleges able to provide a very high quality service — it’s likely, and it’s my personal view, that there will be significantly fewer of them.”

The committee’s chair and Labour MP for Hackney South and Shoreditch Meg Hillier (pictured above), who declined to comment on the report today, warned during the hearing that the process of “rationalisation” of college provision could prove “haphazard”.

And principal of Central Sussex College, Sarah Wright, told MPs that heavy funding cuts had been “coupled with often late decisions, which do not enable colleges to plan ahead”.

She added: “The fact that funding is made on a year-by-year basis, and sometimes there are cuts to funding in-year, means that it is very difficult for colleges to plan their finances effectively.”

The Association of College also submitted written evidence, stating: “For the vast majority of colleges, debts owed to banks, local government pension funds, the Government and other creditors are manageable and are matched by assets (land and buildings in education use).

“There is, however, a small minority of colleges with unsustainable debt.

“It is worth noting that government policy up until 2013 specifically encouraged colleges to borrow more to invest in their buildings.”

Looking towards the outcome of the report, chief executive of the Association of Employment and Learning Providers (AELP) Stewart Segal, said: “It will be interesting to see the latest information from the PAC and it will be important to ensure that funding for frontline delivery is maximised across all providers.”

The PAC inquiry followed up on the findings of the National Audit Office (NAO), which in July reported that the financial health of the FE college sector had been in decline with 110 colleges recording an operating deficit in 2013/14, up from 52 in 2010/11.

The NAO report, entitled Overseeing financial sustainability in the FE sector, further said that in the same period, the number of colleges assessed by the Skills Funding Agency (SFA) to have ‘inadequate’ financial health rose from 12 (5 per cent of colleges) to 29 (12 per cent).

Ofsted chief inspector Sir Michael Wilshaw has called on employer groups to “take ownership” over localised apprenticeship recruitment as the Government pushes to create 3m apprenticeship starts by 2020.

He spoke of his support for the apprenticeship levy and said that a clearer structure for delivering apprenticeships at a local level was needed, in a speech at the British Chambers of Commerce Business and Education Summit, in London, yesterday (December 10).

“I believe the passporting of training funding and the new business levy is a step in the right direction. It should work to focus minds, encourage business to think carefully about their needs and take ownership of what is delivered,” he said.

“You as employers have got to take ownership. There needs to be a recognised structure to deliver apprenticeships at a local level.”

Sir Michael also questioned why different Chambers of Commerce branches across the country were not working with the Confederation of British Industry (CBI) to organise and identify the needs of different regions.

He said that a “joined-up approach is needed, not only to help small and medium-sized enterprises with the process, but to establish where the skills gaps are and to ensure we get the best fit of apprentices into vacancies”.

“If this isn’t done, the ambitious apprenticeship programme will come to a grinding halt,” he added.

Sir Michael challenged his listeners to organise themselves better, by putting “structures in place” to avoid “major problems in recruitment” in the future.

He added: “You need to do your bit by getting more involved and becoming active participants in schools, colleges and vocational training.

“You will benefit, your company will benefit, the economy of the country will benefit, but most importantly of all young people will benefit.”

The challenge to employers largely echoed the message Sir Michael delivered to business leaders at the Confederation of British Industry (CBI) West Midlands education and skills conference in October, when he, for example, told them: “This is my challenge to you, organise yourselves, it’s no use waiting for others to put structures in pace and then bemoaning the progress made. Use your networks and knowledge to find solutions.”

Ofsted’s annual report, released a week ago (December 4), highlighted poor progression rates from traineeships to apprenticeships and a lack of “high quality training” through apprenticeship programmes run by colleges and independent learning providers.

In response to Sir Michael’s speech, Marcus Mason, head of business, education and skills at the British Chambers of Commerce, said: “Chambers across the country are very involved in brokering and in some cases delivering apprenticeships. In 2014 we brokered and delivered over 5,000 apprenticeships across our network.

“We agree that working with a broad base of businesses and business groups is important and to some extent that’s already happening – we’re working with the Federation of Small Businesses (FSB) to run events in different part of the country promoting the benefits of apprenticeships to small and medium-sized businesses. I think it essentially it is something we are doing; we work with other business groups on this agenda.”

The CBI, FSB, and Local Enterprise Network declined to comment on Sir Michael’s call for better employer-based local organisation of apprenticeship recruitment.

A new interim principal will take the reins at troubled City College Coventry early next month.

Dr Elaine McMahon (pictured above) will start in the role at the 5,944-learner college on January 4.

She will take over from current principal Steve Logan, who has spent just 18 months in the post.

The change is set to coincide with the publication of an Ofsted report on the college, following an inspection from November 24 to 27, which a statement released yesterday by chair of the board of governors Maggie Galliers suggested did not go well.

