Two days before the college insolvency regime comes into effect, meaning that colleges will be able to go bust for the first time, the Department for Education has released guidance for governors on the new law and their responsibilities.

FE Week has picked out seven key points:

 

1. Early identification of financial difficulties is vital – so don’t ‘rely solely’ on ESFA ratings

College governors are being urged to “liaise with their bank and the ESFA” as “soon as signs of financial difficulty emerge”.

“It will be more straightforward to identify appropriate support and intervention if colleges tell the ESFA immediately if they judge that they may be running into difficulties,” the guidance said.

Governors are warned not to “rely solely” on the college’s ESFA financial health rating as “such ratings do not necessarily take into account all aspects of financial management and the cashflow position can vary quickly and should be assessed monthly”.

 

2. Colleges should have a qualified accountant on their board

College corporations would be “advised” to “recruit a qualified accountant onto their board”, and to also ensure that a finance director of “sufficient seniority” who is “capable of renegotiating covenants and lending facilities and driving through change” is appointed.

Governors without a background in finance “are not expected to become experts” but “they should familiarise themselves with financial planning and accounting guidance” and be prepared to “ask questions” about finance papers, and “undertake training if required”.

During an interview with FE Week in November last year the FE commissioner said it was “staggering” that there were still colleges that didn’t have any financially qualified board members.

 

3. An independent business review could help ‘head off’ insolvency situation

An independent business review is the first stage in the insolvency process – and could actually “head off” a college going bust “if conducted early enough”.

The IBR involves “assessing the financial and strategic future of the college” to identify a range of options for its future.

It’s usually commissioned “where an undertaking is either exhibiting signs of financial distress, has breached covenants on financing facilities or where there is a material additional financing need caused by operational difficulties”, but does “not automatically result in insolvency proceedings of any kind”.

In the case of the college insolvency regime, it’s most likely to be commissioned by the DfE, a secured creditor, or the college board.

 

4. Governors have a number of duties under insolvency law – and penalties if they don’t comply

If the outcome of the IBR is that the college is insolvent, the DfE will appoint an education administrator to oversee the insolvency process.

Governors have a “statutory duty to co-operate with an administrator, education administrator or liquidator”, according to today’s guidance.

Actions that governors might be required to do include “make out and submit a statement as to the affairs of the statutory corporation, setting out the particulars of the corporation’s assets, debts and liabilities” and “lay a statement of affairs before creditors”.

Related to this, the FE Bodies (Insolvency) Regulations 2019 lists a number of offences that governors can be guilty of, including “material omissions from statements relating to the college’s affairs”, “falsification of the college’s books” and “false representations”.

In each case the penalty could be a fine or a prison term, or both.

 

5. Student governors won’t be treated the same as other governors

The legislation around the FE insolvency regime “deliberately” includes “allowances” for student governors.

“Student governors must take their responsibilities as governors and duties as charity trustees seriously, and these still apply,” today’s guidance says.

“However, it was judged that they might be likely to have less knowledge of the college’s financial affairs than other governors of the college and that it would be unfair to put them in a position where they could potentially be fined for not being able to be involved in preparing and submitting statements of affairs about the college.”

Student governors also don’t have the power to appoint an administrator.

But in “circumstances where student members give false statements” in relation to other offences they can be held responsible, as “these matters are within their control”.

 

6. All governors could be guilty of wrongful trading

Wrongful trading is a civil offence that occurs – in this case – where governors have allowed a college to continue to operate when they knew that insolvency was unavoidable, and they didn’t do everything they could to avoid loss to its creditors.

“Governors must act reasonably and responsibly in the time preceding insolvency to recognise the prospect of insolvency and act on it, making every effort to minimise loss to creditors,” the guidance said.

If a claim of wrongful trading is successful, the court “can order a governor to make such contribution to the FE body’s assets as the court thinks fit”.

 

7. We still don’t know what the ESFA’s monitoring and intervention arrangements will be

Today’s guidance “does not provide comprehensive guidance on the financial monitoring and intervention arrangements for colleges, which are being redeveloped in the light of the introduction of the insolvency regime”.

More details will be published “later in spring of 2019”.

