Serious governance failings and financial inexperience are in the spotlight at The Hadlow Group as the board goes into meltdown.

As previously revealed by FE Week the Department for Education has launched several investigations into the finances of the group – consisting of a board for Hadlow College and a separate one for West Kent and Ashford College.

Both principal Paul Hannan and deputy principal Mark Lumsdon-Taylor have been suspended.

FE Week has now found that the joint finance committee for the group, which reports to both college boards, currently has no chair, consists of just two board members from Hadlow College, has no representation at all from West Kent and Ashford College and for several years has had no board member that was a qualified accountant.

In recent days, George Jessel, Harvey Guntrip, Chris Hearn and Paul Dubrow have all stepped down from their governor roles at the group’s two colleges and the FE Commissioner, Richard Atkins, has loaned one of his deputies, Anna Fitch, to be the group’s chief financial officer – a post that has been vacant for several years – and to pay her costs.

The lack of financial experience on the committee was troubling their own professional advisors last year.

According to June 2018 meeting minutes, ‘professional advisors’ told the finance committee it needed to be “strengthened” by recruiting a chartered accountant and a chief financial officer.

The college has since confirmed that the advisors were in fact Hearn’s consultancy firm Edscencio and despite the obvious potential for a conflict of interest in being a paid adviser, Hearn only stepped down as a governor and as a member of the finance committee in recent weeks.

In any event, no accountant was found.

A spokesperson told FE Week: “We conducted a search for a chartered accountant over the summer and autumn terms, but were not impressed with the two CVs we received and did not progress them to an interview stage.

“We are in the process of conducting a further search, which is a key priority.”

Board minutes for The Hadlow Group show it first started searching for a chartered accountant in February 2017 after its finance committee agreed it needed a qualified accountant with relevant sector experience.

In an interview with FE Week last November, Atkins stressed the need for colleges to have at least two financially qualified governors on their board to both challenge and support the principal and finance director – the post Lumsdon-Taylor held.

DfE guidance also states college boards require a mix of skills, knowledge and experience, “such as accountants or other qualified finance practitioners”.

The FE Commissioner visit was triggered by a request for restructuring funds to the Department for Education’s Transactions Unit, which raised questions about a series of land purchases by Hadlow College.

The ESFA is said to be looking to reclaim significant sums of funding from the Hadlow Group after concluding its own investigation.

It is understood the group was claiming funding they were not permitted to.

Lumsdon-Taylor said they had permission to claim the funding, as part of Hadlow’s adoption of the West Kent and Ashford campuses of K College (which became West Kent and Ashford College).

But the ESFA disputes whether Hadlow had this permission.

Another out-of-the-ordinary practice at The Hadlow Group is the one finance committee for two, unmerged colleges.

Although West Kent and Ashford College and Hadlow College belong to the same group and share a principal, they have not been merged.

A planned merger is currently on hold.

Other colleges which share a principal, as Kingston and Carshalton colleges did before they merged, had two separate finance committees.

This has all taken place in the shadow of the new insolvency regime: if the college has to give funding back to the government, it may need a short-term bailout and to quickly dispose of property to avoid going into administration.

Insolvency guidance for college governors, published on January 29, states that colleges would be “advised” to “recruit a qualified accountant on to their board”.

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Paul Dubrow

Dubrow was the only member of the finance committee who served as a governor at West Kent and Ashford College. 

The former chair of WKAC’s governing board, before stepping down in February, he attached a laurel to the final beam when builders finished constructing a WKAC centre in Ashford in 2016. He is a director for Global Driving Ranges Ltd.

Chris Hearn (also a paid advisor)

Hearn was the UK head of the education sectors for Barclays Corporate Bank between 2009 and 2015.

Since then, he has co-run a consultancy that provides financial advice to colleges, such as East Berkshire and Strode and Havering College of Further and Higher Education; as well as advising organisations that want to do business with colleges.
John Dinnis

Dinnis runs his family’s farm, Filston Farm, in Shoreham in Kent, which houses a number of businesses and has arable farming, livestock, competition horses and sweat lodges.
He is a director of The Shambles Property Holding, an estate management company based in Sevenoaks.