She said: “We were disappointed by some of our success rates this year and the inspection highlighted a number of important areas where significant changes and improvements are needed.

“We have therefore moved swiftly to appoint the right person to take the college forward.

“Elaine is an extremely experienced, well-respected and successful former principal, who is enthusiastic about joining us.

“Her priorities will be accelerating the pace of quality improvement, ensuring the continued financial health of the college and preparing for a local area review of FE provision announced for November 2016.”

She added that the inspectors had made “positive comments about the decisiveness of college governance and our strong links with industry”.

“Our finances are stable, despite the deep cuts in funding that have swept the FE sector,” she said.

“Furthermore, we know that some areas of our teaching are delivered to the high standards to which we aspire and which our students deserve.”

Dr McMahon has more the 30 years of experience in further and higher education in the UK and the USA, the college’s statement said.

She led Hull College for eight and a half years until early 2013, during which time it received an outstanding rating by Ofsted.

She has since had a number of stints as interim principal, at Harlow College, Ealing, Hammersmith and West London College and Edinburgh College.

Dr McMahon said: “City College has all the right ingredients to be successful, having passionate staff and superb facilities.

“I look forward to working with colleagues to meet student, employer and community needs, to improve success rates and to help our students progress into meaningful employment.”

Her appointment is the latest twist in an almost three-year long saga at the college.

The college was rated inadequate across-the-board by Ofsted in April 2013, down from its previous grade three (‘satisfactory’) inspection result.

It led to the Skills Funding Agency (SFA) calling for “fundamental changes to leadership and governance” and the departure of  former principal Paul Taylor and chair of governors Warwick Hall.

Ms Galliers, who was the Association of Colleges president for 2011/12, was appointed to oversee improvements as chair at the college in August 2013 and, with interim principal John Hogg, achieved a degree of success.

The college received a grade three rating from Ofsted in July last year, the same month that Mr Logan took over.

Post-16 education area reviews “haven’t been set up in order to save money,” Education Secretary Nicky Morgan (pictured above) claimed in an evidence session with the House of Lords Social Mobility Committee.

Ms Morgan was grilled about the influence of FE funding issues on the post-16 education area review process by former Labour Education Secretary Lady Estelle Morris (pictured left), in the session on Wednesday (December 9).

Thirteen area reviews across two initial waves, covering more than 130 general FE and sixth form colleges, have been launched so far by the government, which has said the “need” to move towards “fewer, often larger, more resilient and efficient providers,” underlies the process.

However, when Lady Morris questioned whether the government intended to make savings through the area reviews, Ms Morgan said: “The area reviews haven’t been set up in order to save money, they have been set up to ensure sustainability of institutions.”

The session was covered live on Twitter by FE Week and reaction to Ms Morgan’s comment was swift. Among those to respond was London Work-Based Learning Alliance governor Rob Brooks, who tweeted: “I don’t believe that for a second.”

And Dr Fiona Summers, technical standards manager at YMCA Awards, tweeted: “This goes against what we are hearing elsewhere re area reviews = efficiencies.”

Both Ms Morgan and Skills Minister Nick Boles were questioned in what was the final evidence session of the committee’s inquiry into social mobility in the transition from school to work.

Moving on to apprenticeships, Lady Morris queried whether the government would meet its 3m starts target with, for example, 80 per cent of learners at level two.

Mr Boles (pictured below right) was quick to highlight the value of level two apprenticeships, saying: “I just do not accept that innately a level two apprenticeship cannot be high quality.”

He added that under the new standards all level two apprenticeships will meet baseline requirements, which means an apprenticeship must be a job that lasts for at least a year, with an employer and a minimum of 20% off the job training.

“If you talk to builders – if you took away the level two in plastering or brick laying or site carpentry it would be devastating, not only for the industry which has a desperate need for skills, but actually for a lot of the young people, he said.

“While of course you’d much prefer every young person to sign up for a level three from the get go; some aren’t ready.”

Mr Boles also said that he was actually concerned about maintaining level two numbers once the levy on large firms was introduced because, he said, employers would be able to spend more of their levy voucher entitlement if they opted for higher level programmes.

“If you’re an big employer and you’re playing a huge levy bill there no way that you’re going to be able to employ enough level two apprenticeships to use up your levy,” he said.

“To some extent this makes us slightly worried about out 3m target … obviously if you ended up with everybody just offering higher and degree apprenticeships we would be hard pressed to be creating 600,000 a year.”

However, he concluded that the government remained confident that the “combination of measures” it is taking will mean targets are met.

Commenting on what was said in the session, Shadow Skills Minister Gordon Marsden said that building level two has traditionally been an important factor for apprenticeships in a number of areas.

