The FE Commissioner is pushing for a mega merger in Cornwall to secure the future of Cornwall College, which is currently surviving on government bailouts.

FE Week exclusively revealed the existence of a mysterious and confidential review of further education in Cornwall back in November, after it was requested by Cornwall Council.

It put pressure on the region’s two colleges – Cornwall College and Truro and Penwith College – to work more closely together.

The review, published today, warned that “maintaining two separate colleges in Cornwall may not bring about the best learning opportunities for all of Cornwall’s learners”.

“There is growing agreement that moving towards one single entity for provision across Cornwall could be in the best interest of learners, businesses and the wider Cornwall community,” the report said.

Instead, the FE Commissioner has recommended that the two colleges actively participate in a strategic steering group to decide whether they should become a “single entity” no later than December 2020, or find a way to deliver a “financially viable” standalone Cornwall College.

Truro and Penwith College has just over 5,000 16-18-year-old learners, while Cornwall College – which has previously been warned over falling learner numbers – has closer to 3,500.

When FE Week first revealed the review, Truro and Penwith, which is rated grade one by Ofsted, expressed concern.

A spokesperson said “several” of the draft recommendations coming out of it “do not reflect the position of governors here”.

Today’s report revealed that Cornwall College’s £30 million application to the restructuring fund was rejected by the Department for Education in May 2018, as long-term financial modelling “still showed the college incurring operating deficits in future years”. 

The Cornwall College Group, rated ‘good’ by Ofsted, is undergoing the ‘fresh start’ approach, meaning it must significantly change its business or operating model. It announced the resignation of its principal Raoul Humphreys back in November.

Dr Elaine McMahon took over as interim principal and chief executive in November.

The group received £4.5 million emergency funding in 2016/17 and £3.5 million in 2017/18. An FE commissioner assessment summary of the group, published in July 2017, said the new leadership team were not responsible for the loss of financial control” experienced by the college under the previous principal Amarjit Basi, who resigned in July 2016 with a £200,000 payout.

Back in August 2017, the post-16 area review report covering Cornwall, Somerset, Devon and the Isle of Scilly was published without recommending any mergers.

However, it did recommend “collaboration” between Cornwall College and Truro and Penwith College, including establishing a joint project group to “facilitate closer collaboration” such as the delivery of higher education, apprenticeships and provision for students with high needs.

But the FE Commissioner’s report has found the two rivals failed to work together, and said that “little progress had been made and any work on this has now stalled”.

Universities showed off their apprenticeship delivery skills this week, as one was rated ‘outstanding’ while another was judged to be ‘good’ by Ofsted.

It wasn’t so positive for independent providers however, as two were rated ‘requires improvement’ and another was judged to be making ‘insufficient progress’ in its early monitoring visit.

Teeside University was the HE provider to come out with a grade one in all areas, in its first ever inspection of its apprenticeship provision.

It trains nearly 200 level five apprentices and inspectors wrote approvingly of how senior leaders “very successfully” use apprenticeships to provide education for disadvantaged groups in the north east.

Tutors have “excellent” subject knowledge, work with employers to establish an apprentice’s starting point and use their professional experience so apprentices gain an “in-depth” understanding of their subjects.

All apprentices go on to a higher level at their employers, with more responsibility, after they finish their course, while a high proportion of use the academic credits that have been gained through their course to take higher-level qualifications.

Birmingham City University, which has 237 apprentices on mainly health education and life science standards, maintained its grade two in its latest Ofsted report.

Leaders, managers and governors have developed a strategic plan for apprentices, which contributes “effectively” towards meeting the skills gap in the health and social care sector in the West Midlands.

Leaders and managers also promote equality of opportunity and diversity, resulting in few differences in attainment between groups of apprentices.

Lecturers “skilfully” use their up-to-date nursing and clinical skills to relate theory to practice and their passion for the health sector to inspire apprentices.

Their performance was in contrast to the reports on several independent learning providers.

Catalyst Learning and Development Limited, which has 98 apprentices, scored ‘insufficient progress’ in three areas of its monitoring visit, as reported by FE Week on Wednesday.