As previously reported by FE Week, “exceptional financial support will no longer be available from April 2019” but a “range of support will continue to be available” from both the ESFA and the FE commissioner’s team, today’s guidance said.

Special educational needs experts have warned of a “postcode lottery” for post-16 learners with high needs, during an education select committee roundtable this morning.

MPs heard from representatives from colleges and charities working with learners with special education needs and disabilities on the issues around post-16 education.

It was part of the committee’s inquiry into the impact of the reforms introduced in the Children and Families Act 2014 which, among other things, extended local authorities’ statutory duty towards those with SEND up until the age of 25.

It seems to be a big tangled mess

Di Roberts, principal of Brockenhurst College and chair of the Association of Colleges’ SEN group, said the reforms had helped “raise the profile of the FE and post-16 providers with local authorities”, as previously “we were the hidden sector and we were doing brilliant work with our young people but I don’t think the local authorities understood”.

But Pat Brennan-Barrett, principal of Northampton College, said she was “deeply concerned” about the “postcode lottery of funding, the devolvement of the budget, the interpretation of the language of the code, and how that is used”.

Her views were echoed by Beatrice Barleon, policy development manager at Mencap, who told MPs that one of the challenges of the reforms was the “implementation across all the different local authorities”.

Ms Roberts gave the example of East Kent College, which took its local authority to judicial review “as they didn’t feel that the authority was funding them correctly, or understanding”.

Through the “perseverance of the principal and the team there” they had agreed a three year funding deal which “gives the college that certainty about being able to invest, to have the staffing necessary”, she said.

That deal was “better than what we have in most places where it’s literally one year to the next,” she said.

She also spoke about the “time, effort and money” that had been wasted on the “bureaucracy” of the system.

“If you’re working with 10s of local authorities they often have different systems, different requirements,” she said.

“If I could take away from my frontline people all the paper work and bureaucracy and put that into frontline delivery that wouldn’t cost any more money and would make the limited resources go further.”

If I could take away from my frontline people all the paper work and bureaucracy and put that into frontline delivery

Other issues highlighted included the “trend to only give education and health care plans to the age of 19” – meaning that colleges were having to use adult funding to provide support to learners with SEND older than 19.

“We do that. We can’t afford to continue doing that. It’s costing us over £300,000 a year,” said Ms Brennan-Barrett.

Ms Roberts said that, although officials working in high needs in the Department for Education were “incredibly supportive”, official guidance from the department said that “the majority of young people with EHC plans should complete their education by 19” – which she described as “totally unrealistic”.

The high-needs budget is devolved to local authorities, and “has to be divided between a five-year-old and a 25-year-old” – which created pressure, according to Ms Brennan-Barrett.

“Under the disability act it is necessary to make reasonable adjustments. We’re not making those reasonable adjustments with the local devolvement,” she said.

Decisions on how the money was spent were made at the local schools forum, at which the college just had one vote among 40 schools “even though we represent more people at 16 to 18,” she said.

After hearing the evidence, education select committee chair Robert Halfon said the picture of post-16 funding for learners with SEND “seems to be a big tangled mess”.

Irene Lucas has been named the new chair of the Education and Skills Funding Agency’s management board.

Ms Lucas is currently a non-executive board member of the Department for Education and was previously a director-general of the Department of Communities & Local Government.

She received a CBE in 2008 for services to local government, having served as the chief executive for Sunderland City and South Tyneside Borough councils.

The management board was created in April 2017 and advises the agency’s chief executive on how initiatives are working in practice.

Its interim board, led by Ian Ferguson, was involved in the investigations into the collapse of Learndirect and in 2018, was keeping a close eye on the introduction of T-Levels.

Eileen Milner, ESFA chief executive, said: “It is great to have Irene leading the management board and having all members now appointed.

“The role of the management board is to provide crucial scrutiny, challenge, advice and oversight, to hold us rightly to account as a public body. I look forward to working with Irene and the rest of the board members.”

More than half of the apprentices that trained with former apprenticeship giant Aspire Achieve Advance have still not been found a new provider, four months after its collapse.

The company, better known as 3aaa, went into administration on October 11 after the government pulled its skills funding contracts following a fraud investigation, which is now being looked into by the police.