Dinnis also served as a governor of Shoreham School for three terms.

Mike Weed

Professor Weed is pro-vice chancellor for research and enterprise at Canterbury Christ Church University, which has a partnership with Hadlow Group to run courses at its colleges.

He is also the head of the university’s human and life sciences school and has worked for various banks, government departments and local authorities on public health initiatives.

Up to 50 jobs are on the line at a college group which last year received a £30 million government bailout to help with its merger, a union has said.

The University and College Union reacted angrily to the news at Stockport College and Trafford College, which merged in April 2018 and are planning to axe 26 teaching jobs in areas such as English, maths, gas and plumbing as part of a restructure.

UCU regional official Martyn Moss said: “Less than a year on from a merger the college said would bring stability and allow it to better serve students, businesses and the local community it is announcing plans to scrap jobs.

“There is no rationale for axing jobs in areas like English, maths, gas and plumbing and the move appears to be directly at odds with what the students, businesses and the local community actually need.

“UCU will resist any compulsory redundancies amongst our members and we will be meeting in the coming days to discuss this news and how best to respond to it.”

Trafford College Group (TCG), which runs both colleges, said following a review, it has “seen that there are some areas that need to be addressed in terms of staffing levels and how we operate some of our services”.

“We are also consulting with our trade unions on a proposal to, unfortunately, reduce approximately 27 full-time equivalent posts from the staff body representing a little under five per cent of the college group,” a spokesperson said.

Despite receiving at least £30 million from the government, TCG still made a loss of £31 million in 2017/18 owing to the historical problems at Stockport, which was rated ‘inadequate’ three times by Ofsted in just five years.

The 2017/18 accounts also showed TCG had an outstanding debt £6.72 million with Barclays Bank, as of July 31, 2018, and expects to repay £671,000 annually until 2036.

Stockport College has had a notice of concern for financial health since December 2010, longer than any other college.

It was placed in administered status by former FE commissioner David Collins in 2013.

Trafford College was last rated grade two.

TCG principal Lesley Davies told FE Week in February that the merger was “the right thing to do”, despite the challenges.

England’s largest college group has paused recruitment for a new chief executive after its initial hunt proved fruitless.

NCG was left without a permanent boss in October after Joe Docherty left. Docherty was one of eight high-profile principals to step down in a spate of resignations last term.

He was replaced by Chris Payne, the group’s executive director partnerships and assurance, immediately on an interim basis and a recruitment round was then launched.

But after five months of searching NCG, which comprises seven colleges and two private training providers, has failed to find a talented enough permanent leader.

In a highly unusual move, NCG is now not actively recruiting a replacement. Instead, they will focus efforts on “improving standards” as it awaits a follow-up visit from Ofsted following the grade three rating in June.

“We have experienced and committed leadership in place at NCG – dedicated to improving standards at our divisions,” a spokesperson for the group said.

“We have paused recruitment for a permanent chief executive while we focus on these priorities and intend to return to the search in spring.

“Chris Payne will continue as interim chief executive in the meantime.”

Rumours had been circulating that NCG was looking to demerge part of its group – a move that Birmingham Metropolitan College is consulting on (see page 4) – after experiencing a fall in training standards when it expanded rapidly in recent years. However, the group denied this when quizzed by FE Week.

Trouble at NCG, which is chaired by former Education and Skills Funding Agency chief executive Peter Lauener, started brewing last year.

Achievement rates across the group fell way below the national average, it had to make mass redundancies across its private training providers Intraining and Rathbone Training to make savings, and staff at its colleges in London went on strike in a row over pay.

On top of this, a free school that the group sponsored, the Discovery School, was forced to close down by the government.

All this happened before Ofsted downgraded the group from ‘good’ to ‘requires improvement’, which triggered intervention from the FE Commissioner.

The NCG spokesperson said it expects the commissioner’s team to carry out a “diagnostic visit” as a result of the grade three, and while he has “not yet visited”, the group expects this to happen “before the end of the academic year”.

As well as FE Commissioner intervention, it is expected that NCG will be dropped from the government’s final bidding round for Institutes of Technology as a result of its grade three Ofsted rating.