New London Educational Trust, which has 70 apprentices, received a grade three in its first inspection.

Tutors were found to be not planning lessons to meet the needs of learners well enough, so the more able were being “insufficiently” challenged, while the less able were falling behind.

Phoenix Training Services (midlands) Limited also received a grade three from its first inspection.

Inspectors found its staff do not effectively use information about a learner’s starting point to plan learning, so learners do not develop the essential skills for their course as well as they could.

Exeter Royal Academy for Deaf Education, a specialist college, did worse – it dropped from a grade two to a grade three.

It was found that students do not develop English and mathematical skills in different settings well enough and teachers do not plan to include these skills in those different settings.

Harlow College received good news as it maintained its grade two from Ofsted.

The college, which has 5,900 learners in total, works with a wide range of organisations and employers to meet local and regional skills priorities; for example, at the Stansted Airport campus, which was covered in this week’s FE Week National Apprenticeship Week supplement.

“Governors and leaders have a clear vision and high ambitions for learners and apprentices,” Ofsted said.

“As a result, learners and apprentices make good progress and are successful in gaining employment within their chosen careers.”

In an Ofsted monitoring visit, Highbury College was found to have made reasonable progress in all four areas following a grade three report last year, which saw it drop two grades from ‘outstanding’.

Mentors are being allocated to learners who are at risk of not getting their qualifications because of poor attendance, but attendance at English and maths lessons is at about 12 per cent below that for vocational lessons.

University Hospitals Plymouth NHS Trust made ‘reasonable progress’ in all three areas of a monitoring visit.

Apprentices are reported to be ambitious, and have the confidence and knowledge they need to become useful members of ward staff.

North East Lincolnshire Council was told to continue implementing measures so it can carry on providing adult and community learning, following a grade four report in 2018.

Last year, inspectors found learners did not attend exams and this year, Ofsted reports learners’ attendance remains too low.

 

GFE Colleges	Inspected	Published	Grade	Previous grade	Progress
Harlow College	22/01/2019	06/03/2019	2	2
Highbury College	31/01/2019	06/03/2019	M	M	RRRR

 

Independent Learning Providers	Inspected	Published	Grade	Previous grade	Progress
New London Educational Trust	26/01/2019	05/03/2019	3	N/A
Phoenix Training Services (midlands) Limited	05/02/2019	06/03/2019	3	N/A
Catalyst Learning and Development Limited	06/02/2019	06/03/2019	M	M	III

 

Adult and Community Learning	Inspected	Published	Grade	Previous grade	Progress
North East Lincolnshire Council	23/01/2019	04/03/2019	M	M	N/A

 

Employer providers	Inspected	Published	Grade	Previous grade	Progress
University Hospitals Plymouth NHS Trust	06/02/2019	06/03/2019	M	M	RRR

 

Other (including UTCs)	Inspected	Published	Grade	Previous grade
Teeside University	26/01/2019	06/03/2019	1	N/A
Birmingham City University	05/02/2019	07/03/2019	2	2

 

Specialist colleges	Inspected	Published	Grade	Previous grade
Exeter Royal Academy for Deaf Education	15/01/2019	04/03/2019	3	2

A major high street bank will “remain supportive” of a cash-strapped college that owes it over £6 million, despite fears the college may collapse following the last-minute failure of a second merger attempt.

The future of City College Southampton, which is surviving on government bailouts, was thrown into doubt this week when Eastleigh College pulled out of its proposed merger after the Department for Education rejected its bid for funds from the Restructuring Facility. 

Its first attempt to join up with another provider – Southampton Solent University – fell through in 2017, following a recommendation from the Solent Area Review.

City College’s accounts for 2017/18 warned that if its second merger failed, it would “require a standalone application to be approved to ensure it is able to continue operations into 2019/20” and would have to “seek additional long-term funding from the ESFA in order to remain in existence in the long term”. 

The accounts also stated that the college has £6.1 million of bank loans outstanding with Santander on terms negotiated in 2009, which has 16 years remaining. 