A total of 4,216 apprentices were subsequently left without a place to complete their training so the Education and Skills Funding Agency immediately began trying to find them alternative provision.

Skills minister Anne Milton has now revealed that only 1,892 apprentices, or 45 per cent, of those affected have moved on to new providers so far.

Responding to a parliamentary question submitted by shadow skills minister Gordon Marsden, Ms Milton said the ESFA holds responsibility for moving on only those apprentices with non-levy employers, of which there were 1,832.

Of these, the ESFA has “approved 1,358 apprentice transfers to 125 high quality alternative providers”.

Alternative provision for 410 of the remaining apprentices with non-levy employers has been found, according to Ms Milton, but the agency is still in the process of “contacting the providers involved to facilitate the transfers”.

But 64 of the non-levy apprentices have “notified” the ESFA that they have “successfully completed or withdrawn from their apprenticeship”.

A total of 2,384 former 3aaa apprentices were with levy paying employers. Ms Milton said the National Apprenticeship Service account managers “are supporting those employers to identify new providers”.

But to date, only 534 apprentices with levy paying employers have transferred to new providers of their choice.

The apprentice transfer figures come after the ESFA warned it could withdraw funding from providers after FE Week revealed a few of them attempted to poach staff and apprentices 3aaa by using underhand tactics.

An investigation by this newspaper found that some training providers were “misrepresenting their position” in an effort to recruit those affected.

Tactics included alleged false claims that the ESFA and 3aaa have asked the providers to take on hundreds of people affected.

FE Week revealed what was behind the government and police investigations into 3aaa in November.

The company, which had 500 staff before it went bust when the ESFA pulled its £16.5 million skills contract, allegedly manipulated Individualised Learner Records to artificially inflate achievement rates by a huge amount and misused employer-incentive grants.

A previouse ESFA investigation into 3aaa, carried out by auditing firm KPMG in 2016, had found dozens of success rate “overclaims”.

3aaa was co-founded by Peter Marples and Di McEvoy-Robinson in 2008, but the pair stepped down in September during the midst of the ESFA’s second investigation.

In December the police told FE Week that it hadn’t been able to decide whether or not to open a criminal investigation into 3aaa as it needed to wait for the DfE to “complete its work”.

At the time of going to press the police said there was no update to this.

The boss of the organisation that will assume powers for T-levels this week has said the delivery timeline is still “worryingly tight” even though everything is “on schedule”.

Sir Gerry Berragan was quizzed by FE Week on the topic this afternoon, ahead of a change in legislation which will see his organisation become the Institute for Apprenticeships and Technical Education on Thursday.

He stated, nearly one year on since he told an Ofqual conference of his deep concerns at meeting the 2020 delivery timetable, that he still views the deadline as “worryingly tight”.

It is fair to say the timeline is still worryingly tight because there is no real time contingency

But he reiterated what Jonathan Slater, the Department for Education’s permanent secretary, told the education select committee last week: everything is “on track”.

“It is fair to say the timeline is still worryingly tight because there is no real time contingency and any project that is running without any contingency is always going to be tight,” Sir Gerry said.

“The good news is we are absolutely on track and schedule. We’ve taken this by the horns and managed this thing really, really closely.

“We have a detailed plan and mitigated any risks that we can to that schedule but it still remains tight.”

When asked what he sees as the biggest challenge to overcoming the tight T-levels timeline, Sir Gerry said: “From our perspective it is getting the qualifications through the approvals.

“In a broader sense the DfE needs to make sure the colleges delivering T-levels in wave one are in good shape and they have a programme and money to help them do that.

“We’re sharing the content with colleges as it becomes available so that they can get ahead of the game and develop the content into a course.

“We’re doing everything we can to mitigate that tight timeframe but there are still genuine challenges to be overcome but they are all doable.”

One key milestone that the IfA has managed to meet is the controversial £17.5 million procurement process for assigning awarding organisations to each of the first three T-levels, which will cover digital, childcare and education, and construction.

The Federation of Awarding Bodies had threatened legal action against the government because of its tight implementation plans including the procurement, which would almost certainly have delayed the rollout of the new post-16 technical qualifications.