We have paused recruitment for a permanent chief executive while we focus on improving standards

Following the turbulent year, Docherty decided it was time for him to resign. But because he left in October, after the start of a new academic year, he would have been paid a contractual entitlement.

These payments can be huge: in January FE Week reported that John Connolly, the former principal of the RNN Group who also resigned with immediate effect in October, received a £150,000 “emolument” payment, and Amarjit Basi received a £200,000 payout when he resigned as principal of the troubled Cornwall College Group in July 2016.

NCG confirmed that Docherty, who was one of the highest paid principals in the country, taking home a £227,000 salary in 2017/18, was paid a “contractual entitlement” when he left, but would not disclose the figure.

The seven other colleges that saw their top boss leave with immediate effect (in a spate of resignations after the start of the 2018/19 academic year) have all also failed to find permanent replacements.

BMet told FE Week this week that Cliff Hall, who replaced Andrew Cleaves as interim principal in September, still holds the post, and West Nottinghamshire College confirmed that Martin Sim is still interim principal after taking over from Dame Asha Khemka in October.

Cornwall College Group said Dr Elaine McMahon is still heading up the college on an interim basis after the departure of Raoul Humphreys in November 2018, and the job at Havering College is still being done by interim Paul Wakeling after Maria Thompson left in September.

Penny Wycherley is still in charge of City College Plymouth on an interim basis after Garry Phillips stepped down in November, and lastly, Rachel Nicholls continues to be the acting principal at Peterborough Regional College after Terry Jones resigned in October.

The Labour Party has launched its second consultation on its plans for a National Education Service, which will explore how to move to a system “empowered” by “local accountability”.

It will be of particular interest to colleges, considering Labour leader Jeremy Corbyn previously revealed to FE Week his plans for free lifelong learning could mean they lose their status as independent corporations and be brought back under local authority control.

In a consultation document entitled “local accountability in the National Education Service”, the party’s early years, education and skills policy commission warns that “in our haste to rectify the damage the Conservatives are doing to our education system, it could be tempting to simply return to what has been done in the past.

“But this would be a wasted opportunity,” the document states.

Labour wants to “empower” local communities “to influence change where it is needed and guarantee that the education system meets their needs”.

The party’s first consultation on the NES, which ran for 12 weeks last year, was light on detail and didn’t include any costings for how these policies would be implemented.

This new consultation, which runs until June 30, equally gives away little about the party’s vision for a National Education Service, beyond its promise to “empower” local communities “to influence change where it is needed and guarantee that the education system meets their needs”.

“By reinstating local democratic accountability, and involving local stakeholders in the creation of shared education aims trust can be built,” it states.

The six questions posed are deliberately broad and open-ended.

Labour members and supporters are asked whether they believe there should be a “single democratically accountable structure” for the National Education Service, that would “deal with each part of the system and its institutions at local and national level”.

Respondents are also asked how they would “ensure education institutions retain appropriate levels of autonomy and independence”, and to say what role they think local authorities, combined authorities, metro mayors and local enterprise partnerships should play.

In November 2017 Labour leader Jeremy Corbyn said his party feels “there’s a danger with the independent model of college education that they get too far away from local communities and local education authorities” and “we’re looking to is a model that will bring them closer to that, but not removing the important connection with local industry”.

Then, in September 2018, the shadow skills minister Gordon Marsden refused to rule out bringing colleges back under local authority control.

The National Education Service is a flagship policy of Corbyn, and seeks to emulate the popularity and support enjoyed by the NHS.

At last year’s conference, the party voted to recreate a “coherent, planned and appropriately funded national public system which is accountable to its various stakeholders and communities”. It has also set out 10 guiding “principles” which will be followed during policy development.

To help shape the NES, Labour has launched a lifelong learning commission.

Earlier this month a team of 16 education experts joined the advisory board, including former education secretary Estelle Morries, former Association of Colleges chair Carole Stott, managing director of City and Guilds Kirstie Donnelly, and FE Week contributor professor Ewart Keep.

One of its tasks will be to carry out work on funding models that would “ensure that education is free at the point of use for all those who need it”.