The college’s “forecast” show that one of the loan covenants will be breached, requiring the entire loan to be repaid in a single year.

The accounts go on to say:  “Santander has verbally stated it will not take any action on the college as it continues to work towards a merger.”

At the time of going to press, Santander told FE Week it remains “supportive of the college” despite its second failed merger, and the bank will continue to “work closely with them, as they explore their options”. 

The reassurance follows fears the college could be the first provider to be placed into administration under the new insolvency regime, which came into effect on January 31 and which allows colleges to go bust for the first time.

The Department for Education has made clear that there will be no more long-term bailouts available to colleges following the introduction of the insolvency regime.

A  DfE spokesperson would not confirm if it was considering placing the college into administration, but said: “All bids for funding from the Restructuring Facility fund are assessed through a rigorous governance and approval criteria, including whether a college is financially sustainable in the long term.

“We are working with City College Southampton to ensure learners aren’t negatively affected.”

The college told FE Week it was not entering into administration, nor had it begun an Independent Business Review – the start of insolvency proceedings.

Sarah Stannard, principal of City College Southampton, said: “City College Southampton is reassured by the constructive conversations we are having with key stakeholders and their commitment to ensuring that there is robust further education provision in Southampton.”

Stannard was due to stand down following the college’s merger, which was meant to be finalised by March 31, and at which point Jan Edrich, principal of Eastleigh, would have headed up both colleges. 

City College Southampton has since confirmed Stannard will be staying put, while trying to reassure students, staff and parents that it is “business as usual”.

The college, which is rated “requires improvement” by Ofsted and has around 5,000 students, has seen its financial health deteriorate to “inadequate” in recent years.

Its accounts showed that it has agreed with Santander a £500,000 ongoing overdraft facility, “however, this is insufficient to cover the expected cashflow shortfall occurring during January, February and March 2019” and an application for an unknown amount of exceptional financial support from the DfE has been approved “enabling the college to continue in operation in the short term”.

The financial statement also shows that its cash deficit deepened from £257,000 to £585,000 in 2017/18, and its total comprehensive income was just £1.3 million.

The new college insolvency regime

The news of the failed merger with Eastleigh College, which has put City College Southampton in imminent danger of insolvency, came little over one month after the new insolvency regime was introduced, which set out that, for the first time, troubled colleges will be able to go bust.

The Department for Education has made clear in its new regime that colleges like Southampton, which has been surviving on government bailouts, will no longer be saved by long-term bailouts and will be placed into administration if they fail.

The insolvency regime, which came into effect on January 31, aims at making it clear how colleges will be managed if they become insolvent, at the same time as protecting existing learners.

Prior to a corporate insolvency, government may commission an Independent Business Review into the provider to assess the options available, since the Restructuring Facility funding is no longer to be available. Some lending banks already commission these as part of their normal course of business.

In the event that a college runs out of money, they must now give the DfE notice that they want to appoint an administrator. The DfE then has 14 days to decide if it wants to apply to court for an education administration order – for their own administrator. Then the administrator appointed by the court will be required to act to avoid or minimise disruption to the studies of the existing students.

Administrators would first seek to rescue the college as a going concern. If this fails, they would seek to transfer the business to another institution. In some cases, some or all students could be transferred to another provider, or the college may be kept going until existing students have completed their course. At the same time the education administrator would also balance the needs and rights of lenders and other creditors and realise assets for their benefit.

 

Alternative providers in Southampton

If City College Southampton does collapse, administrators could transfer its existing learners to other local providers. The college, which is located in the city centre, has four other sixth-form colleges within a three-mile radius: St Anne’s Catholic School & Sixth Form College, Bitterne Park Sixth Form, Itchen Sixth Form College and Richard Taunton Sixth Form College. Further away there is The Hamble Community Sports College and the Totton College.

St Anne’s Catholic School has an “outstanding” Ofsted rating and Bitterne has been ranked as “good” in its last inspection. Itchen and Richard Taunton both have a “requires improvement” rating.