But the body dropped this challenge in August after the DfE offered to “re-set the relationship” with awarding organisations.

The IfA will notify the successful AO bidders over the next week, which will be followed by a 10-day standstill period before an official announcement next month.

A second tender process for the six pathways that are due to be introduced for teaching from 2021 will kick off in spring, with the winning bidders expected to be announced in the autumn.

The IfA has had to bolster its team ahead of assuming powers for technical education.

Sir Gerry told FE Week that the institute has gone from having around 86 staff in the summer to “nearly 150 today”.

It’s been a huge task to get ourselves geared up for this

This number is expected to increase to around 200 by the end of this calendar year, which will be “steady state”.

“We’re clear to go,” Sir Gerry said. “We’ve significantly increased in size and created completely new functions in terms of procurement and contract management, we’ve taken on board the T-level panels from the DfE and the relationship managers that will go with them.

“It’s been a huge task to get ourselves geared up for this.”

To cater for the new staff the IfA’s budget nearly doubled this year, from £8.6 million to £15 million, and is expected to rise to “around £20 million next year”.

Assuming powers for technical education will give the IfA complete authority over the content of T-levels and procurement for awarding organisations.

The institute will also lead on the content for new technical qualifications from levels two to five, once the Department for Education has completed its respective reviews.

The DfE will, however, still hold ultimate responsibility for the policy areas.

You can read more from FE Week’s interview with Sir Gerry in our upcoming edition, which will be published on Friday.

Strike action at two colleges has been suspended at the last minute, after governors at one requested more time to ratify a “landmark” pay deal while the other agreed to hold “further talks”.

University and College Union members at Hugh Baird College are asking for a lecturer pay rise of between three and six per cent over the next two years, as well as an extra five days’ annual leave for 2018/19.

They were scheduled to walk out for two days from tomorrow but this has been delayed after governors promised to meet on February 8 to approve the deal.

If both the union and college are happy following this meeting then the dispute would be resolved and the threat of further strikes planned for March will be lifted.

Strikes have also been suspended at Coventry College after their leadership team agreed to further talks with the union.

UCU members at fourteen other colleges are still due to walk out this week.

The union said the “landmark deal” it is hoping for at Hugh Baird was “further proof that colleges and the union could work together to secure a better deal for staff”.

UCU regional official Martyn Moss said: “This landmark deal sets the bar for other colleges when it comes to the pay and conditions of staff. Too often colleges hide behind low levels of government investment to avoid giving their staff a fair pay deal.

“This deal shows what can be achieved when colleges work with us to avoid disruption and look after their staff. If the governors sign it off then the strikes planned for March can be called off.”

Hugh Baird college principal and chief executive, Yana Williams, said: “Our staff are the most important asset we have at the college to ensure we can provide quality education and support to our communities.

“This deal aims to recognise the importance we place on our staff whilst ensuring college finances remains sustainable at a time when government funding for the further education sector remains the same as it was seven years ago.”

The 14 other colleges scheduled to take strike action this week are: Abingdon and Witney College, Bridgwater and Taunton College, City of Wolverhampton College, East Sussex College, Harlow College, Kendal College, Leicester College, West Thames College, Bath College, Bradford College, Croydon College, Lambeth College, New College Swindon and Petroc.

College staff are unhappy about proposals put forward by the Association of Colleges, which represents college leadership, over pay for 2018/19.

In December the AoC put forward an offer of one per cent even though the UCU requested a five per cent rise, which the union described as a “wholly inadequate response” to the pay crisis in FE.

Capital City College Group agreed a “landmark” pay rise for its staff of up to five per cent late last year – even though this would turn a projected break-even budget into a £2.3 million deficit.

It’s been an up-and-down week for the FE sector, which saw a return of three ‘good’ ratings, but two ‘insufficient’ monitoring reports.

There was also disappointment for five other providers that got grade three reports, including a grade one college falling two ratings.

Holy Cross College in Manchester has improved on its last inspection, going from a grade three to a grade two following a “restructure” of the senior leadership team.

“Leaders and managers have created a culture of high expectations for both staff and students,” Ofsted said.

“Staff are highly motivated. They welcome the challenge and pace of change as leaders strive for excellence.”