Government officials have revealed they are actively looking at ways to make the 315-hour minimum industry placement in T-levels more flexible.

Senior leaders such as David Hughes, chief executive of the Association of Colleges, have long expressed concern that young people, especially in rural areas, will be unable to pass the T-level owing to a lack of local and lengthy placement opportunities.

In a webinar put out by the Education and Skills Funding Agency in February, T-level developer Sarah Knights said the government is listening to concerns and could “accommodate flexibilities” before the first T-level students start in 2020.

“It’s very much something under consideration – access to industry placements, particularly in areas where opportunities are limited. There is a lot of work going on at the moment to see how we might be able to accommodate flexibilities within the delivery model,” she said.

FE Week understands one area of flexibility the ESFA is looking at is allowing students to take several short industry placements at different employers, as opposed to one long one, which would add up to the minimum duration.

Jo Maher, the principal of Boston College, one of the pilots of the new technical qualifications, is one person campaigning for the change to allow for multiple placements to count towards the 315-hour minimum.

She also wants a change in government rules so that simulated work within a college, at a college-run restaurant or hair salon, for example, can count towards the placement.

“I fully understand there is a view that it’s an artificial environment, but having paying members of the public in the building means students can still learn,” she said.

She believes this flexibility would be particularly helpful for students with special educational needs and mental health issues who can use it to “build confidence” before going to work at other companies.

Maher has also asked the ESFA to make 45 days the minimum requirement, instead of 315 hours.

“The spending rules say the placement can last a minimum of 45 days, but that’s a misnomer. It’s the 315 hours that’s the real crux point,” she told FE Week.

Maher said many of her 72 T-level pilot learners have to get up at 7am, but cannot start work until 10am.

This is because they have firstly to travel to college before being taken to their work by a designated minibus as they cannot afford to travel to the placement.

“Why would we then put in a measure that they have got to this for 60 days?” Maher asked.

Boston College had to buy a minibus and delegate a member of the work placement team to make an hourlong trip ferrying the learners to their placements.

“That is not what funding should be used for,” Maher said.

She added that without these various flexibilities to the industry placements she does not believe T-levels will be a success. Another area the ESFA still needs to work out is whether part-time jobs can count as part of the work placement.

“When asked a question about this in the ESFA webinar, Elisabeth Baines, who works for the agency in funding and programmes development, said: “It depends. We have outlined the principles of what an industry placement should be so I do not think we can give a blanket ‘yes it could’.”

On the possibility of flexibilities, a DfE spokesperson would only say: “We are working closely with colleges, providers and business to get the delivery of this right and more information will be made available over the year.”

However, he confirmed that there are no plans to change the 315-hour minimum requirement.

Figures for the apprenticeship starts published this morning for the period August to December 2018 are up 10 per cent on 2017 – but 24 per cent down for the same period in 2016 – the year before the levy reforms were introduced.

The Department for Education reports: “There have been 192,100 apprenticeship starts reported to date between August 2018 and December 2018 for the 2018/19 academic year. This compares to 175,100 reported in the equivalent period in 2017/18, 230,400 in 2016/17 and 224,400 in 2015/16.

“Of the 192,100 apprenticeship starts reported so far in 2018/19, 59.1 per cent (113,500) were on apprenticeship standards.”

The 15,300 starts in December 2018 were 8 per cent lower than the 16,700 reported at the same time last year for 2017.

December is the second month in 2018/19 to experience a fall in starts compared to figures published at the same time last year.

Analysis by FE Week shows that for the Government to achieve their manifesto commitment of 3 million starts by April 2020 there will need to be an average of 82,031 starts every month over the next 16 months. Since May 2015 the average monthly starts have been 38,352.

More to follow

The Department for Education is “encouraging” colleges to be more transparent about senior staff pay when they file their accounts – along with whether they have adopted the Association of College’s new code.

A “college accounts direction” for 2018/19 was published by the department today and included “substantial” updates that corporations should include when submitting their upcoming financial statements.

“Corporations receive significant investment from public funds and need to demonstrate to stakeholders that decisions made on executive pay are evidence-based, proportionate and represent value for money,” it said.

“This year, as a matter of policy, we have increased transparency around executive pay to support accountability, and to help maintain public confidence and trust in executive pay.”