“The same is true of parts of the service sector – hospitality, leisure and related qualifications – and that is a view that has been expressed by employers and sector skills representatives in the past,” he said.

“However it is important that qualifications can be progressive, that they are properly monitored and examined, and that they genuinely equip people with broad as well as specific skills.

“Maintaining the essence and progression of the content of current level twos, even if the label is altered, may be another route forward.”

The staggered launch of bidding windows for £650m-worth of European Social Fund (ESF) cash between next month and May could result in providers competing on the basis of “available resources rather than delivery expertise,” the Association of Employment and Learning Providers (AELP) has warned.

The first bidding window — for provision for young people considered not in education, employment, or training (Neet) — opened on December 7 and the second is expected to launch today (December 14).

The rest are expected to open “at regular intervals between January and May 2016,” said a Skills Funding Agency (SFA) spokesperson.

“We won’t know how many contracts there will be until after the procurement exercise is completed at the end of May 2016,” she said.

But Paul Warner (pictured), director of employment and skills at the AELP, said providers who were unaware of future tenders could win a contract only to find delivering it might hamper their ability to deliver ESF provision put to market at a later date.

Such a situation might, he suggested, put ESF contract-winning providers off going for further contracts despite having the necessary expertise because, for example, staff were located in a different region.

“With each specification likely to be launched gradually over a number of weeks, providers may find it difficult to allocate resources sensibly, which may lead to some having to choose which specifications to bid for on the basis of available resources, rather than delivery expertise,” said Mr Warner.

“We are in active dialogue with the SFA and have asked a number of questions regarding the procurement and contract mobilisation process, which we hope to have answers to shortly.”

The first bidding window is set to shut on January 18 — giving just 27 working days excluding weekends and public holidays to research, write and submit bids.

And then, after initial tenders totalling £14.86m have been awarded on March 30, winning bidders will have only 11 working days before delivery commences from April 14.

It follows a summer in which ESF-funded providers were forced to lay-off staff amid delays in issuing new ESF contracts, as the government sought to iron out regional devolution issues with local enterprise partnerships (Leps).

“These short timescales compound the delays and problems we’ve seen with ESF funding,” said Mr Warner.

“Providers who laid off staff because of the delays might now struggle to bid for new contracts because they do not have the staff any more or even shut provision.”

The five local enterprise partnership areas to which ESF money would be heading in the first bidding window were exclusively revealed by FE Week on December 4 and confirmed by the SFA and ESF just days later.

The SFA and Lep Network declined to comment on the concerns raised by Mr Warner.

Providers have hit back at claims that establishing new learner ventures in Saudi Arabia as part of the Colleges of Excellence (CoE) scheme might lead to “bankruptcy”.

It was reported last week in Education Investor and by FE Week that bosses of the scheme were struggling to get the number of learners they expected after attracting providers such as Lincoln College, Moulton College and Activate Learning to sign up to multi-million pound deals.

And while UK Trade and Industry (UKTI) Education, which was responsible for bringing together consortia to bid for the contracts, conceded CoE had “encountered challenges,” providers defended their involvement.

Activate Learning, an education group that includes Banbury and Bicester College, City of Oxford College and Reading College, signed up to the CoE programme as part of the Oxford Partnership, a consortium with GEMS Education Solutions and Moulton College.

Sally Dicketts, chief executive of Activate Learning (pictured above), said: “The Oxford Partnership entered into the agreement with CoE recognising that it would be a long-term investment.

“We remain fully committed to our colleges in the Kingdom of Saudi Arabia, which also represent a social investment in empowering women and equipping them with the skills required to access meaningful employment.”

Interserve, an international support services and construction group, acquired the Employment and Skills Group, a UK-based provider of vocational training, skills and employability services that had signed up to CoE, at the end of last year.

An Interserve spokesperson said: “We deliver a range of educational services for our client, CoE. We are pleased with the progress we have made and recently opened a new state-of-the-art technical college for CoE.

“More than 1,500 young Saudi people — the majority of whom are female — attend our colleges where they are prepared for their future careers. We are proud to be part of CoE’s forward looking programme and remain committed to it.”

Although the projects were thought to be providing new revenue streams for an increasingly cash-strapped domestic college sector, such ventures have not been without their critics. Ofsted boss Sir Michael Wilshaw, for instance, once urged colleges to focus on “Deptford not Delhi,” as previously reported by FE Week.

A UKTI spokesperson said: “While the CoE programme has encountered challenges, the UK providers are working with UKTI and CoE to ensure the success of the programme.

“UKTI continues to support the Saudi government’s ambitions to broaden and improve Technical and Vocational Education and Training provision in the country.”

Pearson and North Hertfordshire College have declined to comment. Highbury College, Moulton College, Nescot, Lincoln College, Hertvec and CoE did not respond.