Another college which has moved up a rating from three to two is Oldham College.

Inspectors praised senior leaders and governors for focussing “relentlessly on improving the college’s financial position and the quality of education and training”.

“They have been successful in returning the college to a stable financial position while investing significantly in improving the accommodation and resources at the college,” Ofsted said.

“The quality of teaching, learning and assessment is now good.”

Newham Sixth Form College maintained its grade two rating with Ofsted following an inspection in December.

Inspectors wrote approvingly of how a high and steadily increasing proportion of students achieved their qualifications, gain high grades on vocational courses and achieve a grade 4 or above in GCSE English.

“The new principal has quickly established his vision for the college to be ‘one college, one team’, which enables managers and staff to have direct input into agreeing the new values and mission for the college,” Ofsted added.

Meanwhile, Barnet and Southgate College dropped from a grade two to three, with a ‘requires improvement’ rating for every area except apprenticeships.

“Leaders and managers do not monitor the quality of subcontracted provision well enough,” inspectors reported.

“They are too reliant on the judgements of other contractors in assessing the quality of teaching, learning and assessment.”

Southampton College received its second consecutive grade three report from Ofsted.

The provider was criticised for ineffective learning and teaching in theory classes, attendance at English and maths classes and insufficient progress in improving curriculum-level self-assessment.

Blackburn College has maintained a grade three rating in its latest Ofsted report, with inspectors writing that governors and leaders have not successfully rectified weaknesses identified at the last inspection.

Independent learning provider BOCK Consultancy & Personnel Development Limited was hit with a grade three on its first inspection since it opened.

None of its learners manage a higher grade than a pass and too few learners complete their course, according to the report.

Swindon College, which was previously rated grade one in 2013, was told it required improvement after its latest inspection in December; as previously reported by FE Week.

Citrus Training Solutions Ltd scored two insufficient marks for apprenticeship provision and positive outcomes from a monitoring visit in December, as reported by FE Week.

The Development Fund, an independent learning provider, was also told it had made ‘insufficient progress’ after Ofsted found it was offering apprenticeships in areas it had no expertise.

“Leaders enrol most apprentices onto the level 3 standards-based apprenticeship in travel consultancy,” inspectors said.

“This is not the provider’s area of expertise. As a result, leaders relied too heavily on the employer’s advice and did not take sufficient control of the quality of the apprenticeship programme.”

Independent learning provider Creative Sport & Leisure Ltd also had a monitoring visit in December and made progress on two themes of the inspection, and significant progress in safeguarding.

Two other new apprenticeship providers – Valkyrie Support Services Ltd and Decidebloom Limited – had early monitoring visits this month and were both found to have made reasonable progress in all themes.

Ofsted also paid monitoring visits to the South Thames Colleges Group and Langdon College.

Both were previously graded ‘good’ were found to be making reasonable progress in all three areas in the monitoring reports published this week.

Develop-U, an independent learning provider, was paid another monitoring visit by Ofsted earlier this month after a previous visit found it was making ‘insufficient progress’ against the theme of safeguarding.

It has now been judged to have made ‘sufficient progress’ in the area.

Grade four UTC@harbourside was subject to a safeguarding monitoring visit and Ofsted found it was effective.

GFE Colleges	Inspected	Published	Grade	Previous grade
Barnet and Southgate College	04/12/2018	21/01/2019	3	2
The Oldham College	04/12/2018	21/01/2019	2	3
Swindon College	11/12/2018	22/01/2019	3	1
South Thames Colleges Group	17/12/2018	23/01/2019	M	N/A
Southampton City College	11/12/2018	23/01/2019	3	3
Blackburn College	11/12/2018	25/01/2019	3	3
Langdon College	13/12/2018	25/01/2019	M	3

 

Sixth Form Colleges (inc 16-19 academies)	Inspected	Published	Grade	Previous grade
Newham Sixth Form College	04/12/2018	22/01/2019	2	2
Holy Cross College	10/12/2018	21/01/2019	2	3

 