While the DfE has clamped down on chief executive pay in multi-academy trusts and vice-chancellor wages in universities, including writing to demand a justification of salaries of over £150,000, no such action has been taken against colleges, despite many principals earning over £200,000.

Addressing colleges today, the DfE said: “We encourage corporations to make every effort to evidence their disclosures fully, and to consider what other information enhance transparency and understandability.

“For example, corporations could consider providing stakeholders with more meaningful information to help them understand pay structures and movements, such as: remuneration paid or payable in the year, alongside full-time equivalent information [and] whether they have adopted AoC’s Governor’s Council’s The Colleges Senior Staff Remuneration Code.”

The voluntary guidance from the Association of Colleges, which received mixed reactions when it was being consulted on, was published in December.

It encompasses “three core principles: fairness, independence and transparency”.

The main policies include only giving seniors a pay rise if all staff also receive one, removing top college bosses from remuneration committees, and separate publication of principal salaries.

It was developed after tension between lecturers and their bosses intensified as college leaders enjoyed bumper wage increases while pay for lower-level staff has reportedly failed to keep up with inflation.

The University and College Union blasted principals for being “greedy and hopelessly out of touch” in April last year, after its analysis of 2016/17 accounts showed a third enjoyed a pay rise of more than 10 per cent.

Seventeen principals earned salaries of over £200,000 that year.

Today’s accounts direction from the DfE emphasises that colleges “risk” intervention from the Education and Skills Funding Agency if they do not submit their audited accounts for 2018/19 by December 31, 2019.

It also highlights that colleges and their auditors “need to be mindful of the new insolvency regime in preparing accounts”, which came into force on January 31.

The National Audit Office is expected to publish its long awaited follow-up review on the state of the apprenticeships programme next Wednesday, in the middle of National Apprenticeship Week.

The independent Parliamentary body was damning in its verdict of apprenticeship reform in its last report in September 2016, when it warned of a high risk of fraud and “market abuse” and revealed a lack of contingency plans.

The new report, which is due on March 6 and will focus on whether the reformed apprenticeships programme is delivering value for money, is also expected to be highly critical.

This latest review was launched last July. When FE Week asked the NAO why it had chosen the middle of National Apprenticeship Week to publish the report, a spokesperson said: “We were always going to publish this report around now and are of course aware that next week is Apprenticeship Week. Given the focus it seems a good time to reflect on the programme.”

Its report will consider whether the Department for Education has defined appropriate indicators of success for the apprenticeships programme, whether the DfE is doing enough to ensure apprenticeships and the levy system are not being abused and what progress has been made against previous NAO and public accounts committee recommendations.

The NAO is also expected to comment on why thousands of apprentices do not have a regulator responsible for inspecting the quality of their training. This comes after FE Week revealed that providers who delivering apprenticeships at levels 6 and 7 that have no HE qualification – such as a degree – and are not on the Office for Students register go completely unregulated.

The new report is also expected to be damning on issues of apprenticeship oversight after repeated issues with applications to the register of apprenticeship training providers, which led to cases of one-man bands with no delivery experience being given access to millions of pounds of apprenticeship funding.

A new “tougher” register opened in December, which forces all providers who gained access to reapply, and new applicants must have traded for 12 months at least in order to be eligible and provide a full set of accounts to be on the register.

When the NAO launched its follow-up review it also said it would also focus on why apprenticeship starts have dropped and the work of the Institute for Apprenticeships and Technical Education. It is also expected to examine the impact of the policy.

Earlier this month, the DfE commissioned research to examine whether apprenticeship delivery is being adjusted to account for apprentices’ prior learning, signalling the government is preparing to clamp down on funding overclaims. The NAO also told FE Week that this is one area of concern that it is likely to address in its new report.

In September 2016, the first NAO report on apprenticeship reforms found that a delivery team had been set up to “consider the risks of fraud and gaming” but said it was “too early to say what impact this group will have”.

It urged the DfE to “do more to understand how employers, training providers and assessment bodies may respond to ongoing reforms, and develop robust ways of reacting quickly should instances of market abuse emerge”.