Eastleigh College, a 20-minute car ride away from City College, could also be an alternative to learners. Located close to the city’s airport, the college was downgraded from “outstanding” to “good” by Ofsted earlier this year.

Anne Milton initially seemed in good spirits when I began our interview at a coffee shop at the University for East London’s (UEL) Docklands campus.

It was the morning of the third day of National Apprenticeships Week and she’d just finished meeting apprentices at an informal breakfast. 

Despite the event not entirely going to plan (a falling roof tile that very narrowly missed the minister but left two apprentices grazed and in need of medical attention) Milton was unfazed and keen to talk to apprentices about their courses.

But it did not take me long to trigger a change in mood, pointing out that just a few hours earlier, the National Audit Office had published a report criticising the government on a range of issues relating to the apprenticeship reforms.

“It is always a shame when these reports come out because I think they have an important part to play in the development of government policy, but by their very nature they 
are looking back rather than forward,” Milton said.

“It doesn’t always, I think, give a very accurate picture of what we are going to be seeing in six months’ time.” 

Milton clearly thinks there will be significant improvements in the next six months, but what is the evidence for this?

Readers will recall that the minister predicted in February 2018 that apprenticeship starts would really take off by September, but the latest figures for December starts show they are slipping backwards, a full 8 per cent down on the previous year. 

And last October it was announced that demand from small employers would be stimulated by halving their co-investment fee halved from 10 to 5 per cent.

More than four months on, the fee reduction has not been implemented and Milton was unable to even say from when it would begin.

“I would love to make an announcement now. Sadly, with much of one’s life in government, one waits for Her Majesty’s Treasury to say when you can do these things. And so we are always to some extent in the Treasury’s
hands.”

And on the thorny issue of limits to non-levy funding (UEL successfully tendered for non-levy, but was not awarded any, and is having to turn local businesses away), the promised changes to get small employers on to the Apprenticeship System keeps being delayed.

“Like with the reduction in co-investment, I am frustrated that the machinery of government is slow and sluggish, always. So I am somebody who wants to do everything yesterday,

“I am a terribly impatient person, so I am as frustrated as everybody else, but we will make announcements when we can make announcements.”

Milton’s frustrations should not really come as a surprise, given in her first speech as skills minister, back in July 2017. She responded to a question about the fall in apprenticeship starts by saying: “I am somebody who has absolutely no patience at all. I want everything done yesterday, and I will only forgive not doing it yesterday if it’s in an attempt to get it right.”

One thing that clearly wasn’t done right was the Department for Education’s budgeting for apprenticeships.

My own published analysis, now confirmed by the NAO, had found the average cost of starts on standards was running at £9,000, which is double what the government had budgeted for.

“I haven’t seen how they got to the figures they thought it would be,” Milton said.

“But you always have to take a bit of a leap in the dark when the programme is being driven by employers.

“Added to which, if you are going to improve quality – quality and money don’t always go together – but it is likely it will cost you more. So whether the original forecasts took all that into account, I don’t know.”

This raised the obvious question of whether the budget needed to be doubled to afford £9,000 per apprentice, or whether the average could be brought down by, controversially, restricting employer choice.

I ask, should public money be spent on management MBA apprenticeships at a time when 16-to-19 and level two apprenticeships are in such decline? 

“I think you want money spent on both,” Milton said.

“We have seen today 16-year-olds doing level 3 engineering. I mean, brilliant. But you also need businesses to be more productive, so people are thinking about how they manage. What sticks in people’s throats is people on £100,000 a year and the state subsidising their MBA. 

“There is no easy answer. You put more money in the pot or you restrict what you are doing. Those are the choices.”

So it seems likely the Treasury will have to find a way to increase the size of the pot to get even close to the 3 million starts target and fund all the popular and expensive degree and management apprenticeships.

Even the NAO report points out that restricting employer choice in an employer-led system would not only be unpopular it “could damage confidence in the programme”.

Milton concluded by saying: “I always look for more money, I will always look at whether we are absolutely sure this is where public subsidy should go – looking at both
things, always.”