Independent Learning Providers	Inspected	Published	Grade	Previous grade
Creative Sport & Leisure Ltd	17/12/2018	22/01/2019	M	N/A
BOCK Consultancy & Personnel Development Limited	11/12/2018	23/01/2019	3	N/A
Valkyrie Support Services Ltd	08/01/2019	25/01/2019	N/A	M
Decidebloom Limited	05/12/2018	22/01/2019	M	M
Citrus Training Solutions Ltd	12/12/2018	25/01/2019	M	M
The Development Fund Limited	18/12/2018	24/01/2019	M	M
Develop-U	08/01/2019	25/01/2019	M	2

 

Other (including UTCs)	Inspected	Published	Grade	Previous grade
UTC@harbourside	19/12/2018	21/01/2019	MM	4

Creating a petition signed by tens of thousands of people and a debate attended by as many as 50 MPs is no mean feat, especially when you’re juggling A-levels.

But that is just what seven learners at Brockenhurst College did. They set up a petition in October after finding out how funding for their education had been cut by almost 30 per cent from 2009 to 2019. 

As skills minister Anne Milton put it at the debate: “I think we can all agree that securing a debate in parliament is a pretty impressive piece of A-level project work.”

It’s especially extraordinary considering only 47 petitions have been debated in this session of parliament; on topics including Brexit, immigration policy and the treatment of animals.

We spoke to three of the organisers, Brockenhurst learners Charlotte Jones, Hannah Powis and Laura Whitcher, who went to parliament on Monday for a debate on their petition, which called for the funding to colleges to be increased to the same level as school funding.

Charlotte enjoyed seeing “such a big turnout of MPs to discuss our petition and it was great to see how many people are passionate about the same issues as us”.

What Hannah picked up on was “the amount of cross-party support we had”.

Laura said: “It was really great to see the process of how everything happens and how we can affect that and especially seeing the government working so well together.”

Asked why they wanted to start campaigning after hearing about the cuts to FE funding, Hannah said: “We thought it was really important for sustainability to make sure we are able to continue providing the services we get from the college for future generations.

“Things like mental health support, which the college is really good at; we want to ensure that’s stable for future students.”

Laura said: “We knew there were funding cuts in education across the board but especially in FE and colleges.

“But we were never aware how significant they were.

“We felt it was important to educate other people and make sure they were aware this was happening to us.

“There is a real sense of inequality in comparison to the funding under-16s get in comparison to 16-18 education. Considering you have to stay in school until you’re 18, I think it really doesn’t make sense why we would be funded any differently.”

Their hard work has taken them to parliament several times before with local MP Julian Lewis.

Following this week’s debate, Mr Lewis said: “The fact that a few dedicated students in a first-class college can turn their individual concerns into a full-scale parliamentary debate at Westminster speaks volumes for their character and for the encouragement given to them by the college staff and its principal.”

Asked what they wanted to happen next, Hannah said she wanted to see meetings with the Treasury about bringing FE funding up to scratch.

“We just want to carry on putting pressure on politicians,” Hannah added.

“It’s really important to keep up the pressure and make sure people are still listening.

“The issue is fundamental and needs to be addressed.”

Laura said: “Financial reports come out in March. I’d like to see they had taken what we said to heart.

“In the end, we’d like more funding.”

The learners were expecting much of what skills minister Anne Milton said in her speech responding to the debate, but said she seemed to agree with the points their petition raised.

Laura said she was impressed by Ms Milton: “She really stood out in how much she was listening to everyone’s information and how she was not brushing anything off, she really did care.”

Reflecting on the whole journey, Charlotte said: “I think the fact we were able to start this petition together and it’s become so big with just us and the help of the staff inspires me to know if any other issues need to be addressed, I am able to do that, so I would definitely do more campaigning in the future.”

Hannah added: “It shows us how important democracy is and how important it is to be directly involved and participate in what’s going on.

“Younger people can sometimes get disillusioned and feel disconnected from it, but this has shown our voices are important and people care what we have to say.”

On whether they would encourage other FE students to campaign on funding, Charlotte said: “Definitely. Actually, students within our own college have found issues they’re passionate about and made petitions and started campaigning.”

A learner in Laura’s law class has made a petition on the cost of travel for education purposes for young people.

Charlotte added: “It’s important for students to know they can affect change. They are not just an effect of what happens in parliament.”